I would need to stick with my original position and not offer an opinion to the contrary. in my post that I wrote previously, there was additional information i did not include such as: The withdrawal of nonfunctional currency from a demand or time deposit or similar instrument issued by a bank or other financial institution if such instrument is denominated in such currency. The CD is a time deposit instrument that would fall under this guideline where you could not take a conversion currency loss.
There is not enough evidence in this article that would sway me to change my position. I cannot advise you to take a loss in this situation. If you decide to take a loss, you have my blessing but make sure you have a solid reference source to support your position and keep it in records in case you are examined by the IRS.
This is a confusing issue and is open to interpretation. I tend to be very conservative thus try to follow the letter of the law. Besides the reason why i changed my opinion in the first place is that our tax compliance dept advised me to and pointed out the restrictions regarding time deposits, specifically CD's.
@MS456
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