Situation:
A couple years back I opened a bank account and brokerage account in India solely for investing purposes.
I funded that foreign bank account using Xoom (essentially sold USD and bought INR).
Over time, while INR was declining, I kept funding the account to average my price down.
Also, I started buying certain stocks, which kept declining on me.
Now 2 years in, I have meaningful losses -- the currency has declined about 7-20% (20% on the initial tranches and 7% on the last tranches); stocks I bought have also declined about 50% (in local currency). Incorporating the currency decline on stock transactions, the stock losses are about 70% in USD basis.
Now I need to understand how to recognize capital gains/losses on foreign stocks as well the currency trades
Reporting Capital Gain/Losses on Stock Transactions seems relatively straightforward (although cumbersome as I have over 100 txns in several stocks)
Stock Gain / Loss = Sale Proceeds - Initial Cost
Sale proceeds = FX rate on date of sale * foreign currency sale price * volume of shares
Initial Cost = FX rate on date of purchase * foreign currency purchase price * volume of shares
Challenge is how do I report FX losses beyond the share purchase/sale txns?
The reason I am asking is that while some of the FX losses get reflected in stock txns in the method above, not all of my losses on purchase and sale of currency get reflected
For example, let's say I sent $200K at USDINR of 65, essentially took delivery of INR 13M (65*200K USD) in my Indian bank account
I didn’t buy stocks with all of INR 13M; I bought stock with let’s say INR 9M and that too over 12 months in several transactions
If I report combined currency and stock losses on my INR 9M stock sale, I lose out on FX losses on the remaining INR 4M, which are quite meaningful
I want to bring my money back, so will be incurring 15% FX loses on round trip for INR 4M balance, which was never used for stock trading and just went from my US account>India account>back in US account
I am wondering what is the best way to recognize my losses on both stock and FX?
Please advise! Thank you!
PS: Tagging some experts who seemed to have responded to similar questions in the forums
@ColeenD3 @DaveF1006 @ThomasM125 @DavidD66 @MaryK4 @DianeC958 @BillM223 @KarenJ2
