Hi Dave, I think your earlier answer is correct and an individual should be able to show the currency exchange loss as ordinary loss under section 988 transactions. Please check the section (9) Examples in the same article you provided in your latest reply: https://www.law.cornell.edu/cfr/text/26/1.988-2
Example 1 and 2 clearly explains that one can take losses when the individual actually convert the money from one currency to other. Examples mentions a personal loan but CD is also like a loan to the bank.
Also I think the first paragraph of article is saying that one cannot take loss during the transactions such as moving money from one deposit to another in same non-functional currency (all points from A to E specifies almost same type of transfer or maturity of CD etc. ). A cash basis individuals can adjust the basis as they are showing the interest every year as income but keeping the money invested in foreign currency till it is fully converted to USD. Once money is converted from non functional currency (is foreign currency) to USD, a person can take the loss under section 988 (according to examples under section 9).
Can you please review the examples under section 9 again and confirm if my understanding is correct? I need to show my currency loss in TurboTax and I was thinking of showing it as negative number under the 'Other Reportable Income' in the Miscellaneous Income section as you have explained in your older post.
Thanks
MS
