I have a tiny transaction -- 850 Yen profit on a foreign exchange trade. I am curious. What exchange rate do I use to bring this into a US dollar figure? The spot on day of transaction, day of doing my forms ... There are numerous choices.
Well, let me state a few assumptions here. I will assume that if the profit is denominated in Yen, that this means you are doing this in a Yen-denominated account. That you had a certain amount of Japanese currency and through some trading realized a profit, paid in Yen to the aforementioned Yen-denominated account.
I would think the only reasonable choice would be to use the Yen-$ exchange rate on the day of transaction.
I would also expect that there may be an additional gain or loss when you actually convert the 850 Yen into dollars and move it into a dollar-denominated account.
(But note that I am not a tax professional, so....)
See the thread "Foreign Savings Accounts-------Treasury Form 90-22-1 Options ".
Evidently you can use the average exchange rate or the daily exchange rate. Since you have just one transaction, you can pick the better exchange rate.
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