This is not correct. In Coordination with section 988(c)(1)(C)(ii). No exchange gain or loss is recognized with respect to the following transactions.
(A) An exchange of units of nonfunctional currency for different units of the same nonfunctional currency;
(B) The deposit of nonfunctional currency in a demand or time deposit or similar instrument (including a certificate of deposit) issued by a bank or other financial institution if such instrument is denominated in such currency. This is referring to conversion losses.
C. Thus gains or losses are not recognized in Section 988 transactions.
Recognition and Gains and Losses of 988 Transactions
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