### Question
What does section 988 transaction mean?


### Answer
**Section 988 transaction** has the following meaning in *26 U.S.C. § 988*:

> any transaction described in subparagraph (B) if the amount which the taxpayer is entitled to receive (or is required to pay) by reason of such transaction—



(i) is denominated in terms of a nonfunctional currency, or



(ii) is determined by reference to the value of 1 or more nonfunctional currencies

#### Citation:
  - *26 U.S.C. § 988*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter N-Tax Based on Income From Sources Within or Without the United States > PART III-INCOME FROM SOURCES WITHOUT THE UNITED STATES > Subpart J-Foreign Currency Transactions**

