Browse Arkansas Code titles and sections
26 U.S.C. § 985 — Functional currency
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
Stored review status: release_metadata_unconfirmed. A text match is a research starting point; applicability is not established.
Original supplied file — preserved unchanged
Download original Markdown file
File SHA-256: 92e69973de4bfd7a464b7c7df20e16f8177e81990a56d4dc0a9396d34102fcad. The original may include catalog metadata, neighboring provisions, or embedded records outside this collection's scope. Search shows only the selected federal record. Historical editions and unverified snapshots are not a statement of current law.
Authority boundary: historical or unconfirmed source not current law verified.
Open the recorded source website ↗
Record provenance
Stable record: federal_law:legal_authorities:record_usc_9522be7a84228e534312620b
Source file: Laws/federal/codes/united-states-code/title-26/section-985-functional-currency--4d7fb372c6.md
Pages: Not recorded – Not recorded
Passage SHA-256: 7edbf645766558b330bb5a1b95ef568fc46fb77986676f14ba99dc13d1bb03f9
Source location: Title 26, Chapter 1, § 985; chapter-001-normal-taxes-and-surtaxes.md
Stored source content
**(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.
Cross-references
Connections may be documented source relationships, shared citations or nearby passages. Each explains its basis; a connection alone does not establish applicability to your situation.
Federal law — U.S. Code and appendices · legal_authorities
**(a) Recognition of loss in case of straddles, etc.**
(1) **Limitation on recognition of loss**
(A) *In general* — Any loss with respect to 1 or more positions shall be taken into account for any taxable year only to the extent that the amount of such loss exceeds the unrecognized gain (if any) with respect to 1 or more positions which were offsetting positions with respect to 1 or more positions from which the loss arose.
(B) *Carryover of loss* — Any loss which may not be taken into account under subparagraph (A) for any taxable year shall, subject to the limitations under subparagraph (A), be treated as sustained in the succeeding taxable year.
(2) **Special rule for identified straddles**
(A) *In general* — In the case of any straddle which is an identified straddle—
(i) paragraph (1) shall not apply with respect to positions comprising the identified straddle,
(ii) if there is any loss with respect to any position of the identified straddle, the basis of each of the offsetting positions in the identified straddle shall be increased by an amount which bears the same ratio to the loss as the unrecognized gain with respect to such offsetting position bears to the aggregate unrecognized gain with respect to all such offsetting positions,
(iii) if the application of clause (ii) does not result in an increase in the basis of any offsetting position in the identified straddle, the basis of each of the offsetting positions in the identified straddle shall be increased in a manner which—
(I) is reasonable, consistent with the purposes of this paragraph, and consistently applied by the taxpayer, and
(II) results in an aggregate increase in the basis of such offsetting positions which is equal to the loss described in clause (ii), and
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 1092
Stored review status: release_metadata_unconfirmed. Incoming connection: Explicit cross-reference supplied in source Markdown; currentness and applicability require review.
Federal law — U.S. Code and appendices · legal_authorities
**(a) General rule** For purposes of this subtitle—
(1) each section 1256 contract held by the taxpayer at the close of the taxable year shall be treated as sold for its fair market value on the last business day of such taxable year (and any gain or loss shall be taken into account for the taxable year),
(2) proper adjustment shall be made in the amount of any gain or loss subsequently realized for gain or loss taken into account by reason of paragraph (1),
(3) any gain or loss with respect to a section 1256 contract shall be treated as—
(A) short-term capital gain or loss, to the extent of 40 percent of such gain or loss, and
(B) long-term capital gain or loss, to the extent of 60 percent of such gain or loss, and
(4) if all the offsetting positions making up any straddle consist of section 1256 contracts to which this section applies (and such straddle is not part of a larger straddle), sections 1092 and 263(g) shall not apply with respect to such straddle.
**(b) Section 1256 contract defined**
(1) **In general** — For purposes of this section, the term “section 1256 contract” means—
(A) any regulated futures contract,
(B) any foreign currency contract,
(C) any nonequity option,
(D) any dealer equity option, and
(E) any dealer securities futures contract.
(2) **Exceptions** — The term “section 1256 contract” shall not include—
(A) any securities futures contract or option on such a contract unless such contract or option is a dealer securities futures contract, or
(B) any interest rate swap, currency swap, basis swap, interest rate cap, interest rate floor, commodity swap, equity swap, equity index swap, credit default swap, or similar agreement.
