Do have to declare foreign currency transactions?

garagecapital · Joined: 25 Aug 2007 Posts: 6

I have an Australian brokerage account. I put US dollars in there a
year ago when the AUD/USD was like 78. Now it is like 92 and I was
going to wire like $30K home to the US. There is a gain here, I
suppose. Is it taxable. And if so, doesn't it mean that every foreign
traveller has to declare a profit or loss on every round-trip foreign
currency transaction. That can't be true, can it?

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Archived from group: misc>taxes>moderated

Han · Joined: 25 Aug 2007 Posts: 56

garagecapital wrote in
88f9-3e3d6b36e724@u10g2000prn.googlegroups.com:

> I have an Australian brokerage account. I put US dollars in there a
> year ago when the AUD/USD was like 78. Now it is like 92 and I was
> going to wire like $30K home to the US. There is a gain here, I
> suppose. Is it taxable. And if so, doesn't it mean that every foreign
> traveller has to declare a profit or loss on every round-trip foreign
> currency transaction. That can't be true, can it?
>
I believe that "buying" foreign currency is like buying stock. If you sell
at a profit, you have a capital gains, if at a loss, a capital loss.

It was annoying to have to translate €9.65 interest received into $13.06,
especially since the bank imposed €15 fees (for the ATM card).
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Best regards
Han
email address is invalid

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parrisbraeside · Joined: 25 Aug 2007 Posts: 98

On Feb 24, 1:23 pm, garagecapital wrote:
> I have an Australian brokerage account. I put US dollars in there a
> year ago when the AUD/USD was like 78. Now it is like 92 and I was
> going to wire like $30K home to the US. There is a gain here, I
> suppose. Is it taxable. And if so, doesn't it mean that every foreign
> traveller has to declare a profit or loss on every round-trip foreign
> currency transaction. That can't be true, can it?

The gain on currency exchanges is taxable as a capital gain.

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removeps-groups · Joined: 09 Dec 2007 Posts: 98

On Feb 24, 4:05 pm, Han wrote:

> > I have an Australian brokerage account. I put US dollars in there a
> > year ago when the AUD/USD was like 78. Now it is like 92 and I was
> > going to wire like $30K home to the US. There is a gain here, I
> > suppose. Is it taxable. And if so, doesn't it mean that every foreign
> > traveller has to declare a profit or loss on every round-trip foreign
> > currency transaction. That can't be true, can it?
>
> I believe that "buying" foreign currency is like buying stock. If you sell
> at a profit, you have a capital gains, if at a loss, a capital loss.

Are you sure? Here is 988 of the tax code:

http://www.law.cornell.edu/uscode/uscode26/usc_sec_26_00000988----000-.html

In there I think they say personal transactions are not taxable, with
exceptions.

In any case, money earned in the account (interest, dividends, capital
gains) would have to be reported on the individual's tax return as
earned. That would mean using a new exchange rate for each item of
interest, dividend, or capital gain/loss received. So when the money
is finally converted to US dollars, there would be different gains on
each part of the money converted. For example, $10,000 might have
been converted at 0.78, so when converted back to USD at a rate of .
92, so the profit is 10000*(.92-.7 Cool

or $1400 -- hope I got that
right. But say at some point they received but say AUD 1000 in
interest, and the exchange rate was 0.84, so the amount reported as
interest would be $1190; and when converted to USD at .92, the profit
would be 1190*(.92-.84) = $95. In a typical account with interest,
dividends, capital gains this could get quite cumersome.

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Han · Joined: 25 Aug 2007 Posts: 56

"removeps-groups@yahoo.com" wrote in@p25g2000hsf.googlegroups.com:

> On Feb 24, 4:05 pm, Han wrote:
>
>> > I have an Australian brokerage account. I put US dollars in there a
>> > year ago when the AUD/USD was like 78. Now it is like 92 and I was
>> > going to wire like $30K home to the US. There is a gain here, I
>> > suppose. Is it taxable. And if so, doesn't it mean that every
>> > foreign traveller has to declare a profit or loss on every
>> > round-trip foreign currency transaction. That can't be true, can
>> > it?
>>
>> I believe that "buying" foreign currency is like buying stock. If
>> you sell at a profit, you have a capital gains, if at a loss, a
>> capital loss.
>
> Are you sure? Here is 988 of the tax code:
>
> http://www.law.cornell.edu/uscode/uscode26/usc_sec_26_00000988----000-.
> html
>
> In there I think they say personal transactions are not taxable, with
> exceptions.
>
> In any case, money earned in the account (interest, dividends, capital
> gains) would have to be reported on the individual's tax return as
> earned. That would mean using a new exchange rate for each item of
> interest, dividend, or capital gain/loss received. So when the money
> is finally converted to US dollars, there would be different gains on
> each part of the money converted. For example, $10,000 might have
> been converted at 0.78, so when converted back to USD at a rate of .
> 92, so the profit is 10000*(.92-.7 Cool

or $1400 -- hope I got that
> right. But say at some point they received but say AUD 1000 in
> interest, and the exchange rate was 0.84, so the amount reported as
> interest would be $1190; and when converted to USD at .92, the profit
> would be 1190*(.92-.84) = $95. In a typical account with interest,
> dividends, capital gains this could get quite cumersome.
>
It sure does. But I didn't want too much of Father's inheritance to go
to the IRS, but still follow the law.

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Best regards
Han
email address is invalid

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removeps-groups · Joined: 09 Dec 2007 Posts: 98

On Feb 25, 7:06 pm, Han wrote:

> It sure does. But I didn't want too much of Father's inheritance to go
> to the IRS, but still follow the law.

What are you talking about?

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