US Treasury Issues New Proposed Rules Under Section 987

by Glen Shapiro, LawAndTax-News.com, New York

11 September 2006

The US Treasury Department and Internal Revenue Service on Thursday issued new proposed regulations under section 987 that withdraw and replace proposed regulations that were issued in 1991 but were not finalized.

The new proposed regulations generally provide rules for determining items of income or loss of a taxpayer with respect to a "qualified business unit" as well as rules regarding the timing, amount, character, and source of currency gain or loss taken into account upon a remittance from such a unit.

IRS experience with the 1991 proposed regulations has shown that some taxpayers sought to exploit conceptual flaws in those regulations to claim substantial noneconomic losses, largely at the taxpayer's discretion.

The new proposed regulations employ a revised paradigm that is designed to minimize or eliminate such noneconomic results by taking into account currency gain and loss only with respect to items whose value actually changes with fluctuations in exchange rates

The full text of the proposed Section 987 Regulations can be found in the Tax News Resources section.

Recommended

Write a comment