Читать книгу International Taxation - Adnan Islam - Страница 66

Some of the principal issues of foreign currency transactions relate to the timing of recognition, the character, and the geographic source of the gains or losses. Section 988 addresses those issues. Generally, the recognition of foreign currency exchange gain or loss must be separately accounted for; that is, the gain or loss must be accounted for separately from any gain or loss attributable to the underlying transaction. For example, a U.S. company may purchase inventory from a foreign manufacturer. If the purchase price is to be paid in U.S. dollars, the inventory will be recorded at the U.S. dollar cost, and no foreign exchange gain or loss will be recognized regardless of changes in the exchange rate between U.S. currency and the foreign currency. If, on the other hand, the purchase price of the inventory items is to be paid in the currency of the foreign country and the exchange rate changes between the transaction date and the payment date (that is, when the payment in foreign currency is made), gain or loss is recognized on any change in the exchange rate between the date of purchase and the date the payment is made in foreign currency and is treated as ordinary income. The inventory is recorded at the dollar value as of the date of purchase. In addition, there must generally be a closed and completed transaction or realization event, such as the actual payment of a liability.