dollars using the weighted average exchange rate for the taxable year; and (3) make proper adjustments for transfers of property between QBUs
having different functional currencies.
U.S.-owned corporations and branches must use DASTM to determine and report gross income, taxable income or loss, or earnings and profits (E&P) of a QBU
that used a hyperinflationary currency as its functional currency.
Currency gain or loss is determined only when remittances are made (or deemed to be made) from the QBU
to the parent.
Taxpayers historically computed the taxable income of a non-functional currency section 987 QBU
by taking the QBU
's functional currency trial balance and making appropriate tax adjustments to conform the balance to U.S.
1.987-2(c), the taxpayer has to maintain an "equity pool" and a" basis pool" for the QBU
. The equity pool is maintained in the QBU
's functional currency and is adjusted for the QBU
's P&L, as well as for transfers to and from the QBU
If a business has a separate, clearly identified unit of a trade or business that maintains separate books and records, it may qualify as a Qualified Business Unit (QBU
) under section 989.88 If that QBU
's functional currency is determined to be a foreign currency, it may use a simplified profit and loss method to calculate income and exchange gains and losses under Subpart J section 987.
Department of the Treasury and Internal Revenue Service on the proposed section 987 regulations regarding the determination of the items of income or loss of a taxpayer with respect to a section 987 qualified business unit (QBU
), as well as the timing, amount, character, and source of any section 987 gain or loss.
A branch is a qualified business unit (QBU
), defined under Sec.
As far as other additions go, the developers have added a new weapon called the QBU
A Qualified Business Unit (QBU
) is a separate and clearly identified unit of a trade or business of a taxpayer who maintains separate books and records.
Department of Treasury and the Internal Revenue Service issued revised proposed regulations that provide guidance under section 987 of the Internal Revenue Code regarding the determination of the items of income or loss of a taxpayer with respect to a section 987 qualified business unit (QBU
), as well as the timing, amount, character, and source of any section 987 gain or loss (the "2006 proposed regulations" or the "revised regulations").
The qualified business use (QBU
) rules are quite stringent and somewhat complicated.