Section 1.7872-5 - Exempted loans(a)In general - (1)General rule. Except as provided in paragraph (a)(2) of this section, notwithstanding any other provision of section 7872 and the regulations under that section, section 7872 does not apply to the loans listed in paragraph (b) of this section because the interest arrangements do not have a significant effect on the Federal tax liability of the borrower or the lender.(2)No exemption for tax avoidance loans. If a taxpayer structures a transaction to be a loan described in paragraph (b) of this section and one of the principal purposes of so structuring the transaction is the avoidance of Federal tax, then the transaction will be recharacterized as a tax avoidance loan as defined in section 7872(c)(1)(D).(b)List of exemptions. Except as provided in paragraph (a) of this section, the following transactions are exempt from section 7872: (1) through (15) [Reserved] For further guidance, see § 1.7872-5T(b)(1) through (15) . (16) An exchange facilitator loan (within the meaning of § 1.468B-6(c)(1) ) if the amount of the exchange funds (as defined in § 1.468B-6(b)(2) ) treated as loaned does not exceed $2,000,000 and the duration of the loan is 6 months or less. The Commissioner may increase this $2,000,000 loan exemption amount in published guidance of general applicability, see § 601.601(d)(2) of this chapter.(c) [Reserved] For further guidance, see § 1.7872-5T(c) .(d)Effective/applicability date. This section applies to exchange facilitator loans issued on or after October 8, 2008.T.D. 9413, 73 FR 39622 , July 10, 2008