Marked item
(d) Marked item(1) In general. Except as provided in paragraph (d)(2) of this section, a marked item is an asset (marked asset) or liability (marked liability) that is attributable to a section 987 QBU under 1.987-2(b) and that (i) Is denominated in, or determined by reference to, the functional currency of the section 987 QBU and would be a section 988 transaction if such item were held or entered into directly by the owner of the section 987 QBU; (ii) Is a prepaid expense or a liability for an advance payment of unearned income, in either case having an original term of one year or less on the date the prepaid expense or liability for an advance payment of unearned income arises; (iii) Is a section 988 transaction of the section 987 QBU; (iv) Is an insurance reserve; or (v) Is a separate account asset. (2) Current rate election. A taxpayer may elect to treat all assets and liabilities that are attributable to a section 987 QBU under 1.987-2(b) as marked items (a current rate election). See 1.987-11(c) for rules suspending section 987 loss if a current rate election is in effect.