Branch transactionsIn 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—
by computing the taxable income or loss separately for each such unit in its functional currency,
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—
treating post-1986 remittances from each such unit as made on a pro rata basis out of post-1986 accumulated earnings, and
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.
(Added Pub. L. 99–514, title XII
, § 1261(a), Oct. 22, 1986
, 100 Stat. 2586
; amended Pub. L. 100–647, title I
, § 1012(v)(1)(B), Nov. 10, 1988
, 102 Stat. 3528
1988—Par. (4). Pub. L. 100–647 struck out par. (4) which provided for translation of foreign income taxes paid by each qualified business unit of the taxpayer in the same manner as provided under section 986(b).
LII has no control over and does not endorse any external Internet site that contains links to or references LII.