26 U.S.C. § 987: Branch transactions

§ 1.987-0 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 Application of the section 987 regulations to partnerships and S corporations.§ 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 Suspended section 987 loss relating to certain elections; loss-to-the-extent-of-gain rule.§ 1.987-12 Deferral of section 987 gain or loss.§ 1.987-13 Suspended section 987 loss upon terminations.§ 1.987-14 Section 987 hedging transactions.§ 1.987-15 Applicability date.Prop. § 1.987-7A Proposed 2023 · Partnerships and S corporations that own section 987 QBUs.Prop. § 1.987-7B Proposed 2023 · [Amended]Prop. § 1.987-7C Proposed 2023 · Transitioning between partnership and section 987 aggregate partnership treatment.Prop. § 1.987-2 Proposed 2024 · Attribution of items to eligible QBUs; definition of a transfer and related rules.Prop. § 1.987-4 Proposed 2024 · Determination of net unrecognized section 987 gain or loss of a section 987 QBU.Prop. § 1.987-9 Proposed 2024 · Recordkeeping requirements.Prop. § 1.987-11 Proposed 2026 · Suspended section 987 loss relating to certain elections; loss-to-the-extent-of-gain rule.Prop. § 1.987-1 Proposed 2026 · Scope, definitions, and special rules.Prop. § 1.987-6 Proposed 2026 · Character and source of section 987 gain or loss.Prop. § 1.987-7 Proposed 2026 · Application of the section 987 regulations to partnerships and S corporations.Prop. § 1.987-10 Proposed 2026 · Transition rules.Prop. § 1.987-15 Proposed 2026 · CFC exemption election.Prop. § 1.987-16 Proposed 2026 · Special rules for inbound nonrecognition transactions.Prop. § 1.987-17 Proposed 2026 · Applicability date.

Amended 1988

1988 Pub. L. 100-647 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).

Forms: Form 8858; Form 8832

Final rules 5

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,

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(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—

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(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.