§ 985. Functional currency

• (a) Unless otherwise provided in regulations, all determinations under this subtitle shall be made in the taxpayer’s functional currency.
• (b)
  • (1) For purposes of this subtitle, the term “functional currency” means—
    • (A) except as provided in subparagraph (B), the dollar, or
    • (B) in the case of a qualified business unit, the currency of the economic environment in which a significant part of such unit’s activities are conducted and which is used by such unit in keeping its books and records.
  • (2) The functional currency of any qualified business unit shall be the dollar if activities of such unit are primarily conducted in dollars.
  • (3) To the extent provided in regulations, the taxpayer may elect to use the dollar as the functional currency for any qualified business unit if—
    • (A) such unit keeps its books and records in dollars, or
    • (B) the taxpayer uses a method of accounting that approximates a separate transactions method.
  • (4) Any change in the functional currency shall be treated as a change in the taxpayer’s method of accounting for purposes of section 481 under procedures to be established by the Secretary.