Section 987

These regulations will have an impact on many taxpayers given the proliferation of check the box structures.
Section 987. With the advent of the ctb regulations a taxpayer can exercise entity transformation for tax purposes in a matter of minutes for an eligible entity. This section provides rules regarding the termination of a section 987 qbu. Overview on december 7 2016 us treasury released final section 987 regulations providing tax accounting rules for a branch or other qualified business unit that conducts business using a functional currency that is different from that of its owner.
As a reminder final regulations for section 987 were issued at the. Paragraph b of this section provides general rules for determining when a termination occurs. As a follow up to section 987 regulations.
Terminology explained this third and final post in this series will focus on the calculation under the final regulations along with some of the potential elections that can be made related to section 987 branch remittances. 31 1986 with certain exceptions and qualifications see section 1261 e of pub. When congress enacted sec.
99 514 set out as a note under section 985 of this title. The amount of u s. Note that a taxpayer s functional currency is the us dollar.
Section 988 transactions are nonfunctional currency transactions that generally give rise to functional currency gain or loss. Paragraph e of this section describes certain effects of terminations. 987 it would be approximately another ten years before the check the box ctb regulations were finalized.
Learn how companies can prepare for the changes with a thorough understanding of the rules and a well planned treasury process. Corp s resulting recognized section 987 gain for 2021 is 6 80. Section applicable to taxable years beginning after dec.