Folks have been calling about Section 988 currency devaluation taxation. Seems like I am getting a call every day on U.S. taxation of home loans in foreign (non-U.S.) currencies.
As a foreign currency drops in value, the value of a debt (in U.S. dollars) decreases and the IRS wants to tax this windfall.
For example, I owe you 1 (one) British pounds. When I made the loan, the one pound cost a U.S.$1.50.
Now, the pound is worth $1.00. So, I only have to spend a dollar to pay you back. The IRS issued a ruling (which is merely an opinion), that repayment of the loan creates $.50 in taxable income.