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26 U.S.C. § 989 — Other definitions and special rules
Federal law — U.S. Code and appendices · legal_authorities
**(a) Qualified business unit** For purposes of this subpart, the term “qualified business unit” means any separate and clearly identified unit of a trade or business of a taxpayer which maintains separate books and records.
**(b) Appropriate exchange rate** Except as provided in regulations, for purposes of this subpart, the term “appropriate exchange rate” means—
(1) in the case of an actual distribution of earnings and profits, the spot rate on the date such distribution is included in income,
(2) in the case of an actual or deemed sale or exchange of stock in a foreign corporation treated as a dividend under section 1248, the spot rate on the date the deemed dividend is included in income,
(3) in the case of any amounts included in income under section 951(a)(1)(A) or 1293(a), the average exchange rate for the taxable year of the foreign corporation, or
(4) in the case of any other qualified business unit of a taxpayer, the average exchange rate for the taxable year of such qualified business unit.
For purposes of the preceding sentence, any amount included in income under section 951(a)(1)(B) shall be treated as an actual distribution made on the last day of the taxable year for which such amount was so included.
**(c) Regulations** The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this subpart, including regulations—
(1) setting forth procedures to be followed by taxpayers with qualified business units using a net worth method of accounting before the enactment of this subpart,
(2) limiting the recognition of foreign currency loss on certain remittances from qualified business units,
(3) providing for the recharacterization of interest and principal payments with respect to obligations denominat
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Source location: Title 26, Chapter 1, § 989; chapter-001-normal-taxes-and-surtaxes.md
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**(a) Qualified business unit** For purposes of this subpart, the term “qualified business unit” means any separate and clearly identified unit of a trade or business of a taxpayer which maintains separate books and records.
**(b) Appropriate exchange rate** Except as provided in regulations, for purposes of this subpart, the term “appropriate exchange rate” means—
(1) in the case of an actual distribution of earnings and profits, the spot rate on the date such distribution is included in income,
(2) in the case of an actual or deemed sale or exchange of stock in a foreign corporation treated as a dividend under section 1248, the spot rate on the date the deemed dividend is included in income,
(3) in the case of any amounts included in income under section 951(a)(1)(A) or 1293(a), the average exchange rate for the taxable year of the foreign corporation, or
(4) in the case of any other qualified business unit of a taxpayer, the average exchange rate for the taxable year of such qualified business unit.
For purposes of the preceding sentence, any amount included in income under section 951(a)(1)(B) shall be treated as an actual distribution made on the last day of the taxable year for which such amount was so included.
**(c) Regulations** The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this subpart, including regulations—
(1) setting forth procedures to be followed by taxpayers with qualified business units using a net worth method of accounting before the enactment of this subpart,
(2) limiting the recognition of foreign currency loss on certain remittances from qualified business units,
(3) providing for the recharacterization of interest and principal payments with respect to obligations denominated in certain hyperinflationary currencies,
(4) providing for alternative adjustments to the application of section 905(c),
(5) providing for the appropriate treatment of related party transactions (including transactions between qualified business units of the same taxpayer), and
(6) setting forth procedures for determining the average exchange rate for any period.
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Limitation** The total amount of the credit taken under section 901(a) shall not exceed the same proportion of the tax against which such credit is taken which the taxpayer’s taxable income from sources without the United States (but not in excess of the taxpayer’s entire taxable income) bears to his entire taxable income for the same taxable year.
**(b) Taxable income for purpose of computing limitation**
(1) **Personal exemptions** — For purposes of subsection (a), the taxable income in the case of an individual, estate, or trust shall be computed without any deduction for personal exemptions under section 151 or 642(b).
(2) **Capital gains** — For purposes of this section—
(A) *In general* — Taxable income from sources outside the United States shall include gain from the sale or exchange of capital assets only to the extent of foreign source capital gain net income.
