I.R.C. § 989(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.
I.R.C. § 989(b) Appropriate Exchange Rate —
Except as provided in regulations, for purposes of this subpart, the term “appropriate
exchange rate” means—
I.R.C. § 989(b)(1) —
in the case of an actual distribution of earnings and profits, the spot rate on the
date such distribution is included in income,
I.R.C. § 989(b)(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,
I.R.C. § 989(b)(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
I.R.C. § 989(b)(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.
I.R.C. § 989(c) Regulations —
The Secretary shall prescribe such regulations as may be necessary or appropriate
to carry out the purposes of this subpart, including regulations—
I.R.C. § 989(c)(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,
I.R.C. § 989(c)(2) —
limiting the recognition of foreign currency loss on certain remittances from qualified
business units,
I.R.C. § 989(c)(3) —
providing for the recharacterization of interest and principal payments with respect
to obligations denominated in certain hyperinflationary currencies,
I.R.C. § 989(c)(4) —
providing for alternative adjustments to the application of section 905(c),
I.R.C. § 989(c)(5) —
providing for the appropriate treatment of related party transactions (including
transactions between qualified business units of the same taxpayer), and
I.R.C. § 989(c)(6) —
setting forth procedures for determining the average exchange rate for any period.
(Added Pub. L. 99-514, title XII, 1261(a), Oct. 22, 1986, 100 Stat. 2590, and amended Pub. L. 100-647, title I, 1012(v)(5),
Nov. 10, 1988, 102 Stat. 3529; Pub. L. 103-66, title XIII, Sec. 13231(c)(4)(C), Aug. 10, 1993, 107 Stat. 312; Pub. L. 104-188, title I, Sec. 1501(b)(8);
Aug. 20, 1996, 110 Stat. 1755; Pub. L. 105-34, title XI, Sec. 1102(b), Aug. 5, 1997, 111 Stat 788; Pub. L. 108-357, title IV, Sec. 413(c)(17),
Oct. 22, 2004, 118 Stat. 1418.)
BACKGROUND NOTES
AMENDMENTS
1997--Subsec. (b). Pub. L. 105-34, Sec. 1102(b)(3). Struck out “weighted” each place it appeared in subsection (b).
Subsec. (c)(4), (5). Pub. L. 105-34, Sec. 1102(b)(2). Struck out “and” at the end of paragraph (4), and struck out the period at the end
of paragraph (5).
Subsec. (c)(6). Pub. L. 105-34, Sec. 1102(b)(2). Added a new paragraph (6) at the end of paragraph (5).
1996--Subsec. (b). Pub. L. 104-188, sec. 1501(b), substituted “section 951(a)(1)(B)” for “subparagraphs (B) and (C)
of section 951(a)(1)”.
1993—Subsec. (b). Pub. L. 103-66, Sec. 13231(c)(4)(C), amended subsec. (b) by substituting “subparagraph (B) or (C)
of section 951(a)(1)” for “section 951(a)(1)(B)”.
1988--Subsec. (b). Pub. L. 100-647 substituted in par. (3)
“section 951(a)(1)(A)” for “section 951(a)” and inserted at end “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.”
EFFECTIVE DATE OF 2004 AMENDMENT
Amendment by Pub. L. 108-357, Sec. 413(c)(17), effective for taxable years of foreign corporations beginning after December 31,
2004, and to taxable years of United States shareholders with or within which
such taxable years of foreign corporations end.
EFFECTIVE DATE OF 1997 AMENDMENTS
Section 1102(c)(1)(2) of Pub. L. 105-34 provided that:
“(1)The amendments made by subsections (a)(1) and
(b) shall apply to taxes paid or accrued in taxable years beginning after December
31, 1997”.
Section 1102(c)(2) provided the following exception:
“The amendment made by subsection (a)(2) shall apply to taxes which relate to taxable
years beginning after December 31, 1997”.
EFFECTIVE DATE OF 1996 AMENDMENT
Amendment by Pub. L. 104-188, sec. 1501(b), effective for taxable years of foreign corporations beginning after December 31,
1996, and to taxable years of United States shareholders within which or with which
such taxable years of foreign corporations end.
EFFECTIVE DATE OF 1993 AMENDMENT
Amendment by Pub. L. 103-66, Sec. 13231(c)(4)(C), effective for taxable years of foreign corporations beginning after September 30,
1993, and for taxable years of United States shareholders in which or with which such
taxable years of foreign corporations end.
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by Pub. L. 100-647 effective, except as otherwise provided, as if included in the provision of the Tax
Reform Act of 1986, Pub. L. 99-514, to which such amendment relates, see section 1019(a) of Pub. L. 100-647, set out as a note under section 1 of this title.
EFFECTIVE DATE
Section applicable to taxable years beginning after Dec. 31, 1986, with certain exceptions
and qualifications, see section 1261(e) of Pub. L. 99-514, set out as a note under section 985 of this title.
