AICPA Criticizes Foreign Currency Regs

Proposed regulations amending IRC section 987 may frustrate the intent of the Tax Reform Act of 1986 and place an undue burden on taxpayers, the AICPA said. The new regulations establish a “foreign exchange exposure pool” method of reporting gain and loss transacted in a foreign currency. Comments developed by the AICPA’s Section 987 Task Force and approved by its International Tax Technical Resource Panel and Tax Executive Committee were conveyed to the IRS in a March 29 letter by Jeffrey R. Hoops, chair of the Tax Executive Committee. The AICPA urged the IRS to reconsider the approach of the 2006 proposed regulations; barring that, it recommended 19 modifications of the proposed regulations, published Sept. 7, 2006, as REG-208270. The IRS substituted the rules for proposed changes in 1991 that it said had led to claims of large non-economic currency losses.