didn't you say what you have is a savings a/c. that's not what's meant by a Forex a/c
A forex account is an online platform account used for holding the forex currencies and trading them. A trader will usually open a forex account, deposit money in the account using the currency of the home country and then sell or buy currency pairs.
however, if you are doing Forex trading this is how you report it
FOREX traders have the ability to trade two primary forms of contracts. FOREX options and futures contracts are commonly classified by the Internal Revenue Service as IRC Section 1256 contracts. Because of this, traders will receive a unique 60/40 tax consideration, which means that 60 percent of any gains or losses reported under Section 1256 will be considered long-term capital gains or losses, and 40 percent will be classified as short-term gains or losses.
This method of trading differs greatly from the standard OTC, which is classified by the IRS as a Section 988 contract. Here, investors will be required to report any losses or gains as they would with ordinary loss/gains accrued throughout the year. As a general rule, the FOREX marketplace considers an OTC contract to be any contract that is settled within 48 hours of its initiation.
a savings a/c would be section 988 as follows from the code
(1)Section 988 transaction
(A)In general
The term “section 988 transaction” means any transaction described in subparagraph (B) if the amount which the taxpayer is entitled to receive (or is required to pay) by reason of such transaction—
(i)is denominated in terms of a nonfunctional currency,
(B)Description of transactions
For purposes of subparagraph (A), the following transactions are described in this subparagraph:
(i)The acquisition of a debt instrument or becoming the obligor under a debt instrument.
(C)Special rules for disposition of nonfunctional currency
(i)In general
In the case of any disposition of any nonfunctional currency—
(I)such disposition shall be treated as a section 988 transaction, and
(II)any gain or loss from such transaction shall be treated as foreign currency gain or loss (as the case may be).
(ii)Nonfunctional currency
For purposes of this section (IRC Sec 988) , the term “nonfunctional currency” includes coin or currency, and nonfunctional currency denominated demand or time deposits or similar instruments issued by a bank or other financial institution.
any foreign currency gain or loss attributable to a section 988 transaction shall be computed separately and treated as ordinary income or loss (as the case may be).
