taxation for foreign CD's

Technical topics regarding tax preparation.
#1
mikrev  
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13-May-2015 10:08pm
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Southern California
My client purchased a foreign CD that matures after a few years. I've been reporting the accrued interest yearly even though it has not yet matured. When it matured, the amount my client received back in US dollars is less than his original principal and the accrued interest we reported because of the loss in foreign exchange rates. Can he deduct the exchange rate loss or is it a personal loss? If deductible, would it be a Sec 988 ordinary loss or capital loss?

Thanks for any help. I'm getting a lot of mixed answers from other colleagues.
 

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