26 U.S.C. § 987 | Branch transactions

In the case of any taxpayer having 1 or more qualified business units with a functional currency other than the dollar, taxable income of such taxpayer shall be determined—

(1)

by computing the taxable income or loss separately for each such unit in its functional currency,

(2)

by translating the income or loss separately computed under paragraph (1) at the appropriate exchange rate, and

(3)

by making proper adjustments (as prescribed by the Secretary) for transfers of property between qualified business units of the taxpayer having different functional currencies, including—

(A)

treating post-1986 remittances from each such unit as made on a pro rata basis out of post-1986 accumulated earnings, and

(B)

treating gain or loss determined under this paragraph as ordinary income or loss, respectively, and sourcing such gain or loss by reference to the source of the income giving rise to post-1986 accumulated earnings.

Pub. L. 99–514, title XII, § 1261(a)Oct. 22, 1986100 Stat. 2586 Pub. L. 100–647, title I, § 1012(v)(1)(B)Nov. 10, 1988102 Stat. 3528(Added , , ; amended , , .)

Editorial Notes

Amendments

Pub. L. 100–6471988—Par. (4). struck out par. (4) which provided for translation of foreign income taxes paid by each qualified business unit of the taxpayer in the same manner as provided under section 986(b).

Statutory Notes and Related Subsidiaries

Effective Date of 1988 Amendment

Pub. L. 100–647 Pub. L. 99–514 section 1019(a) of Pub. L. 100–647 section 1 of this titleAmendment by effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, , to which such amendment relates, see , set out as a note under .

Effective Date

Dec. 31, 1986section 1261(e) of Pub. L. 99–514 section 985 of this titleSection applicable to taxable years beginning after , with certain exceptions and qualifications, see , set out as a note under .