**(c) Terminations, etc.**
(1) **In general** — The rules of paragraphs (1), (2), and
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 1256
Stored review status: release_metadata_unconfirmed. Incoming connection: Explicit cross-reference supplied in source Markdown; currentness and applicability require review.
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
Stored review status: release_metadata_unconfirmed. Incoming connection: Explicit cross-reference supplied in source Markdown; currentness and applicability require review.
Federal law — U.S. Code and appendices · legal_authorities
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—
(1) by computing the taxable income or loss separately for each such unit in its functional currency,
(2) by translating the income or loss separately computed under paragraph (1) at the appropriate exchange rate, and
(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—
(A) treating post-1986 remittances from each such unit as made on a pro rata basis out of post-1986 accumulated earnings, and
(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.
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 987
Stored review status: release_metadata_unconfirmed. Incoming connection: Explicit cross-reference supplied in source Markdown; currentness and applicability require review.
Federal law — U.S. Code and appendices · legal_authorities
**(a) General rule** Notwithstanding any other provision of this chapter—
(1) **Treatment as ordinary income or loss**
(A) *In general* — Except as otherwise provided in this section, any foreign currency gain or loss attributable to a section 988 transaction shall be computed separately and treated as ordinary income or loss (as the case may be).
(B) *Special rule for forward contracts, etc.* — Except as provided in regulations, a taxpayer may elect to treat any foreign currency gain or loss attributable to a forward contract, a futures contract, or option described in subsection (c)(1)(B)(iii) which is a capital asset in the hands of the taxpayer and which is not a part of a straddle (within the meaning of section 1092(c), without regard to paragraph (4) thereof) as capital gain or loss (as the case may be) if the taxpayer makes such election and identifies such transaction before the close of the day on which such transaction is entered into (or such earlier time as the Secretary may prescribe).
(2) **Gain or loss treated as interest for certain purposes** — To the extent provided in regulations, any amount treated as ordinary income or loss under paragraph (1) shall be treated as interest income or expense (as the case may be).
(3) **Source**
(A) *In general* — Except as otherwise provided in regulations, in the case of any amount treated as ordinary income or loss under paragraph (1) (without regard to paragraph (1)(B)), the source of such amount shall be determined by reference to the residence of the taxpayer or the qualified business unit of the taxpayer on whose books the asset, liability, or item of income or expense is properly reflected.
(B) *Residence* — For purposes of this subpart—
(i) *In general* — The residence of any person shall b
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 988
Stored review status: release_metadata_unconfirmed. Incoming connection: Explicit cross-reference supplied in source Markdown; currentness and applicability require review.
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
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 989
Stored review status: release_metadata_unconfirmed. Incoming connection: Explicit cross-reference supplied in source Markdown; currentness and applicability require review.
Federal law — U.S. Code and appendices · legal_authorities
Page 2224
TITLE 26—INTERNAL REVENUE CODE
§ 985
(A) the time and place for the production
of the documentation,
(B) a statement of the reason the docu-
mentation previously produced (if any) is
not sufficient,
(C) a description of the documentation
being sought, and
(D) the consequences to the taxpayer of
the failure to produce the documentation de-
scribed in subparagraph (C).
(2) Proceeding to quash
(A) In general
Notwithstanding any other law or rule of
law, any person to whom a formal document
request is mailed shall have the right to
begin a proceeding to quash such request not
later than the 90th day after the day such re-
quest was mailed. In any such proceeding,
the Secretary may seek to compel compli-
ance with such request.
(B) Jurisdiction
The United States district court for the
district in which the person (to whom the
formal document request is mailed) resides
or is found shall have jurisdiction to hear
any proceeding brought under subparagraph
(A). An order denying the petition shall be
deemed a final order which may be appealed.
(C) Suspension of 90-day period
The running of the 90-day period referred
to in subsection (a) shall be suspended dur-
ing any period during which a proceeding
brought under subparagraph (A) is pending.
(d) Definitions and special rules
For purposes of this section—
(1) Foreign-based documentation
The term ‘‘foreign-based documentation’’
means any documentation which is outside
the United States and which may be relevant
or material to the tax treatment of the exam-
ined item.
(2) Documentation
The term ‘‘documentation’’ includes books
and records.
(3) Authority to extend 90-day period
The Secretary, and any court having juris-
diction over a proceeding under subsection
(c)(2), may extend the
Source: Supplied 2024 U.S. Code historical extraction · 26 U.S.C. § 985
Stored review status: historical_2024_not_currentness_verified. Same stored citation; legal effect and authority still require review.