### Question
What does 988 hedging transaction mean?


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

> any transaction—


(A) entered into by the taxpayer primarily—


(i) to manage risk of currency fluctuations with respect to property which is held or to be held by the taxpayer, or


(ii) to manage risk of currency fluctuations with respect to borrowings made or to be made, or obligations incurred or to be incurred, by the taxpayer, and


  

(B) identified by the Secretary or the taxpayer as being a 988 hedging transaction

#### 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**

