A non-US person passed away overseas in Dec. 2022. The estate was valued $28,000 using the exchange rate at the death date.
One year later, Dec 2023, I concluded a settlement agreement with the executor that I should receive half of the value of the estate. By this time the value of the estate had dropped both in the foreign currency and in US dollars to $24,000 using the exchange rate on the day of the signing of the settlement agreement. I.E. I was to receive foreign currency equivalent of $12,000 valued at that date.
In Jan. 2024 I received a payout in foreign currency equivalent to $11,000 using the exchange rate on the day I received it. Stated in foreign currency the payout was slightly more than the foreign currency amount stated in the settlement agreement. The difference was said to be 1 month interest payment in local currency and was about $200.
Questions.
On my TY2024 1040 do I have an interest income of $200? OR do I have a latent loss of $1,000 or even a latent loss of $3,000 (28/2-11=3). In case of a loss, how do I declare that?
I assume it will fall out based on the cost basis I set for the foreign currency I received and still hold.
Which exchange rate date should I use when I set the cost basis for the foreign currency? Death date, Settlement agreement date or the date when I actually received the foreign currency?
