Cross-border Tax Talks

Lost in FX Translation: The Latest 987 Regs

PwC International Tax Services leaders Doug McHoney and Laura Valestin dissect the latest Section 987 updates introduced by Notice 2026‑17. The new rules replace the legacy framework with a simplified equity‑and‑basis‑pool method for calculating foreign currency gains and losses in U.S. branches and disregarded entities. They also clarify remittance‑based loss suspension, hedging treatment, and propose a CFC election, while outlining compliance dates and modeling requirements for 2025 onward. The discussion highlights immediate comment opportunities for taxpayers.