As a US resident and non-resident of Canada
In 2020, if I converted USD$10,000 to CAD$14,000 at rate of 1.4 and keep in bank while earning slightly higher interest
If in 2021 I convert CAD$12,000 back to USD$10,000 at rate of 1.2, can I simply declare the remaining CAD$2,000 (USD$1,666) as capital gain in the 2021 tax year (form 6781 under section 988) and conclude that transaction?
Or do I have to keep track of the remaining CAD$2,000 until it's transacted?
Tax reporting on USD<>CAD conversion
Moderator: Mark T Serbinski CA CPA
Re: Tax reporting on USD<>CAD conversion
You have to evaluate each transaction.
In your example, you are selling $12K CAD, for which you paid $8571 USD (10/12 x $10K), and receiving $10K USD, so your gain is $1429, which you report as a gain on your 1040.
When you sell any or all of the rest of your CAD, you determine the gain at that time. If the gain is less than $200, it is not reported.
In your example, you are selling $12K CAD, for which you paid $8571 USD (10/12 x $10K), and receiving $10K USD, so your gain is $1429, which you report as a gain on your 1040.
When you sell any or all of the rest of your CAD, you determine the gain at that time. If the gain is less than $200, it is not reported.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best