# Prop. Treas. Reg. § 1.988-7: Election to mark-to-market foreign currency gain or loss on section 988 transactions.

Proposed regulation, not in force. REG-111629-23, 89 FR 67336, published 2024-08-20 <https://www.federalregister.gov/documents/2024/08/20/2024-18281/guidance-regarding-elections-relating-to-foreign-currency-gains-and-losses>. Interprets 26 U.S.C. § 988.

Par. 3. Section 1.988-7, as proposed to be added at 82 FR 60143 (December 19, 2017), is amended by adding paragraphs (c) through (e) to read as follows:

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(c) Time and manner of election— (1) In general. Except as otherwise provided in this paragraph (c), a taxpayer makes the election under paragraph (a) of this section by filing a statement that clearly indicates that the election has been made with the taxpayer's timely-filed (excluding extensions) original Federal income tax return for the taxable year immediately preceding the year for which the election is made.

(2) New taxpayers. In the case of a taxpayer for which no Federal income tax return was required to be filed for the taxable year immediately preceding the year for which the election is made, the taxpayer makes the election under paragraph (a) of this section by preparing a statement that clearly indicates the election has been made and:

(i) Placing the statement in the taxpayer's books and records by no later than 2 months and 15 days after the first day of the year for which the election is made; and

(ii) Filing the statement with the taxpayer's original Federal income tax return for the taxable year for which the election is made.

(3) Elections on behalf of CFCs. In the case of a controlled foreign corporation, the controlling United States shareholders (as defined in § 1.964-1(c)(5)(i)) make the election under paragraph (a) of this section on behalf of the controlled foreign corporation by preparing a statement that clearly indicates the election has been made and:

(i) Placing the statement in the controlled foreign corporation's books and records by no later than 2 months and 15 days after the first day of the year of the controlled foreign corporation for which the election is made; and

(ii) Filing the statement with their original Federal income tax returns for the taxable year of the United States shareholders in which or with which the taxable year of the controlled foreign corporation for which the election is made ends.

(d) Revocation. An election under paragraph (a) of this section is effective for the taxable year for which it is made and all subsequent taxable years unless the election is revoked with the consent of the Commissioner.

(e) Applicability dates. This section applies to taxable years of taxpayers ending on or after [DATE OF PUBLICATION OF FINAL RULE]. Paragraph (c)(3) of this section applies to taxable years of controlled foreign corporations ending on or after [DATE OF PUBLICATION OF FINAL RULE], and to taxable years of United States shareholders in which or with which the taxable years of those controlled foreign corporations end.