Sec. 1.1001-5 European Monetary Union (conversion to the euro).

(a) Conversion of currencies.

For purposes of section 1.1001-1(a), the conversion to the euro of legacy currencies (as defined in section 1.985-8(a)(1)) is not the exchange of property for other property differing materially in kind or extent.

(b) Effect of currency conversion on other rights and obligations.

For purposes of section 1.1001-1(a), if, solely as the result of the conversion of legacy currencies to the euro, rights or obligations denominated in a legacy currency become rights or obligations denominated in the euro, that event is not the exchange of property for other property differing materially in kind or extent. Thus, for example, when a debt instrument that requires payments of amounts denominated in a legacy currency becomes a debt instrument requiring payments of euros, that alteration is not a modification within the meaning of section 1.1001-3(c).

(c) Effective date.

This section applies to tax years ending after July 29, 1998.