Foreign currency conversion at a gain
Posted: 25-Mar-2020 3:10pm
Client put cash into a foreign bank account in year 1.
It's year 5, and client wants to withdraw most of the cash, knowing it has increased in USD value.
I've been researching the taxability of this. Am I correct on this:
1) It's an ordinary gain or loss.
2) You calculate the gain or loss by taking the difference between the USD value on the date the money returned to the US in year 5, and the USD values based on the date the money was converted into the foreign currency in Year 1?
3) It gets reported as "Other Income" on the 1040.
It's year 5, and client wants to withdraw most of the cash, knowing it has increased in USD value.
I've been researching the taxability of this. Am I correct on this:
1) It's an ordinary gain or loss.
2) You calculate the gain or loss by taking the difference between the USD value on the date the money returned to the US in year 5, and the USD values based on the date the money was converted into the foreign currency in Year 1?
3) It gets reported as "Other Income" on the 1040.