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How to report sale of foreign stock in foreign FX for which I did not get a 1099-B from the non-US Broker? Translate to $ at the purchase and sale or only at sale date?

Sale proceeds = foreign FX rate on date of sale * foreign currency sale price * volume of shares
Cost = foreign FX rate on date of purchase * foreign currency purchase price * volume of shares

If reporting like this, because there is a FX loss, the gain will be much smaller than if I report the gain as (foreign currency sale price - foreign currency purchase price) * volume of shares * FX rate on the date of sale.

In essence, I would like to know please how to report capital gains from selling foreign stock in foreign currency, for which there was a FX loss (the foreign currency devalued against the $ over time).

I am an individual taxpayer, not a corporation. I use Turbo Tax Premier. Thank you.
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4 Replies
DS30
New Member

How to report sale of foreign stock in foreign FX for which I did not get a 1099-B from the non-US Broker? Translate to $ at the purchase and sale or only at sale date?

It is more accurate to use the spot rate on the date of purchase to convert the basis and the spot rate on the date of sale to convert the sales proceeds. This is also the IRS's preferred method of doing conversions.

The Internal Revenue Service has no official exchange rate. In general, use the exchange rate prevailing (i.e., the spot rate) when the transaction occurred. You can use Oanda.com to find your spot rates.

To enter the sale of a capital asset in TurboTax, log into your tax return (for TurboTax Online sign-in, click Here and click on "Take me to my return") type "investment sales" in the search bar then select "jump to investment sales". TurboTax will guide you in entering this information.

Just remember foreign stock sale as though you received a 1099-B but select the you did not and the basis information was not reported to the IRS.

Also, you will be able to claim a Foreign Tax Credit for any foreign taxes paid related to the foreign stock sale.

How to report sale of foreign stock in foreign FX for which I did not get a 1099-B from the non-US Broker? Translate to $ at the purchase and sale or only at sale date?

Thank you. Your answer clarifies what exchange rate to use. I would be appreciative of knowing how the transaction is reported: 1) Covert purchase price to $, convert sales price to $, calculate sales proceeds and cost to enter into Turbo Tax. 2) Calculate sales proceeds and cost in foreign currency and then translate to $ at the exchange rate of the date of sale only. I think option 1) is correct, but I want to know what IRS requires. Using 1) I get a way lower gain because there was an FX loss. Using 2) I get a higher gain, but it only takes into account the FX on the date of sale.

Which is the correct approach?

Much appreciated.

How to report sale of foreign stock in foreign FX for which I did not get a 1099-B from the non-US Broker? Translate to $ at the purchase and sale or only at sale date?

From the reply I got above you should convert the prices on the dates the transactions happened. 

Irene2805
Expert Alumni

How to report sale of foreign stock in foreign FX for which I did not get a 1099-B from the non-US Broker? Translate to $ at the purchase and sale or only at sale date?

That is correct.

 

@obsidianj

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