I'm surprised I can't find a very clear statement about this online, as it seems like it wouldn't be such an unusual situation.
Suppose I inherit foreign currency, e.g. $100,000 Canadian dollars, but live and pay taxes in the United States. Let's say the date of death was January 1st 2024, I received the inheritance into my Canadian bank account on March 1st 2024. Then on May 1st 2024 I converted the currency to US dollars and transferred it to my US bank account.
I'm aware of the various reporting requirements, like FBAR, 8938 and 3520, this post is not about those.
If the US/Canadian dollar exchange rate changes over the year, do I have to pay capital gains tax for the exchange of the Canadian dollars to US dollars? If so, would the basis for this gain be based on January 1, or March 1 (i.e. the date of death, or the date the money was received)?
If the Canadian dollar actually decreased in value during this time, is this a capital loss that can be used to offset other capital gains?
