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.
(Added Pub. L. 99–514, title XII, §1261(a), Oct. 22, 1986, 100 Stat. 2586; amended Pub. L. 100–647, title I, §1012(v)(1)(B), Nov. 10, 1988, 102 Stat. 3528.)
1988—Par. (4). Pub. L. 100–647 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).
Amendment by Pub. L. 100–647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 1019(a) of Pub. L. 100–647, set out as a note under section 1 of this title.
Section applicable to taxable years beginning after Dec. 31, 1986, with certain exceptions and qualifications, see section 1261(e) of Pub. L. 99–514, set out as a note under section 985 of this title.
| § 1.987-0 | Section 987; table of contents |
| § 1.987-1 | Scope, definitions, and special rules |
| § 1.987-1T | Scope, definitions, and special rules (temporary) |
| § 1.987-2 | Attribution of items to eligible QBUs; definition of a transfer and related rules |
| § 1.987-3 | Determination of section 987 taxable income or loss of an owner of a section 987 QBU |
| § 1.987-3T | Determination of section 987 taxable income or loss of an owner of a section 987 QBU (temporary) |
| § 1.987-4 | Determination of net unrecognized section 987 gain or loss of a section 987 QBU |
| § 1.987-5 | Recognition of section 987 gain or loss |
| § 1.987-6 | Character and source of section 987 gain or loss |
| § 1.987-6T | Character and source of section 987 gain or loss (temporary) |
| § 1.987-7 | Section 987 aggregate partnerships |
| § 1.987-8 | Termination of a section 987 QBU |
| § 1.987-8T | Termination of a section 987 QBU (temporary) |
| § 1.987-9 | Recordkeeping requirements |
| § 1.987-10 | Transition rules |
| § 1.987-11 | Effective/applicability date |
| § 1.987-12 | Deferral of section 987 gain or loss |
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