Elections Relating to Foreign Currency Gains and Losses

Forms and Documents

Forms and supporting documents for this ICR

Document	Type	Status	Availability
REG-111629-23 - Supporting Statement.docx	Supporting Statement A	Uploaded 2024-08-21	Repair queued

IC Document Collections

Information collection document groups

IC ID	Collection	Type	Status	Form
266158	Election or revocation statements and associated recordkeeping		New

ICR Details

OMB Control No:	ICR Reference No: 202403-1545-011
Status: Received in OIRA	Previous ICR Reference No:
Agency/Subagency: TREAS/IRS	Agency Tracking No:
Title: Elections Relating to Foreign Currency Gains and Losses
Type of Information Collection: New collection (Request for a new OMB Control Number)	Common Form ICR:  No
Type of Review Request: Regular	Date Submitted to OIRA: 08/22/2024

table that charts list comparision

	Requested	Previously Approved
Expiration Date	36 Months From Approved
Responses	61	0
Time Burden (Hours)	61	0
Cost Burden (Dollars)	0	0

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Abstract: Certain United States shareholders (“U.S. shareholders”) of a controlled foreign corporation (CFC) are subject to current U.S. taxation on the CFC’s subpart F income. Under IRC section 954(c)(1)(D) and 26 CFR §1.954-2(g), the excess of foreign currency gains over foreign currency losses attributable to any section 988 transactions generally constitutes foreign personal holding company income (“FPHCI”), a type of subpart F income. Two section 954 elections are available to certain controlling U.S. shareholders of a CFC with respect to the CFC’s computation of its FPHCI. First, under 26 CFR §1.954-2(g)(3), a controlling U.S. shareholder may elect to exclude foreign currency gain or loss in their FPHCI and instead include it as the subpart F income to which the gain or loss relates. Second, under 26 CFR §1.954-2(g)(4), a controlling U.S. shareholder may generally elect to treat all foreign currency gains or losses as attributable to any section 988 transaction, provided the conditions outlined in 26 CFR §1.954-2(g)(4) are met. To make these elections, 26 CFR §1.954-2(g)(3)(ii) requires a controlling U.S. shareholder to file a statement with its original income tax return for its taxable year in which, or with which, the taxable year of the CFC for which the election is made ends. Additionally, 26 CFR §1.954-2(g)(3)(iii) and (g)(4)(iii) include rules for revoking §1.954-2(g) elections. The Internal Revenue Service (IRS) previously published a proposed rulemaking in 2017 (82 FR 60135) which revised the rules for revoking 26 CFR §1.954-2(g) elections and making certain foreign currency elections under section 988 (described further below) (“2017 NPRM”). In the 2017 NPRM, proposed §1.954-2(g)(3)(iii) and (4)(iii) generally require a controlling U.S shareholder to file a statement with its original or amended income tax return for its taxable year in which or with which the taxable year of the CFC for which the election is revoked ends, clearly indicating its §1.954-2(g) election is being revoked. Taxpayers should also keep records of these elections and revocations. The 2017 NPRM also includes procedures for making and revoking certain foreign currency elections under IRC section 988. In general, proposed §1.988-7(a) permits a taxpayer to elect to apply a mark-to-market method of accounting with respect to all IRC section 988 transactions. Proposed §1.988-7(c) and (d) require a controlling U.S shareholder to file a statement with its original (or, in the case of revocations, amended) income tax return for its taxable year in which or with which the taxable year of the CFC for which the election or revocation ends, clearly indicating its §1.988-7(a) election is being made or revoked. Taxpayers should also keep records of these elections and revocations. IRS is now issuing a companion NPRM (REG-111629-23) to the 2017 NPRM which re-proposes the election and revocation procedures under 26 CFR §1.954-2(g), proposed §1.954-2(g)(3)(iii) and (4)(iii), and proposed §1.988-7(c) and (d).

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Authorizing Statute(s): US Code: 26 USC 954 Name of Law: Foreign Base Company Income
   US Code: 26 USC 988 Name of Law: Treatment Of Certain Foreign Currency Transactions
  

Citations for New Statutory Requirements: None

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Associated Rulemaking Information
RIN:	Stage of Rulemaking:	Federal Register Citation:	Date:
1545-BM80	Proposed rulemaking	89 FR 67336	08/20/2024

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Federal Register Notices & Comments

Did the Agency receive public comments on this ICR? No

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Number of Information Collection (IC) in this ICR: 1

table that charts list of burden

IC Title	Form No.	Form Name
Election or revocation statements and associated recordkeeping

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ICR Summary of Burden

table that charts list of burden

	Total Request	Previously Approved	Change Due to New Statute	Change Due to Agency Discretion	Change Due to Adjustment in Estimate	Change Due to Potential Violation of the PRA
Annual Number of Responses	61	0	0	61	0	0
Annual Time Burden (Hours)	61	0	0	61	0	0
Annual Cost Burden (Dollars)	0	0	0	0	0	0

Burden increases because of Program Change due to Agency Discretion: Yes

Burden Increase Due to: Changing Regulations

Burden decreases because of Program Change due to Agency Discretion: No

Burden Reduction Due to:

Short Statement: This is a new collection.

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Annual Cost to Federal Government: $0

Does this IC contain surveys, censuses, or employ statistical methods? No

Does this ICR request any personally identifiable information (see OMB Circular No. A-130 for an explanation of this term)? Please consult with your agency's privacy program when making this determination.     No

Does this ICR include a form that requires a Privacy Act Statement (see 5 U.S.C. §552a(e)(3))? Please consult with your agency's privacy program when making this determination.     No

Is this ICR related to the Affordable Care Act [Pub. L. 111-148 & 111-152]? No

Is this ICR related to the Dodd-Frank Wall Street Reform and Consumer Protection Act, [Pub. L. 111-203]? No

Is this ICR related to the American Recovery and Reinvestment Act of 2009 (ARRA)? No

Is this ICR related to the Pandemic Response? No

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Common Form ICR:  No

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On behalf of this Federal agency, I certify that the collection of information encompassed by this request complies with 5 CFR 1320.9 and the related provisions of 5 CFR 1320.8(b)(3).

The following is a summary of the topics, regarding the proposed collection of information, that the certification covers:

(a) It is necessary for the proper performance of agency functions;

(b) It avoids unnecessary duplication;

(c) It reduces burden on small entities;

(d) It uses plain, coherent, and unambiguous language that is understandable to respondents;

(e) Its implementation will be consistent and compatible with current reporting and recordkeeping practices;

(f) It indicates the retention periods for recordkeeping requirements;

(g) It informs respondents of the information called for under 5 CFR 1320.8 (b)(3) about:

(i) Why the information is being collected;

(ii) Use of information;

(iii) Burden estimate;

(iv) Nature of response (voluntary, required for a benefit, or mandatory);

(v) Nature and extent of confidentiality; and

(vi) Need to display currently valid OMB control number;

(h) It was developed by an office that has planned and allocated resources for the efficient and effective management and use of the information to be collected.

(i) It uses effective and efficient statistical survey methodology (if applicable); and

(j) It makes appropriate use of information technology.

If you are unable to certify compliance with any of these provisions, identify the item by leaving the box unchecked and explain the reason in the Supporting Statement.

Certification Date: 08/22/2024

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