n-17-07.pdf

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Part III - Administrative, Procedural, and Miscellaneous

Foreign currency guidance under section 987

Notice 2017-07

On December 7, 2016, the Department of the Treasury (Treasury Department)
and the Internal Revenue Service (IRS) filed with the Federal Register Treasury
Decision 9795, which includes temporary regulations under §1.987-12T relating to the
recognition and deferral of foreign currency gain or loss under section 987 with respect
to a qualified business unit in connection with a deferral event or outbound loss event.
Section 1.987-12T(j)(1) provides that §1.987-12T generally applies to any deferral event
or outbound loss event that occurs on or after January 6, 2017. Under §1.987-12T(j)(2),
however, §1.987-12T also applies to any deferral event or outbound loss event that
occurs on or after December 7, 2016, if such deferral event or outbound loss event is
undertaken with a principal purpose of recognizing section 987 gain or loss.
In order to prevent abuse, §1.987-12T(j)(2) will be modified so that §1.987-12T
also will apply to any deferral event or outbound loss event that is undertaken with a
principal purpose of recognizing section 987 gain or loss and that occurs as a result of
an entity classification election made under §301.7701-3 that is filed on or after
December 22, 2016, and that is effective before December 7, 2016. Additionally,
§1.987-12T(j)(1) will be modified so that §1.987-12T also will apply to any deferral event

or outbound loss event that occurs as a result of an entity classification election made
under §301.7701-3 that is filed on or after January 6, 2017, and that is effective before
January 6, 2017.
The principal author of this notice is Steven D. Jensen of the Office of Associate
Chief Counsel (International). However, other personnel from the Treasury Department
and the IRS participated in its development. For further information regarding this
notice contact Steven D. Jensen at (202) 317-6938 (not a toll-free call).