New regulations under IRC Section 987, which governs how taxpayers determine taxable income or loss for a qualified business unit (QBU) using a functional currency different from its owner, were released at the end of 2024. While the statute has existed over 35 years, previous regulations addressing computation rules for taxpayers had never taken effect. With the finalization of these regulations, the foreign exchange exposure pool method appears to be the definitive approach for Section 987.
Cory Perry, an International Tax Principal in Grant Thornton’s Washington National Tax Office, and Wei Fan, a Director also in Grant Thornton’s Washington National Tax Office, coauthored an article on the new Section 987 regulations for Bloomberg Tax titled, “How to Decode Section 987 Transition Rules.” Perry and Fan explain how the new final regulations’ transition rules apply to Section 987 QBUs. They specifically address how to determine pretransition gains or losses based on the method previously applied and how to treat these gains or losses, depending on the elections made.
To find out more, read the full article here.
Contacts:
Cory Perry
Washington National Tax Office
Principal, Tax Services
Grant Thornton Advisors LLC
Washington DC, Washington DC
Industries
- Technology, Media & Telecommunications
- Manufacturing, Transportation & Distribution
- Private Equity
Service Experience
- Tax Services
Content disclaimer
This content provides information and comments on current issues and developments from Grant Thornton Advisors LLC and Grant Thornton LLP. It is not a comprehensive analysis of the subject matter covered. It is not, and should not be construed as, accounting, legal, tax, or professional advice provided by Grant Thornton Advisors LLC and Grant Thornton LLP. All relevant facts and circumstances, including the pertinent authoritative literature, need to be considered to arrive at conclusions that comply with matters addressed in this content.
For additional information on topics covered in this content, contact a Grant Thornton professional.
Grant Thornton LLP and Grant Thornton Advisors LLC (and their respective subsidiary entities) practice as an alternative practice structure in accordance with the AICPA Code of Professional Conduct and applicable law, regulations and professional standards. Grant Thornton LLP is a licensed independent CPA firm that provides attest services to its clients, and Grant Thornton Advisors LLC and its subsidiary entities provide tax and business consulting services to their clients. Grant Thornton Advisors LLC and its subsidiary entities are not licensed CPA firms.
Tax professional standards statement
This content supports Grant Thornton Advisors LLC’s marketing of professional services and is not written tax advice directed at the particular facts and circumstances of any person. It is not, and should not be construed as, accounting, legal, tax, or professional advice provided by Grant Thornton Advisors LLC. If you are interested in the topics presented herein, we encourage you to contact a Grant Thornton Advisors LLC tax professional. Nothing herein shall be construed as imposing a limitation on any person from disclosing the tax treatment or tax structure of any matter addressed herein.
The information contained herein is general in nature and is based on authorities that are subject to change. It is not, and should not be construed as, accounting, legal, tax, or professional advice provided by Grant Thornton Advisors LLC. This material may not be applicable to, or suitable for, the reader’s specific circumstances or needs and may require consideration of tax and nontax factors not described herein. Contact a Grant Thornton Advisors LLC tax professional prior to taking any action based upon this information. Changes in tax laws or other factors could affect, on a prospective or retroactive basis, the information contained herein; Grant Thornton Advisors LLC assumes no obligation to inform the reader of any such changes. All references to “Section,” “Sec.,” or “§” refer to the Internal Revenue Code of 1986, as amended.
Grant Thornton Advisors LLC and its subsidiary entities are not licensed CPA firms.
Trending topics
No Results Found. Please search again using different keywords and/or filters.
Share with your network
Share