Unrealized Foreign Exchange

Stevecanada · Post by **Stevecanada** » Sat Mar 07, 2015 2:43 am

I am a US citizen who has been living in Canada since I was a child. All my financial accounts (checking account, and GICs) are in CDN$ only. I report to the IRS all interest that I earn. I never convert Canadian$ to US$. Are unrealized / accrued foreign exchange gains/losses on my checking account or GICs reportable to (and taxable by) the IRS?

nelsona · Post by **nelsona** » Sat Mar 07, 2015 9:28 am

Since you haven't made any exchanges, there is no exchange gains/losses.

Stevecanada · Post by **Stevecanada** » Sun Mar 08, 2015 10:41 pm

Thank you Nelsona for your prompt reply.

Just to be sure I understand, if one of my Canadian GICs matures, and I deposit the proceeds in my Canadian checking account (in CDN$), I do not have to worry about an "unrealized" gain or loss in the value of the principle of the GIC relative to the US dollar which occurred over the term of the GIC? I am calling this "unrealized" because I never exchange CDN$ for US$. I only have to report the interest earned?

nelsona · Post by **nelsona** » Sun Mar 08, 2015 10:44 pm

Correct. You are always dealing in Cdn cash.

nohairleft · Post by **nohairleft** » Mon Mar 09, 2015 1:29 pm

Wouldn't he be subject to FX gains or losses based on the US$ cost at which he acquired the CDN$, as of the time he disposed of the CDN$? (Assuming the transaction gain was over $200, of course.)

Or at least that's what I thought nelsona wrote here many moons ago: http://forums.serbinski.com/viewtopic.php?p=12900#12900

(Or is that discussion really only relevant to the RRSP book value calculation?)

nelsona · Post by **nelsona** » Mon Mar 09, 2015 1:56 pm

We are talking GICs here. That is considered cash. The GIC would be lumped in with ALL Cdn cash he EVER recieved. It is unrealistic to come up with an average cost basis in USD of every CDn penny he ever made.