(B) *Special rules where capital gain rate differential* — In the case of any taxable year for which there is a capital gain rate differential—
(i) in lieu of applying subparagraph (A), the taxable income from sources outside the United States shall include gain from the sale or exchange of capital assets only in an amount equal to foreign source capital gain net income reduced by the rate differential portion of foreign source net capital gain,
(ii) the entire taxable income shall include gain from the sale or exchange of capital assets only in an amount equal to capital gain net income reduced by the rate differential portion of net capital gain, and
(iii) for purposes of determining taxable income from sources outside the United States, any net capital loss (and any amount which is a short-term capital loss under section 1212(a)) from sources outside the United States to
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 904
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Foreign income taxes**
(1) **Translation of accrued taxes**
(A) *In general* — For purposes of determining the amount of the foreign tax credit, in the case of a taxpayer who takes foreign income taxes into account when accrued, the amount of any foreign income taxes (and any adjustment thereto) shall be translated into dollars by using the average exchange rate for the taxable year to which such taxes relate.
(B) *Exception for certain taxes* — Subparagraph (A) shall not apply to any foreign income taxes—
(i) paid after the date 2 years after the close of the taxable year to which such taxes relate, or
(ii) paid before the beginning of the taxable year to which such taxes relate.
(C) *Exception for inflationary currencies* — Subparagraph (A) shall not apply to any foreign income taxes the liability for which is denominated in any inflationary currency (as determined under regulations).
(D) *Elective exception for taxes paid other than in functional currency*
(i) *In general* — At the election of the taxpayer, subparagraph (A) shall not apply to any foreign income taxes the liability for which is denominated in any currency other than in the taxpayer’s functional currency.
(ii) *Application to qualified business units* — An election under this subparagraph may apply to foreign income taxes attributable to a qualified business unit in accordance with regulations prescribed by the Secretary.
(iii) *Election* — Any such election shall apply to the taxable year for which made and all subsequent taxable years unless revoked with the consent of the Secretary.
(E) *Special rule for regulated investment companies* — In the case of a regulated investment company which takes into account income on an accrual basis, subparagraphs (A)
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 986
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Married individuals filing joint returns and surviving spouses** There is hereby imposed on the taxable income of—
(1) every married individual (as defined in section 7703) who makes a single return jointly with his spouse under section 6013, and
(2) every surviving spouse (as defined in section 2(a)),
a tax determined in accordance with the following table: If taxable income is:The tax is: Not over $36,90015% of taxable income. Over $36,900 but not over $89,150$5,535, plus 28% of the excess over $36,900. Over $89,150 but not over $140,000$20,165, plus 31% of the excess over $89,150. Over $140,000 but not over $250,000$35,928.50, plus 36% of the excess over $140,000. Over $250,000$75,528.50, plus 39.6% of the excess over $250,000.
**(b) Heads of households** There is hereby imposed on the taxable income of every head of a household (as defined in section 2(b)) a tax determined in accordance with the following table: If taxable income is:The tax is: Not over $29,60015% of taxable income. Over $29,600 but not over $76,400$4,440, plus 28% of the excess over $29,600. Over $76,400 but not over $127,500$17,544, plus 31% of the excess over $76,400. Over $127,500 but not over $250,000$33,385, plus 36% of the excess over $127,500. Over $250,000$77,485, plus 39.6% of the excess over $250,000.
**(c) Unmarried individuals (other than surviving spouses and heads of households)** There is hereby imposed on the taxable income of every individual (other than a surviving spouse as defined in section 2(a) or the head of a household as defined in section 2(b)) who is not a married individual (as defined in section 7703) a tax determined in accordance with the following table: If taxable income is:The tax is: Not over $22,10015% of taxable income. Over $22,100 but not over $53,50
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 1
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Federal law — U.S. Code and appendices · legal_authorities
**(a) In general** Unless otherwise provided in regulations, all determinations under this subtitle shall be made in the taxpayer’s functional currency.
**(b) Functional currency**
(1) **In general** — For purposes of this subtitle, the term “functional currency” means—
(A) except as provided in subparagraph (B), the dollar, or
(B) in the case of a qualified business unit, the currency of the economic environment in which a significant part of such unit’s activities are conducted and which is used by such unit in keeping its books and records.
(2) **Functional currency where activities primarily conducted in dollars** — The functional currency of any qualified business unit shall be the dollar if activities of such unit are primarily conducted in dollars.
