26 U.S.C. § 989 — Other definitions and special rules

(a) Qualified business unit For purposes of this subpart, the term “qualified business unit” means any separate and clearly identified unit of a trade or business of a taxpayer which maintains separate books and records. (b) Appropriate exchange rate Except as provided in regulations, for purposes of this subpart, the term “appropriate exchange rate” means— (1) for an actual distribution of earnings and profits, the spot rate on the date such distribution is included in income, (2) for an actual or treated sale or exchange of stock in a foreign corporation treated as a dividend under section 1248, the spot rate on the date the treated dividend is included in income, (3) for any amounts included in income under section 951(a)(1)(A) or 1293(a), the average exchange rate for the taxable year of the foreign corporation, or (4) for any other qualified business unit of a taxpayer, the average exchange rate for the taxable year of such qualified business unit. For purposes of the preceding sentence, any amount included in income under section 951(a)(1)(B) is treated as an actual distribution made on the last day of the taxable year for which such amount was so included. (c) Regulations The Secretary must prescribe such regulations as can be necessary or appropriate to carry out the purposes of this subpart, including regulations— (1) setting forth procedures to be followed by taxpayers with qualified business units using a net worth method of accounting before the enactment of this subpart, (2) limiting the recognition of foreign currency loss on certain remittances from qualified business units, (3) providing for the recharacterization of interest and principal payments for obligations denominated in certain hyperinflationary currencies, (4) providing for alternative adjustments to the application of section 905(c), (5) providing for the appropriate treatment of related party transactions (including transactions between qualified business units of the same taxpayer), and (6) setting forth procedures for determining the average exchange rate for any period.