The IRS Has Yet to Issue Final Regulations for Section 987 Foreign Currency Branch Transactions
By Anthony Diosdi Internal Revenue Code Section 987 states the rule for dealing with a foreign branch that is a Qualified Business Unit (“QBU”) which utilizes a foreign functional currency. On December 6, 2019, the U.S. Department of the Treasury (“Treasury”) and the Internal Revenue Service (“IRS”) announced Notice 2019-65 stating that they intend to amend the final Section 987 regulations. As of this date, the Treasury and IRS have yet to issue final regulations to Section 987. This means that in the meantime taxpayers must compute Section 987 gains or losses under a reasonable method. A reasonable method would be to utilize the regulations that were previously promulgated by the Treasury and the IRS. This article will walk through a basic QBU foreign currency transaction utilizing the regulations previously…