# § 989. Other definitions and special rules
**(a)** **Qualified business unit** For purposes of this subpart, the term “qualified business unit” means any separate and clearly identified unit of a trade or business of a taxpayer which maintains separate books and records.
**(b)** **Appropriate exchange rate** Except as provided in regulations, for purposes of this subpart, the term “appropriate exchange rate” means—
For purposes of the preceding sentence, any amount included in income under section 951(a)(1)(B) shall be treated as an actual distribution made on the last day of the taxable year for which such amount was so included.
**(1)** in the case of an actual distribution of earnings and profits, the spot rate on the date such distribution is included in income,
**(2)** in the case of an actual or deemed sale or exchange of stock in a foreign corporation treated as a dividend under section 1248, the spot rate on the date the deemed dividend is included in income,
**(3)** in the case of any amounts included in income under section 951(a)(1)(A) or 1293(a), the average exchange rate for the taxable year of the foreign corporation, or
**(4)** in the case of any other qualified business unit of a taxpayer, the average exchange rate for the taxable year of such qualified business unit.
**(c)** **Regulations** The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this subpart, including regulations—
**(1)** setting forth procedures to be followed by taxpayers with qualified business units using a net worth method of accounting before the enactment of this subpart,
**(2)** limiting the recognition of foreign currency loss on certain remittances from qualified business units,
**(3)** providing for the recharacterization of interest and principal payments with respect to obligations denominated in certain hyperinflationary currencies,
**(4)** providing for alternative adjustments to the application of section 905(c),
**(5)** providing for the appropriate treatment of related party transactions (including transactions between qualified business units of the same taxpayer), and
**(6)** setting forth procedures for determining the average exchange rate for any period.
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**Source Credit**: (Added Pub. L. 99–514, title XII, § 1261(a), Oct. 22, 1986, 100 Stat. 2590; amended Pub. L. 100–647, title I, § 1012(v)(5), Nov. 10, 1988, 102 Stat. 3529; Pub. L. 103–66, title XIII, § 13231(c)(4)(C), Aug. 10, 1993, 107 Stat. 499; Pub. L. 104–188, title I, § 1501(b)(9), Aug. 20, 1996, 110 Stat. 1826; Pub. L. 105–34, title XI, § 1102(b)(2), (3), Aug. 5, 1997, 111 Stat. 966; Pub. L. 108–357, title IV, § 413(c)(17), Oct. 22, 2004, 118 Stat. 1508.)
## Editorial Notes
### References in Text
The enactment of this subpart, referred to in subsec. (c)(1), probably means the date of enactment of , which was approved .
### Amendments
2004—Subsec. (b)(3). struck out “, 551(a),” after “section 951(a)(1)(A)”.
1997—Subsec. (b)(3), (4). , struck out “weighted” before “average exchange rate”.
Subsec. (c)(6). , added par. (6).
1996—Subsec. (b). substituted “section 951(a)(1)(B)” for “subparagraph (B) or (C) of section 951(a)(1)” in closing provisions.
1993—Subsec. (b). substituted “subparagraph (B) or (C) of section 951(a)(1)” for “section 951(a)(1)(B)” in last sentence.
1988—Subsec. (b). substituted in par. (3) “section 951(a)(1)(A)” for “section 951(a)” and inserted at end “For purposes of the preceding sentence, any amount included in income under section 951(a)(1)(B) shall be treated as an actual distribution made on the last day of the taxable year for which such amount was so included.”
## Statutory Notes and Related Subsidiaries
### Effective Date of 2004 Amendment
Amendment by applicable to taxable years of foreign corporations beginning after , and to taxable years of United States shareholders with or within which such taxable years of foreign corporations end, see , set out as an Effective and Termination Dates of 2004 Amendments note under .
### Effective Date of 1997 Amendment
Amendment by applicable to taxes paid or accrued in taxable years beginning after , see , set out as a note under .
### Effective Date of 1996 Amendment
Amendment by applicable to taxable years of foreign corporations beginning after , and to taxable years of United States shareholders within which or with which such taxable years of foreign corporations end, see , set out as a note under .
### Effective Date of 1993 Amendment
Amendment by applicable to taxable years of foreign corporations beginning after , and to taxable years of United States shareholders in which or with which such taxable years of foreign corporations end, see , set out as a note under .
### Effective Date of 1988 Amendment
Amendment by effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, , to which such amendment relates, see , set out as a note under .
### Effective Date
Section applicable to taxable years beginning after , with certain exceptions and qualifications, see , set out as a note under .