Capital gains calculation on currency conversion.

[fadius]

Situation:
Can/US dual citizen residing in Canada
Sold US property a few years ago, kept proceeds in USD (exchange rate at the time was 1.33)
Converted a significant chunk to CAD throughout 2024 (when exchange rate was higher) which resulted in capital gains. I followed (https://www.adjustedcostbase.ca/blog/ca ... ency-cash/) to calculate ACB and capital gains for each transaction and I'm able to determine the total capital gain to report on the Canadian return.

I'm unsure as to how to handle this on the US side. I'm assuming that it MUST be reported (as foreign capital gains). I can think of 2 options:
1- Take the total CAD CG and convert it to USD using the avg exchange rate for 2024
2- Convert the CAD CG for each transaction to USD using the rate on the date the transaction occurred, report the sum in USD

leaning toward #2 ?

Thanks

[nelsona]

If you traded US dollars for CDN dollars, there is no CG on the US side, as the USD had the same "value" the day you received it as the day you sold it: 1 USD.

Only foreign currency (from the point of view of the taxing entity) can give rise to cap gain or loss.

[fadius]

I had considered that as a option/possibility, it's logical and the simplest way to handle it.
But I was unsure and was leaning towards playing it safe, reporting, re-sourcing and claiming FTC... perhaps I'll reconsider!

thanks Nelsona.

[nelsona]

It is not a re-sourcing issue at all.