Recognition and Deferral of Section 987 Gain or Loss; Correction

• Published date: 01 July 2019
• Citation: 84 FR 31194
• Record Number: 2019-13615
• Section: Rules and Regulations
• Court: Internal Revenue Service

Federal Register, Volume 84 Issue 126 (Monday, July 1, 2019)

[Federal Register Volume 84, Number 126 (Monday, July 1, 2019)]
                [Rules and Regulations]
                [Page 31194]
                From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
                [FR Doc No: 2019-13615]
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                DEPARTMENT OF THE TREASURY
                Internal Revenue Service
                26 CFR Part 1
                [TD 9857]
                RIN 1545-BL11
                Recognition and Deferral of Section 987 Gain or Loss; Correction
                AGENCY: Internal Revenue Service (IRS), Treasury.
                ACTION: Correcting amendments.
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                SUMMARY: This document contains corrections to final regulations (TD
                9857) that were published in the Federal Register on Monday, May 13,
                2019. The final regulations are relating to combinations and
                separations of qualified business units (QBUs) subject to section 987
                and the recognition and deferral of foreign currency gain or loss with
                respect to a QBU subject to section 987 in connection with certain QBU
                terminations and certain other transactions involving partnerships.
                DATES: This correction is effective on July 1, 2019.
                FOR FURTHER INFORMATION CONTACT: Steven D. Jensen at (202) 317-6938
                (not a toll-free number).
                SUPPLEMENTARY INFORMATION:
                Background
                 The final regulations (TD 9857) that are the subject of this
                correction are issued under section 987 of the Internal Revenue Code.
                Need for Correction
                 As published May 13, 2019 (84 FR 20790) the final regulations (TD
                9857) contain errors that need to be corrected.
                List of Subjects in 26 CFR Part 1
                 Income taxes, Reporting and recordkeeping requirements.
                Correction of Publication
                 Accordingly, 26 CFR part 1 is corrected by making the following
                correcting amendments:
                PART 1--INCOME TAXES
                0
                Paragraph 1. The authority citation for part 1 continues to read in
                part as follows:
                 Authority: 26 U.S.C. 7805 * * *
                0
                Par. 2. Section 1.987-0 is amended by revising the entries of the table
                of contents for Sec. 1.987-12(b) and (j) to read as follows:
                Sec. 1.987-0 Table of contents.
                * * * * *
                Sec. 1.987-12 Deferral of section 987 gain or loss.
                * * * * *
                 (b) Gain and loss recognition in connection with a deferral event.
                * * * * *
                 (j) Applicability date.
                * * * * *
                0
                Par. 3. Section 1.987-2 is amended by revising the fifth sentence of
                paragraph (c)(9)(iii) and revising paragraph (e)(1) to read as follows:
                Sec. 1.987-2 Attribution of items to eligible QBUs; definition of a
                transfer and related rules.
                * * * * *
                 (c) * * *
                 (9) * * *
                 (iii) * * * A separation may also result when a section 987 QBU
                that is subject to a grouping election under Sec. 1.987-1(b)(2)(ii)
                changes its functional currency. * * *
                * * * * *
                 (e) * * *
                 (1) In general. Except as set forth in paragraph (e)(2) of this
                section, this section is applicable as specified in Sec. 1.987-11.
                * * * * *
                0
                Par. 4. Section 1.987-4 is amended by revising the third sentence of
                paragraph (f)(2) to read as follows:
                Sec. 1.987-4 Determination of net unrecognized section 987 gain or
                loss of a section 987 QBU.
                * * * * *
                 (f) * * *
                 (2) * * * For purposes of determining the owner functional currency
                net value of the separated QBUs on the last day of the taxable year
                preceding the taxable year of separation under paragraphs (d)(1)(B) and
                (e) of this section, the balance sheets of the separated QBUs on that
                day will be deemed to reflect the assets and liabilities reflected on
                the balance sheet of the separating QBU on that day, apportioned
                between the separated QBUs in a reasonable manner that takes into
                account the assets and liabilities reflected on the balance sheets of
                the separated QBUs immediately after the separation. * * *
                * * * * *
                Martin V. Franks,
                Chief, Publications and Regulations Branch, Legal Processing Division,
                Associate Chief Counsel (Procedure and Administration).
                [FR Doc. 2019-13615 Filed 6-28-19; 8:45 am]
                 BILLING CODE 4830-01-P