While briefly living in New Zealand (NZ), we deposited $60,000 (USD) in a NZ bank and converted it to NZ dollars. Six months later, after returning to the US, we converted the NZ dollars to USD and transferred the monies back to a US bank. We lost about $3,000 in the currency conversion.
Can we claim the loss on our taxes? And if so, how?
Thanks in advance.
Since you didn't mention it had anything to do with business transactions, sounds like a personal loss which is not deductible.
I've lost, too, in converting back to dollars, but thankfully never as much as 3,000.
ChEAr$, Harlan Lunsford, EA n LA
My reading of section 988 (is this even the right section?)
However, if you were speculating on the USD, then I think your 60k is a capital asset (just like purchasing shares of UDN). In that case, your loss should be deductible as a capital loss. However, you must have identified the 60k as an investment on the day you transferred that money to New Zealand.
I wonder if the 3k could be a casualty loss -- deductible on Schedule A, but only the loss over 10% plus $100 (or is it now $500) is deductible, the deduction is allowed under AMT.
It's not going to be a casualty loss uness there is some casualty, like the value of the NZ dollar lost value all at once due to an armed insurrection.
Stu
Couldn't there be circumstances in which this would be considered an investment loss?
If the money was moved to the NZ bank and held in an interest-bearing account for investment purposes, would that make it a short-term capital loss?
Admittedly, the facts of the money transfer being coincident to moving there are not favorable.
But what about a similar transaction but without actually moving to the other country. Say, one converted money into Euros, purchased bonds in the UK, and then sold the bonds and converted the money back into dollars. If there were a currency exchange loss, that would surely be deductible, right?
Tom Russ wrote in news: snipped-for-privacy@b16g2000yqb.googlegroups.com:
Just to make a nitpivcking point, the Ukkies still use pounds, not euros, but substitute either a euro country or pounds, and I agree.
I inherited euros, and I faithfully reported realized gains whenever I "cashed in" euros to dollars by subtracting the value in dollars of the euros converted on my father's date of death from the value on the day of euro to dollar conversion. I used the fees imposed as adjustments to basis. So far Uncle Sam has always gained and still would for the few remaining euros if sold now. I would really like to declare a loss if the dollar to euro exchange rate got below the rate on dad's date of death. Or have I committed felonies in handling things this way?
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