# 26 U.S.C. § 987: Branch transactions Source: OLRC release point 119-134 . Cite pinpoints as 26 U.S.C. § 987(a)(1). 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— ## § 987(1) by computing the taxable income or loss separately for each such unit in its functional currency, ## § 987(2) by translating the income or loss separately computed under paragraph (1) at the appropriate exchange rate, and ## § 987(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— **§ 987(3)(A)** treating post-1986 remittances from each such unit as made on a pro rata basis out of post-1986 accumulated earnings, and **§ 987(3)(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. ## Regulations - [Treas. Reg. § 1.987-0](/26/reg/1.987-0.md): Table of contents. (interprets § 987) - [Treas. Reg. § 1.987-1](/26/reg/1.987-1.md): Scope, definitions, and special rules. (interprets § 987) - [Treas. Reg. § 1.987-1T](/26/reg/1.987-1T.md): Scope, definitions, and special rules (temporary). (interprets § 987) - [Treas. Reg. § 1.987-2](/26/reg/1.987-2.md): Attribution of items to eligible QBUs; definition of a transfer and related rules. (interprets § 987) - [Treas. Reg. § 1.987-3](/26/reg/1.987-3.md): Determination of section 987 taxable income or loss of an owner of a section 987 QBU. (interprets § 987) - [Treas. Reg. § 1.987-3T](/26/reg/1.987-3T.md): Determination of section 987 taxable income or loss of an owner of a section 987 QBU (temporary). (interprets § 987) - [Treas. Reg. § 1.987-4](/26/reg/1.987-4.md): Determination of net unrecognized section 987 gain or loss of a section 987 QBU. (interprets § 987) - [Treas. Reg. § 1.987-5](/26/reg/1.987-5.md): Recognition of section 987 gain or loss. (interprets § 987) - [Treas. Reg. § 1.987-6](/26/reg/1.987-6.md): Character and source of section 987 gain or loss. (interprets § 987) - [Treas. Reg. § 1.987-6T](/26/reg/1.987-6T.md): Character and source of section 987 gain or loss (temporary). (interprets § 987) - [Treas. Reg. § 1.987-7](/26/reg/1.987-7.md): Application of the section 987 regulations to partnerships and S corporations. (interprets § 987) - [Treas. Reg. § 1.987-8](/26/reg/1.987-8.md): Termination of a section 987 QBU. (interprets § 987) - [Treas. Reg. § 1.987-8T](/26/reg/1.987-8T.md): Termination of a section 987 QBU (temporary). (interprets § 987) - [Treas. Reg. § 1.987-9](/26/reg/1.987-9.md): Recordkeeping requirements. (interprets § 987) - [Treas. Reg. § 1.987-10](/26/reg/1.987-10.md): Transition rules. (interprets § 987) - [Treas. Reg. § 1.987-11](/26/reg/1.987-11.md): Suspended section 987 loss relating to certain elections; loss-to-the-extent-of-gain rule. (interprets § 987) - [Treas. Reg. § 1.987-12](/26/reg/1.987-12.md): Deferral of section 987 gain or loss. (interprets § 987) - [Treas. Reg. § 1.987-13](/26/reg/1.987-13.md): Suspended section 987 loss upon terminations. (interprets § 987) - [Treas. Reg. § 1.987-14](/26/reg/1.987-14.md): Section 987 hedging transactions. (interprets § 987) - [Treas. Reg. § 1.987-15](/26/reg/1.987-15.md): Applicability date. (interprets § 987) ## Forms named in the regulations - [Form 8858](https://www.irs.gov/pub/irs-pdf/f8858.pdf) - [Form 8832](https://www.irs.gov/pub/irs-pdf/f8832.pdf) ## Final rules - [91 FR 54216](https://www.federalregister.gov/documents/2026/08/21/2026-17154/income-taxes) (2026): Income