(3) **Election** — To the extent provided in regulations, the taxpayer may elect to use the dollar as the functional currency for any qualified business unit if—
(A) such unit keeps its books and records in dollars, or
(B) the taxpayer uses a method of accounting that approximates a separate transactions method.
Any such election shall apply to the taxable year for which made and all subsequent taxable years unless revoked with the consent of the Secretary.
(4) **Change in functional currency treated as a change in method of accounting** — Any change in the functional currency shall be treated as a change in the taxpayer’s method of accounting for purposes of section 481 under procedures to be established by the Secretary.
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 985
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Amounts included**
(1) **In general** — If a foreign corporation is a controlled foreign corporation at any time during a taxable year of the foreign corporation (in this subsection referred to as the “CFC year”)—
(A) each United States shareholder which owns (within the meaning of section 958(a)) stock in such corporation on any day during the CFC year shall include in gross income such shareholder’s pro rata share (determined under paragraph (2)) of the corporation’s subpart F income for the CFC year, and
(B) each United States shareholder which owns (within the meaning of section 958(a)) stock in such corporation on the last day, in the CFC year, on which such corporation is a controlled foreign corporation shall include in gross income the amount determined under section 956 with respect to such shareholder for the CFC year (but only to the extent not excluded from gross income under section 959(a)(2)).
(2) **Pro rata share of subpart F income** — A United States shareholder’s pro rata share of a controlled foreign corporation’s subpart F income for a CFC year shall be the portion of such income which is attributable to—
(A) the stock of such corporation owned (within the meaning of section 958(a)) by such shareholder, and
(B) any period of the CFC year during which—
(i) such shareholder owned (within the meaning of section 958(a)) such stock,
(ii) such shareholder was a United States shareholder of such corporation, and
(iii) such corporation was a controlled foreign corporation.
(3) **Taxable year of inclusion** — Any amount required to be included in gross income by a United States shareholder under paragraph (1) with respect to a CFC year shall be included in gross income for the shareholder’s taxable year which includes the l
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 951
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Federal law — U.S. Code and appendices · legal_authorities
Page 2231
TITLE 26—INTERNAL REVENUE CODE
§ 989
‘‘(A) in the case of a transaction described in para-
graph (1)(B)(i) or (ii), the date on which payment is
made or received, or
‘‘(B) in the case of a transaction described in para-
graph (1)(B)(iii), the date payment is made or re-
ceived or the date the taxpayer’s rights with respect
to the position are terminated.’’
Subsec. (c)(5). Pub. L. 100–647, § 1012(v)(2)(A), added
par. (5).
Subsec. (d)(1). Pub. L. 100–647, § 1012(v)(4), substituted
‘‘this subtitle’’ for ‘‘this section’’.
Statutory Notes and Related Subsidiaries
EFFECTIVE DATE OF 1999 AMENDMENT
Amendment by Pub. L. 106–170 applicable to any in-
strument held, acquired, or entered into, any trans-
action entered into, and supplies held or acquired on or
after Dec. 17, 1999, see section 532(d) of Pub. L. 106–170,
set out as a note under section 170 of this title.
EFFECTIVE DATE OF 1997 AMENDMENT
Pub. L. 105–34, title XI, § 1104(b), Aug. 5, 1997, 111 Stat.
967, provided that: ‘‘The amendments made by this sec-
tion [amending this section] shall apply to taxable
years beginning after December 31, 1997.’’
EFFECTIVE DATE OF 1993 AMENDMENT
Amendment by Pub. L. 103–66 applicable to all tax-
able years ending on or after Dec. 31, 1993, with special
rules for taxpayers required to change accounting
methods and for floor specialists and market makers,
see section 13223(c) of Pub. L. 103–66, set out as an Effec-
tive Date note under section 475 of this title.
EFFECTIVE DATE OF 1989 AMENDMENT
Amendment by Pub. L. 101–239 effective, except as
otherwise provided, as if included in the provision of
the Technical and Miscellaneous Revenue Act of 1988,
Pub. L. 100–647, to which such amendment relates, see
section 7817 of Pub. L. 101–239, set out as a note un
Source: Supplied 2024 U.S. Code historical extraction · 26 U.S.C. § 989
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