Section 56: Foreign currency debt gains and losses.

(1) Foreign currency debt gains are assessable and foreign currency debt losses are deductible only under thissection. (2) For the purpose of this section, a taxpayer realises a foreign currency debt gain in the year of assessment in which the taxpayer satisfies a foreign currency debt where, because of a change in the value of the leone as against a foreign currency, the amount in leones of— a) any loan principal received by the taxpayer; b) any expense that is deductible by the taxpayer under this Act; or c) any amount included in the adjusted cost base of a depreciable asset, is more than the amount required to settle the foreign currency debt. (3) For the purposes of this section, a taxpayer realises a foreign currency debt loss in the year of assessment in which the taxpayer satisfies a foreign currency debt where, because of a change in the value of the leone as against a foreign currency, the amount in leones of— a) any 1oan principal received by the taxpayer; b) any expense deductible by the taxpayer under this Act; or c) any amount included in the adjusted cost base of a depreciable asset, is less than the amount required to settle the foreign currency debt. (4) A foreign currency debt reserve may be allowed in a year where leones sufficient to meet the debt have been lodged with a bank but through insufficiency of foreign currency the debt has not been paid, to the extent it is shown that a loss may thereby have been incurred. (5) Foreign currency debt gains shall be included in a taxpayer's assessable income in the year of assessment in which they are realised. (6) A deduction is allowed for foreign currency debt losses incurred by a taxpayer in the year of assessment in which they are incurred. G AINS AND LOSSES ON D ISPOSAL OF A SSETS