100 STAT. 2590
PUBLIC LAW 99-514—OCT. 22, 1986
shall be integrated and treated as a single transaction or otherwise treated consistently for purposes of this section. For pur^- poses of the preceding sentence, the determination of whether any transaction is a section 988 transaction shall be determined '^ without regard to whether such transaction would otherwise be marked-to-market under section 1256 and such term shall not ' include any transaction with respect to which an election is made under subsection (a)(1)(B). Sections 1092 and 1256 shall '.:^ not apply to a transaction covered by this subsection. "(2) 988 HEDGING TRANSACTION.—For purposes of paragraph (1), the term '988 hedging transaction' means any transaction— ^., "(A) entered into by the taxpayer primarily— ^^^' "(i) to reduce risk of currency fluctuations with respect to property which is held or to be held by the .,, s.,«j-.,.. taxpayer, or "(ii) to reduce risk of currency fluctuations with to fi*;*'•'-' respect to borrowings made or to be made, or obligations incurred or to be incurred, by the taxpayer, and 5;;• "(B) identified by the Secretary or the taxpayer as being a 988 hedging transaction. "(e) APPLICATION TO INDIVIDUALS.—This section shall apply to section 988 transactions entered into by an individual only to the extent expenses properly allocable to such transactions meet the requirements of section 162 or 212 (other than that part of section 212 dealing with expenses incurred in connection with taxes). "SEC. 989. OTHER DEFINITIONS AND SPECIAL RULES. "(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. "(b) APPROPRIATE EXCHANGE RATE.—Except as provided in regulations, for purposes of this subpart, the term 'appropriate exchange rate' means— "(1) in the case of an actual distribution of earnings and profits, the spot rate on the date such distribution is included in income,
"(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 ^1^. included in income, .J* * "(3) in the case of any amounts included in income under section 951(a), 551(a), or 1293(a), the weighted average exchange iin rate for the taxable year of the foreign corporation, or
"(4) in the case of any other qualified business unit of a yi taxpayer, the weighted average exchange rate for the taxable year of such qualified business unit. "(c) REGULATIONS.—The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this subpart, including regulations— "(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, "(2) limiting the recognition of foreign currency loss on cer" tain remittances from qualified business units, ^ " "