Thank you @pk
Your response makes a lot of sense!
Re your question on why I am trying to separate the two transactions:
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I am at a loss to understand what you are trying to achieve by partitioning off stocks transaction and the currency transaction ? Do not understand why this method of recognizing loss/gain would give a better outcome than using the total transaction ( i.e. one transaction including the effect of currency fluctuation ).
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I sent the monies but didn't use all of the cash to buy equities in one go..
Using your example, I sent $100 at USDINR of 65 to get Rs. 6500, but let's say i bought stock only worth Rs.4000 and that too in multiple transactions over several months after the initial FX transfer.
During this time INR kept declining (unfavorable) for me
now calculating my purchase price becomes challenge since i have several stocks and multiple transactions in various stock
Essentially if i convert purchase price in INR to USD as of the purchase date, i lose to capture the loss on devaluation before I actually bought the stock , i.e., while INR was lying in my account and getting devalued. Also I lose the capture the loss on Rs 2500 (6500-4000) which I didn't actually spent on stocks
How do I capture those losses in the stock purchase/sale transaction?
Therefore, i was trying to treat the part where i sent the monies, kept the funds in account for trading stocks, but then just sold the INR (and never used the funds for stocks) - argument being that would be FX trade (money sent for investing and brought back). But I get your point that is not valid.
Please advice how would you approach the situation to stock purchase/sale reporting to optimize for whatever the IRS allows
Thank you very much @pk
Namaste ji!
