topic Re: Foreign income tax - from unrealized gains in Get your taxes done using TurboTax

Foreign income tax - from unrealized gains

ajdiue08dcd — Wed, 03 Mar 2021 23:21:12 GMT

I understand that certain employer-sponsored foreign pension plans are taxable not only on distributions but also on year-to-year gains.

My question is related to the following scenario:

For example, year-to-year loss in Euro is -100e but in USD it is +50$ gain (theoretical example). Do we report it as a gain on a US tax return?

Re: Foreign income tax - from unrealized gains

MarilynG1 — Thu, 04 Mar 2021 01:30:11 GMT

Generally, an individual would not have to report a plan that was an employer-administered plan or a traditional defined benefit plan because the individual neither owns the account nor has signatory authority over it; however, foreign owned personal pension plans must be reported.

If your Pension Plan consists of company stock, click this link for detailed info on Retirement Tax Tips.

Re: Foreign income tax - from unrealized gains

ajdiue08dcd — Thu, 04 Mar 2021 16:20:59 GMT

How do we calculate gain/loss in this case. The account is in foreign currency and was never subject to conversion from/to USD. I can calculate year to year difference either:

1. 99euro - 100e = -1e (1.3 USD)

2. 99euro * 1.5 - 100euro * 1.1 = + 36 (USD)

which way is correct in this case ? This is unrealized profit. Its just the fund unit difference.

Re: Foreign income tax - from unrealized gains

DaveF1006 — Mon, 08 Mar 2021 22:50:38 GMT

You would need to know what the exchange rate was at the time you bought the currency and convert that to US dollars. Then calculate the exchange rate when you sold the currency in USD. The difference is your gain or loss on the currency. I am not sure what type of calculation you have above but you will need to check historical exchange rates at the times you bought and sold the currency.