SECTION 4. APPLICABILITY DATE

AND RELIANCE

The forthcoming proposed regulations would provide that the regulations will apply prospectively to taxable years ending after the forthcoming proposed regulations are published in the Federal Register. The forthcoming proposed regulations would also provide that taxpayers may choose to apply the regulations, once finalized, before the applicability date. In addition, taxpayers may rely on the rules described in section 3 of this notice with respect to securities lending transactions and sale-repurchase transactions entered into before the forthcoming proposed regulations are published in the Federal Register.

This notice does not address the source of any other payments with respect to securities lending transactions, sale-repurchase transactions, or substantially similar transactions, including a payment described as a borrow fee that is not within the scope of this notice, such as an amount paid with respect to a one-off or structured transaction or a transaction that does not have standard market business terms. The label given to a payment does not govern the determination of source; whether a fee labeled as a borrow fee is treated as such for Federal income tax purposes is determined based on the substance of the fee.