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Section 987 regulations delayed

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Tax Hot Topics newsletter The IRS released Notice 2019-65 on Dec. 6, 2019, to defer the applicability date of final, proposed and temporary regulations published in 2016 on foreign currency gains or losses for foreign branches under Section 987.

Original final, proposed and temporary regulations were issued in December 2016 to provide rules for computing income from branch operations in a qualified business unit (QBU).The regulations include provisions for translating from the foreign country’s functional currency to the owner’s functional currency, calculating foreign currency gain or loss with respect to the QBU’s assets and liabilities and recognizing such gain or loss when the QBU makes a transfer to its owner.

The revised applicability date will be the first day of the taxable year following Dec. 7, 2020. It also applies to final regulations released earlier in 2019 dealing with QBU combinations and separations, but the applicability dates of the 2019 regulations dealing with outbound loss and deferral events are not affected.

Contacts:
David Sites
Partner
Washington National Tax Office
T +1 202 861 4104

David Zaiken
Managing Director
Washington National Tax Office
T +1 202 521 1543

Cory Perry
Senior Manager
Washington National Tax Office
T +1 202 521 1509

Mike Del Medico
Manager
Washington National Tax Office
T +1 202 521 1522

Yasmin Dirks
Manager
Washington National Tax Office
T +1 202 521 1506

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