(a) Amount of foreign currency gain or loss. Foreign currency gain or loss with respect to distributions of section 965(a) previously taxed earnings and profits (as defined in §1.965-1(f)(39)) is determined based on movements in the exchange rate between December 31, 2017, and the time such distributions are made.

(b) Section 965(a) previously taxed earnings and profits. Any gain or loss recognized under section 986(c) with respect to distributions of section 965(a) previously taxed earnings and profits is reduced in the same proportion as the reduction by a section 965(c) deduction amount (as defined in §1.965-1(f)(42)) of the section 965(a) inclusion amount (as defined in §1.965-1(f)(38)) that gave rise to such section 965(a) previously taxed earnings and profits.

(c) Section 965(b) previously taxed earnings and profits. Section 986(c) does not apply with respect to distributions of section 965(b) previously taxed earnings and profits (as defined in §1.965-1(f)(40)).

(d) Applicability dates. The section applies beginning the last taxable year of a foreign corporation that begins before January 1, 2018, and with respect to a United States person, for the taxable year in which or with which such taxable year of the foreign corporation ends.

[T.D. 9846, 84 FR 1915, Feb. 5, 2019]