988 Transaction

A 988 transaction refers to 26 USCA Section 988 of the Internal Revenue Code in the United States of America. This transaction occurs when a taxpayer enters into or acquires any debt instrument, forward contract, futures contract, option, or similar financial instrument held in a non-functional currency. It shall not apply to any regulated futures contract or non-equity options which would be marked to market under 26 USCA § 1256 (1256 contract) if held on the last day of the taxable year.