Currency fluctuations on GICs

[ctocargo]

Hello,
I'm a Canadian living in the US as a permanent resident. I purchased a 1y GIC in Canada last year and I'm reporting interests in my US tax returns and will pay US taxes on these interests. Also reporting this account as a foreign account on 1040 and on FBAR.

Now, let's say that the CAD gained 10% while the GICs were invested. Is there a point where we need to report the currency gain to the IRS and if so, is this considered a capital gain or misc income on form 1099? The source CAD dollars were always in Canada and remain there for now.

Conversely, if the exchange rate went down 10%, would this constitute a deductible loss, and if so on the GIC expiration day or only if I convert the CAD dollars to USD one day?

Thanks in advance

[ctocargo]

If anyone wonders, I found out that currency fluctuations need to be reported as fixed income under Other Income in TT.
I'm still unsure if buying and selling a certificate of deposit triggers a need to report the currency fluctuation or if I should report it only when/if I exchange the CAD back to USDs. Is anyone knows, or has a source, I would definitely appreciate.

[nelsona]

GICs are CAD cash, not an investment property. There is only currency gain/loss when CAD cash is changed into something else (a stock, a house, toothpaste). All your CAD cash is lumped together. It is only when it changed into something other than cash that there possible currency gain/loss.

So, only if you specifically changed USD into CAD and bought a GIC, and then cashed in the GIC and converted it to USD or some other investment could you possibly determine a gain/loss. Otherwise, it is simply moving Cdn cash from one bank account to another, which is not a capital transaction.

[ctocargo]

Ah, thank you for this! I was really puzzled because of an article that I read describing how currency fluctuations on Bonds would need to be reported.

[nelsona]

Bonds are a different animal, since they are traded.