Hi,
I'm trying to determine if I need to report fluctuations of currencies on a Canadian certificate of deposit (GICs) that expired in 2022. I've gotten conflicting info on this.
Context: US resident reporting to IRS. Let's say I bought a certificate with Canadian dollars in 2021 at $1000 CAD which was equivalent to $800 USD. The money was always in Canada, so I didn't exchange any USD to get them. A year later, the certificate expires and the $1000 CAD is now worth $700 USD. I reinvested the $1000 CAD in another 1 y CD, so I never converted the CAD to USD.
Questions:
- Are foreign CDs covered by section 988 (my guess is yes)
- Does section 988 applies to individuals (my guess is yes)
- Do we need to report the currency fluctuation between purchase price and expiration price as gain/loss when the certificate expires (even if reinvested)?
- Or, do we report the gain/loss only when I sell the CAD back to USD?
- Any difference in tax treatment at the state level if living in California?
Footnotes:
If I need to report, I know that it would go into Other income etc. as covered in other posts.
I received a NR4 statement for the interest and I know what to do with that (convert in USD and report as interest, file foreign accounts and FBAR).
cc Mike9241, DaveF1006
due to excellent answers on similar posts
