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Form 8858 - Information return of U.S. persons with respect to Foreign Disregarded Entities (FDEs) and Foreign Branches (FBs)

Form 8858, Schedule C-1 Section 987 gain or loss data entry

The system uses the equity approach to the Section 987 gain/loss as outlined in the 1991 proposed regulations.
Under the 1991 proposed regulations, the taxable income of a QBU gets calculated in its functional currency (accumulated in an equity pool) and translated to the home office currency using the average exchange rate for the year (accumulated in a basis pool).
Annual earnings get added to the initial capital values in the equity and basis pools.
A 987 gain/loss gets generated as property's transferred from the QBU to the home office to the extent that the value of that remittance in the home office currency (translated using the spot rate) differs from the tax basis of that remittance (calculated as a ratio of the remittance to the equity pool against the basis pool).
During TAS Compute, if you select
Section 987
 in
Binder Properties
,
International
, the remittances in the FDE and home office currencies as well as the Section 987 gain/loss calculated in the
Section 987 Gain/Loss on Remittances
 screen get transferred to Organizer.

This article applies to:

  • Product: ONESOURCE Income Tax
  • Return type: 1120 Corporation
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