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September 7, 2006
HP-84
New Proposed Regulations Issued Under Section 987
WASHINGTON, DC – The Treasury Department and IRS today issued new proposed regulations under section 987 that withdraw and replace proposed regulations that were issued in 1991 and were not finalized. The new proposed regulations generally provide rules for determining items of income or loss of a taxpayer with respect to a "qualified business unit" as well as rules regarding the timing, amount, character, and source of currency gain or loss taken into account upon a remittance from such a unit. As described in Notice 2000-20, IRS experience with the 1991 proposed regulations has shown that some taxpayers sought to exploit conceptual flaws in those regulations to claim substantial noneconomic losses, largely at the taxpayer's discretion. The new proposed regulations employ a revised paradigm that is designed to minimize or eliminate such noneconomic results by taking into account currency gain and loss only with respect to items whose value actually changes with fluctuations in exchange rates
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REPORTS