Treasury Regulations · 26 CFR
§ 1.895-1. Income derived by a foreign central bank of issue, or by Bank for International Settlements, from obligations of the United States or from bank deposits.
Regulation text, no changes From the eCFR, current as of October 15, 2026. The eCFR is an authoritative but unofficial editorial compilation of the Code of Federal Regulations; the official text is the annual CFR on govinfo. Compare it with this section on ecfr.gov (external site) or the official annual CFR on govinfo (external site).
Regulation under 26 U.S.C. § 895
Cite as 26 CFR § 1.895-1
At a glance
Read from the text and its source citation. Not part of the regulation.
- Status
- In the current eCFR
- Issued
- October 2, 1975 by T.D. 7378
- Last amended
- October 16, 1975
- Issued under
- 26 U.S.C. § 895
- Length
- 587 words · about 3 min to read
- Cross-references
- cites 2 Code sections and 3 regulations; cited by 8
¶(a) In general. Income derived by a foreign central bank of issue from obligations of the United States or of any agency or instrumentality thereof, or from interest on deposits with persons carrying on the banking business, is excluded from the gross income of such bank and is exempt from income tax if the bank is the owner of the obligations or deposits and does not hold the obligations or deposits for, or use them in connection with, the conduct of a commercial banking function or other commercial activity by such bank. For purposes of this section and paragraph (i) of § 1.1441-4, obligations of the United States or of any agency or instrumentality thereof include beneficial interests, participations, and other instruments issued under section 302(c) of the Federal National Mortgage Association Charter Act (12 U.S.C. 1717). See 24 CFR part 1600 et seq.
¶(b) Foreign central bank of issue.
¶(1) A foreign central bank of issue is a bank which is by law or government sanction the principal authority, other than the government itself, issuing instruments intended to circulate as currency. Such a bank is generally the custodian of the banking reserves of the country under whose law it is organized. See also paragraph (b)(5) of § 1.861-2.
¶(2) The exclusion granted by section 895 applies to an instrumentality that is separate from a foreign government, whether or not owned in whole or in part by a foreign government. For example, foreign banks organized along the lines of, and performing functions similar to, the Federal Reserve System qualify as foreign central banks of issue for purposes of this section.
¶(3) The Bank for International Settlements shall be treated as though it were a foreign central bank of issue for purposes of obtaining the exclusion granted by section 895.
¶(c) Ownership of United States obligations or bank deposits. The exclusion does not apply if the obligations or bank deposits from which the income is derived are not owned by the foreign central bank of issue. Obligations held, or deposits made, by a foreign central bank of issue as agent, custodian, trustee, or in any other fiduciary capacity, shall be considered as not owned by such bank for purposes of this section.
¶(d) Commercial banking function or other commercial activity. The exclusion applies only to obligations of the United States or of any agency or instrumentality thereof, or to bank deposits, held for, or used in connection with, the conduct of a central banking function and not to obligations or deposits held for, or used in connection with, the conduct of commercial banking functions or other commercial activities by the foreign central bank.
¶(e) Other exclusions. See section 861(a)(1) (A) and (E) and § 1.861-2(b)(1) and (4), for special rules relating to interest paid or credited before January 1, 1977, on deposits and on similar amounts and for rules on interest derived from bankers' acceptances. For exemption from withholding under § 1.1441-1 on income derived by a foreign central bank of issue, or by the Bank of International Settlements, from obligations of the United States or of any agency or instrumentality thereof, or from bank deposits, see § 1.1441-4(i).
¶(f) Effective date. This section shall apply with respect to taxable years beginning after December 31, 1966. For corresponding rules applicable to taxable years beginning before January 1, 1967, see 26 CFR 1.85-1 (Revised as of January 1, 1972).
[T.D. 7378, 40 FR 45435, Oct. 2, 1975; 40 FR 48508, Oct. 16, 1975]
Cross-references
Computed from the citations in the text of 26 CFR.
Code sections it cites
- § 895 Income derived by a foreign central bank of issue from obligations of the United States or from bank deposits
- § 861 Income from sources within the United States
Regulations it cites
- § 1.1441-4 Exemptions from withholding for certain effectively connected income and other amounts.
- § 1.861-2 Interest.
- § 1.1441-1 Requirement for the deduction and withholding of tax on payments to foreign persons.
Cited by 8 other regulations
- § 1.892-3 Income of foreign governments.
- § 1.892-3T Income of foreign governments (temporary regulations).
- § 1.892-5T Controlled commercial entity (temporary regulations).
- § 1.892-7T Relationship to other Internal Revenue Code sections (temporary regulations).
- § 1.1441-8 Exemption from withholding for payments to foreign governments, international organizations, foreign central banks of issue, and the Bank for International Settlements.
- § 1.6045-1 Returns of information of brokers and barter exchanges.
- § 1.6049-4 Return of information as to interest paid and original issue discount includible in gross income after December 31, 1982.
- § 1.6049-7 Returns of information with respect to REMIC regular interests and collateralized debt obligations.
Amendment history
From the source citation at the end of the section, newest first. T.D. is a Treasury decision; FR is the Federal Register.
- Amended (40 FR 48508)
- Issued by T.D. 7378 (40 FR 45435)
Where it sits in 26 CFR
- Subchapter A Income tax
- Part 1 Income taxes
- Miscellaneous provisions
Nearby sections
- § 1.892-6T Income of international organizations (temporary regulations).
- § 1.892-7T Relationship to other Internal Revenue Code sections (temporary regulations).
- § 1.893-1 Compensation of employees of foreign governments or international organizations.
- § 1.894-1 Income affected by treaty.
- § 1.895-1 Income derived by a foreign central bank of issue, or by Bank for International Settlements, from obligations of the United States or from bank deposits.
- § 1.897-1 Taxation of foreign investment in United States real property interests, definition of terms.
- § 1.897-2 United States real property holding corporations.
- § 1.897-3 Election by foreign corporation to be treated as a domestic corporation under section 897(i).
- § 1.897-4AT Table of contents (temporary).