### Question
What does foreign currency contract mean?


### Answer
**Foreign currency contract** has the following meaning in *26 U.S.C. § 1256*:

> a contract—



(i) which requires delivery of, or the settlement of which depends on the value of, a foreign currency which is a currency in which positions are also traded through regulated futures contracts,



(ii) which is traded in the interbank market, and



(iii) which is entered into at arm's length at a price determined by reference to the price in the interbank market

#### Citation:
  - *26 U.S.C. § 1256*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter P-Capital Gains and Losses > PART IV-SPECIAL RULES FOR DETERMINING CAPITAL GAINS AND LOSSES**

