26 CFR §1.6050P-2

1. (a)In general. For purposes of section 6050P(c)(2)(D), the lending of money is a significant trade or business of an organization in a calendar year if the organization lends money on a regular and continuing basis during the calendar year.
2. (b)Safe harbors
   1. (1)Organizations not subject to section 6050P in the previous calendar year. For an organization that was not required to report under section 6050P in the previous calendar year, the lending of money is not treated as a significant trade or business for the calendar year in which the lending occurs if gross income from lending money (as described in paragraph (d) of this section) in the organization's most recent test year (as defined in paragraph (f) of this section) is both less than $5 million and less than 15 percent of the organization's gross income for that test year.
   2. (2)Organizations that were subject to section 6050P in the previous calendar year. For an organization that was required to report under section 6050P for the previous calendar year, the lending of money is not treated as a significant trade or business for the calendar year in which the lending occurs if gross income from lending money (as described in paragraph (d) of this section) in each of the organization's three most recent test years is both less than $3 million and less than 10 percent of the organization's gross income for that test year.
   3. (3)No test year. The lending of money is not treated as a significant trade or business for an organization for the calendar year in which the lending occurs if the organization does not have a test year for that calendar year.
3. (c)Seller financing. If the principal trade or business of an organization is selling nonfinancial goods or providing nonfinancial services and if the organization extends credit to the purchasers of those goods or services to finance the purchases, then, for purposes of section 6050P(c)(2)(D), these extensions of credit are not a significant trade or business of lending money.
4. (d)Gross income from lending of money. For purposes of this section, gross income from lending of money includes—
   1. (1)Income from interest, including qualified stated interest, original issue discount, and market discount;
   2. (2)Gains arising from the sale or other disposition of indebtedness;
   3. (3)Penalties with respect to indebtedness (whether or not the penalty is interest for Federal tax purposes); and
   4. (4)Fees with respect to indebtedness, including merchant discount or interchange (whether or not the fee is interest for Federal tax purposes).
5. (e)Acquisition of an indebtedness from a person other than the debtor included in lending money. For purposes of this section, lending money includes acquiring an indebtedness not only from the debtor at origination but also from a prior holder of the indebtedness. Gross income arising from indebtedness is gross income from the lending of money without regard to who originated the indebtedness. If an organization acquires an indebtedness, the organization is required to report any cancellation of the indebtedness if the organization is engaged in a significant trade or business of lending money.
6. (f)Test year. For any calendar year, a test year is a taxable year of the organization that ends before July 1 of the previous calendar year.
7. (g)Predecessor organization. If an organization acquires substantially all of the property that was used in a trade or business of some other organization (the predecessor) (including when two or more corporations are parties to a merger agreement under which the surviving corporation becomes the owner of the assets and assumes the liabilities of the absorbed corporation(s)) or was used in a separate unit of the predecessor, then whether the organization at issue qualifies for one of the safe harbors in paragraph (b) of this section is determined by also taking into account the test years, reporting obligations, and gross income of the predecessor.
8. (h)Examples. The rules of this section are illustrated by the following examples:
9. (i)Effective date. This section applies to discharges of indebtedness occurring on or after January 1, 2005.