Section 988 Foreign Currency Transaction Reporting Rules for Options, Straddles and Hedges
Utilizing Elections and Avoiding Traps in Foreign Currency Options, Section 1092 Contracts, and Other Transactions
Recording of a 110-minute CPE webinar with Q&A
This course will provide a comprehensive guide to reporting foreign currency transactions. The panel will outline the ground rules under IRC Section 988 and discuss scenarios where the taxpayer may elect out of ordinary income treatment. The presenters will also give practical tools to navigating the complex rules governing foreign currency. The event will discuss the U.S. federal income tax consequences of individuals who hold foreign currency, invest in foreign stock and bonds, foreign currency futures or other derivatives, and will offer guidance on when a taxpayer might need to complete Form 8886 to disclose a reportable transaction arising from a foreign currency loss.
Outline
- Background to transactions involving foreign currency
- Section 988 transactions
- Exceptions, limitations and qualifications to Section 988 transactions
- Character rules
- Sourcing rules
- Proposed REG–119514–15 allowing mark-to-market election
- Reportable transaction rules
- Examples and explanations
Benefits
The panel will discuss these and other essential questions:
- How was foreign currency taxed before Section 988?
- How is foreign currency taxed after the enactment of Section 988?
- What is functional currency?
- If an individual buys foreign currency for personal transactions, do these rules apply?
- How are debt instruments denominated in foreign currency taxed?
- How are derivative instruments the value of which is linked to foreign currency taxed?
- What is the character of gain or loss attributable to fluctuations in foreign currency?
- When and how can you elect out of the default character rules?
- What are the sourcing rules about foreign currency?
- What is a qualifying hedging transaction?
- How do these rules intersect with other Code provisions such as Sections 1256, 1092 or 475?
- When do the reportable transaction rules apply?
Faculty
Armin Gray
Managing Partner
GRAY TOLUB
Mr. Gray's practice is focused on tax controversy, IRS Offshore Voluntary Disclosure programs, FATCA, and... | Read More
Mr. Gray's practice is focused on tax controversy, IRS Offshore Voluntary Disclosure programs, FATCA, and international taxation. He is an adjunct professor at New York Law School where he teaches a course on the taxation of intangible property. He is a frequent presenter and writer on various corporate and tax topics. Prior to forming his firm, he was an attorney at several large law firms, where he focused on capital markets, financial products, international tax, and corporate and partnership tax.
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Doris S. Hsu
Principal
The Hsu Law Firm
Ms. Hsu has counseled clients for almost 20 years on the appropriate structures for their businesses and personal... | Read More
Ms. Hsu has counseled clients for almost 20 years on the appropriate structures for their businesses and personal investments. Because of her background in both the income tax and the trust/estate areas, Ms. Hsu is uniquely qualified in delivering comprehensive advice to her clients. As a result of her international background, Ms. Hsu is especially appreciative of the cultural considerations of her international clients in her tax advice.
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Dr. Dean Smith
Partner
Cadesky Tax
Dr. Smith's practice focuses on international tax and corporate tax. He is President of The British Canadian... | Read More
Dr. Smith's practice focuses on international tax and corporate tax. He is President of The British Canadian Chamber of Trade and Commerce. He previously served as National Practice Leader - Expatriate Tax Solutions with Grant Thornton. President of British Canadian Chamber of Trade and Commerce (BCCTC). He served as Chairman of the tax committee of American Chamber of Commerce in Canada (Amcham).
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