Irc Section 988

A loss from a foreign currency transaction under internal revenue code section 988 is a loss transaction if the gross amount of the loss is at least 50 000 in a single tax year for individuals or trusts whether or not the loss flows through from an s corporation or partnership.

Irc section 988. I was told that this should be reported as interest inc on schedule b. Irc section 988 is a tax regulation governing capital losses or gains on investments held in a foreign nonfunctional currency. Moreover by its express terms sec.

988 a 1 b special rule for forward contracts etc. 988 a 1 a in general except as otherwise provided in this section any foreign currency gain or loss attributable to a section 988 transaction shall be computed separately and treated as ordinary income or loss as the case may be. I have sec 988 income reported on box 11f of my k 1 form 1065.

1 1400u 3 dealing with normal taxes and surtaxes. 3 special rule for certain contracts etc. An advantage of section 988 treatment is that any amount of ordinary income can be deducted as a loss where only 3 000 in capital gains losses can be deducted.

988 transaction as ordinary income or loss. Section 988 taxes forex gains and losses like ordinary income which is at a higher rate than the capital gains tax for most earners. 988 treats foreign currency gains and losses attributable to a sec.

Dollars equivalent in value at repayment to the foreign currency borrowed s. How do i get tt. 313 99thcong 2d sess 1986 3 vol.

Tax consequences can be manipulated by arranging to repay a foreign currency denominated loan in u s. The term foreign currency loss means any loss from a section 988 transaction to the extent such loss does not exceed the loss realized by reason of changes in exchange rates on or after the booking date and before the payment date. This paragraph a applies to a qualified hedging transaction as defined in this paragraph a 1.