### Question
How is the term foreign currency gain defined?


### Answer
The term **foreign currency gain** is defined in *26 U.S.C. § 988* as the following:

> any gain from a section 988 transaction to the extent such gain does not exceed gain realized by reason of changes in exchange rates on or after the booking date and before the payment date

#### 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**

