Hi,
Assume I have $100 in a foreign account on Year 1 and earn $5 as interest. I'll pay tax in the US on the $5 earned. The new principal is now $105
Now, in year 2, assume USD strengthens and my principal in dollar terms drops to $103. The interest this year is again $5 so I will pay tax on $5.
Can I claim any deductions in year 2 due to principal value dropping from $105 to $103?
