How to Calculate Section 987?

To calculate Section 987 gain or loss, follow these steps based on the information provided:

1. Calculate the change in the balance sheet net worth in the tax owner's functional currency.
2. Add transfers from the Qualified Business Unit (QBU) to the tax owner.
3. Subtract transfers from the tax owner to the QBU.

In essence, Section 987 calculates the gain or loss arising from transactions between a taxpayer and its foreign QBU, or between two or more foreign QBUs of the same taxpayer that have different functional currencies. The calculation aims to reflect the economic reality of these transactions in the taxpayer's functional currency.