Section 987: New Rules, New Choices – Webinar Recap
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A quick look back at the “Section 987: New Rules, New Choices,” presented by KBF Advisory on September 24, 2026
Couldn’t join our live session? Here’s a quick, high-level overview of what we covered, and why it’s worth watching the full replay.
An intro to Section 987 and the transition rules
Individuals and C corporations are required to transition to the 2024 Section 987 regulations for their first full year beginning in 2025. Partnerships and S corporations have more leeway but must use a reasonable method and apply certain limitations. The transition calculations depend upon whether the taxpayer previously used an eligible method prior to transition. If not, taxpayers are generally required to use a simplified method to calculate gains and losses every year beginning on or after September 7, 2026.
The FEEP Method and the Earnings and Basis Pool Method
The two methods currently permissible, to calculate Section 987 gain and loss each year, are the FEEP method, which has a ten-step method, and the earnings and basis pool method (the “EBPM”), which is simpler than FEEP. We walked through both, as well as the elections available under these methods and, in the case of the EBPM, required to elect to use the EBPM.
Suspension and Deferral Rules
Under these rules, losses can be suspended, and gains and losses can be deferred under certain circumstances. We walked through these rules in detail.
Hedging
For the first time, the 2024 Regulations include rules related to hedging. We walked through these rules and strategies related thereto in great detail.
The CFC Exemption Election
Also, for the first time, proposed regulations allow an election to allow CFCs to generally elect out of computing Section 987 gains and losses, subject to limited exceptions. We walked through these rules in detail.
[Watch the On-Demand Replay Here] | [Download the Full Presentation Here]
This article is for general information only and isn’t tax, legal, or accounting advice. Connect with a KBF professional about your specific situation.