Taxes - [89 FR 100138](https://www.federalregister.gov/documents/2024/12/11/2024-28372/taxable-income-or-loss-and-currency-gain-or-loss-with-respect-to-a-qualified-business-unit) (2024): Taxable Income or Loss and Currency Gain or Loss With Respect to a Qualified Business Unit - [84 FR 20790](https://www.federalregister.gov/documents/2019/05/13/2019-09552/recognition-and-deferral-of-section-987-gain-or-loss) (2019): Recognition and Deferral of Section 987 Gain or Loss - [81 FR 88806](https://www.federalregister.gov/documents/2016/12/08/2016-28381/income-and-currency-gain-or-loss-with-respect-to-a-section-987-qbu) (2016): Income and Currency Gain or Loss With Respect to a Section 987 QBU - [81 FR 88854](https://www.federalregister.gov/documents/2016/12/08/2016-28380/recognition-and-deferral-of-section-987-gain-or-loss) (2016): Recognition and Deferral of Section 987 Gain or Loss ## Proposed regulations (not in force) - [Prop. Treas. Reg. § 1.987-7A](/26/prop/1.987-7A_2023-24649.md): Partnerships and S corporations that own section 987 QBUs. (REG-132422-17, proposed 2023-11-14) - [Prop. Treas. Reg. § 1.987-7B](/26/prop/1.987-7B_2023-24649.md): [Amended] (REG-132422-17, proposed 2023-11-14) - [Prop. Treas. Reg. § 1.987-7C](/26/prop/1.987-7C_2023-24649.md): Transitioning between partnership and section 987 aggregate partnership treatment. (REG-132422-17, proposed 2023-11-14) - [Prop. Treas. Reg. § 1.987-2](/26/prop/1.987-2_2024-28371.md): Attribution of items to eligible QBUs; definition of a transfer and related rules. (REG-117213-24, proposed 2024-12-11) - [Prop. Treas. Reg. § 1.987-4](/26/prop/1.987-4_2024-28371.md): Determination of net unrecognized section 987 gain or loss of a section 987 QBU. (REG-117213-24, proposed 2024-12-11) - [Prop. Treas. Reg. § 1.987-9](/26/prop/1.987-9_2024-28371.md): Recordkeeping requirements. (REG-117213-24, proposed 2024-12-11) - [Prop. Treas. Reg. § 1.987-11](/26/prop/1.987-11_2026-15614.md): Suspended section 987 loss relating to certain elections; loss-to-the-extent-of-gain rule. (REG-115145-25, proposed 2026-08-03) - [Prop. Treas. Reg. § 1.987-1](/26/prop/1.987-1_2026-16569.md): Scope, definitions, and special rules. (REG-103844-26, proposed 2026-08-14) - [Prop. Treas. Reg. § 1.987-6](/26/prop/1.987-6_2026-16569.md): Character and source of section 987 gain or loss. (REG-103844-26, proposed 2026-08-14) - [Prop. Treas. Reg. § 1.987-7](/26/prop/1.987-7_2026-16569.md): Application of the section 987 regulations to partnerships and S corporations. (REG-103844-26, proposed 2026-08-14) - [Prop. Treas. Reg. § 1.987-10](/26/prop/1.987-10_2026-16569.md): Transition rules. (REG-103844-26, proposed 2026-08-14) - [Prop. Treas. Reg. § 1.987-15](/26/prop/1.987-15_2026-16569.md): CFC exemption election. (REG-103844-26, proposed 2026-08-14) - [Prop. Treas. Reg. § 1.987-16](/26/prop/1.987-16_2026-16569.md): Special rules for inbound nonrecognition transactions. (REG-103844-26, proposed 2026-08-14) - [Prop. Treas. Reg. § 1.987-17](/26/prop/1.987-17_2026-16569.md): Applicability date. (REG-103844-26, proposed 2026-08-14) ## Connections Cites: none Cited by: § 856 Definition of real estate investment trust ## Amendments - 1986-10-22: [Pub. L. 99-514](/26/act/99-514.md), 100 Stat. 2586 - 1988-11-10: [Pub. L. 100-647](/26/act/100-647.md), 102 Stat. 3528