The final Section 987 regulations: what you need to know

March 2017


On December 7, 2016, US Treasury released final Section 987 regulations, providing tax accounting rules for a branch or other qualified business unit that conducts business using a functional currency that is different from that of its owner.

The final regulations largely follow the architecture of proposed regulations issued in 2006, with certain simplifying conventions and elections intended to ease compliance.  These changes represent a welcome response to comments relating to the administrative burden of complying with the 2006 Proposed Regulations.

The Final Regulations must be applied as of the start of the second taxable year following the date of their issuance – for calendar year taxpayers, January 1, 2018.

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