Us Code § 985 - Functional currency
Full text of Us Code United States Code § 985 — Functional currency, with citation guidance and answers to common questions.
§ 985. Functional currency
(a) In general
Unless otherwise provided in regulations, all determinations under this subtitle shall be made in the taxpayer's functional currency.
(b) Functional currency
(1) In general
For purposes of this subtitle, the term "functional currency" means—
(A) except as provided in subparagraph (B), the dollar, or
(B) in the case of a qualified business unit, the currency of the economic environment in which a significant part of such unit's activities are conducted and which is used by such unit in keeping its books and records.
(2) Functional currency where activities primarily conducted in dollars
The functional currency of any qualified business unit shall be the dollar if activities of such unit are primarily conducted in dollars.
(3) Election
To the extent provided in regulations, the taxpayer may elect to use the dollar as the functional currency for any qualified business unit if—
(A) such unit keeps its books and records in dollars, or
(B) the taxpayer uses a method of accounting that approximates a separate transactions method.
Any such election shall apply to the taxable year for which made and all subsequent taxable years unless revoked with the consent of the Secretary.
(4) Change in functional currency treated as a change in method of accounting
Any change in the functional currency shall be treated as a change in the taxpayer's method of accounting for purposes of section 481 under procedures to be established by the Secretary.
(Added Pub. L. 99–514, title XII, §1261(a), Oct. 22, 1986, 100 Stat. 2585.)
Statutory Notes and Related Subsidiaries
Effective Date
Pub. L. 99–514, title XII, §1261(e), Oct. 22, 1986, 100 Stat. 2591, provided that:
"(1)
"(2)
"(A) earnings and profits of the foreign corporation for taxable years beginning after December 31, 1986, and
"(B) foreign taxes paid or accrued by the foreign corporation with respect to such earnings and profits."
About This Section
26 U.S.C. § 985 is part of Title 26 of the United States Code. The United States Code is the official codification of federal statutes maintained by the Office of the Law Revision Counsel of the U.S. House of Representatives. Congress amends the Code through new public laws, which are eventually incorporated into the relevant title.
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