TREATMENT OF PERSONAL TRANSACTIONS BY INDIVIDUALS UNDER FOREIGN CURRENCY RULES.

SEC. 1104. TREATMENT OF PERSONAL TRANSACTIONS BY INDIVIDUALS UNDER FOREIGN CURRENCY RULES. (a) General Rule.—Subsection (e) of section 988 (relating to application to individuals) is amended to read as follows: “(e) Application to Individuals.— “(1) In general.—The preceding provisions of this section shall not apply to any section 988 transaction entered into by an individual which is a personal transaction. “(2) Exclusion for certain personal transactions.—If— “(A) nonfunctional currency is disposed of by an individual in any transaction, and “(B) such transaction is a personal transaction, no gain shall be recognized for purposes of this subtitle by reason of changes in exchange rates after such currency was acquired by such individual and before such disposition. The preceding sentence shall not apply if the gain which would otherwise be recognized on the transaction exceeds $200. “(3) Personal transactions.—For purposes of this subsection, the term ‘personal transaction’ means any transaction entered into by an individual, except that such term shall not include any transaction to the extent that expenses properly allocable to such transaction meet the requirements of— “(A) section 162 (other than traveling expenses described in subsection (a)(2) thereof), or “(B) section 212 (other than that part of section 212 dealing with expenses incurred in connection with taxes).”. (b) Effective Date.—The amendments made by this section shall apply to taxable years beginning after December 31, 1997.