[Federal Register Volume 82, Number 247 (Wednesday, December 27, 2017)]
[Proposed Rules]
[Page 61199]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-27865]



Internal Revenue Service

26 CFR Part 1

RIN 1545-BM80

Exclusion of Foreign Currency Gain or Loss Related to Business 
Needs From Foreign Personal Holding Company Income; Mark-to-Market 
Method of Accounting for Section 988 Transactions; Correction

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking; correction.


SUMMARY: This document contains corrections to the proposed regulations 
(REG-119514-15) that were published in the Federal Register on Tuesday, 
December 19, 2017. The proposed regulations provide guidance on the 
treatment of foreign currency gain or loss of a controlled foreign 
corporation (CFC) under the business needs exclusion from foreign 
personal holding company income (FPHCI). The proposed regulations also 
provide an election for a taxpayer to use a mark-to-market method of 
accounting for foreign currency gain or loss attributable to section 
988 transactions. In addition, the proposed regulations permit the 
controlling United States shareholders of a CFC to automatically revoke 
certain elections concerning the treatment of foreign currency gain or 

DATES: Written or electronic comments and requests for a public 
hearing, for the notice of proposed rulemaking at 82 FR 60135, December 
19, 2017, are still being accepted and must be received by March 19, 

ADDRESSES: Send submissions to CC:PA:LPD:PR (REG-119514-15), Room 5203, 
Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, 
Washington, DC 20044. Submissions may be hand delivered Monday through 
Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG-
119514-15), Courier's desk, Internal Revenue Service, 1111 Constitution 
Avenue NW, Washington, DC 20224, or sent electronically, via the 
Federal eRulemaking Portal at www.regulations.gov (IRS REG-119514-15).

FOR FURTHER INFORMATION CONTACT: Jeffery G. Mitchell, (202) 317-6934 
(not a toll-free number).



    The proposed regulations that are the subject of this correction 
are under sections 446, 954 and 988 of the Internal Revenue Code.

Need for Correction

    As published, the proposed regulations contain errors which may 
prove to be misleading and need to be clarified.

Correction of Publication

    Accordingly, the proposed regulations (REG-119514-15) that are the 
subject of FR Doc. 2017-27320 are corrected as follows:
    On page 60138, in the preamble, first column, the first full 
paragraph is corrected to read:
    ``Although the borrowing and lending in the same nonfunctional 
currency are economically offsetting, section 475 creates the potential 
for a mismatch of gains and losses for a treasury center CFC. If the 
treasury center CFC qualifies as a dealer under section 475, for 
example because it regularly purchases debt from related CFCs in the 
ordinary course of a trade or business, the treasury center CFC 
generally must use a mark-to-market method of accounting for its 
securities. See section 475 and Sec.  1.475(c)-1(a)(3)(i). However, 
Sec.  1.475(c)-2(a)(2) provides that a dealer's own issued debt 
liabilities are not securities for purposes of section 475. 
Consequently, a treasury center CFC that marks to market its assets but 
not its liabilities may recognize any offsetting foreign currency gains 
and losses in different taxable years. To avoid this mismatch, 
taxpayers have taken positions that match a treasury center CFC's 
foreign currency gains and losses under a variety of theories. No 
inference is intended in these proposed regulations as to whether these 
positions are permissible in the years prior to the application of 
these proposed regulations.''

Martin V. Franks,
Chief, Publications and Regulations Branch, Legal Processing Division, 
Associate Chief Counsel, Procedure and Administration.
[FR Doc. 2017-27865 Filed 12-26-17; 8:45 am]