Right exchange rate for currency conversion for foreign income reporting?

[ravi-nalwaya]

Hi I have some foreign income in Indian Rupee for 2016 and hence need to convert to USD. I went through other similar questions regarding currency conversion rate and in few of those answers it was suggested to use the IRS provided rate (https://www.irs.gov/individuals/international-taxpayers/yearly-average-currency-exchange-rates), while in other answers it was advised to use Treasure Department exchange-rates (https://www.irs.gov/individuals/international-taxpayers/foreign-currency-and-currency-exchange-rates... (https://www.fiscal.treasury.gov/fsreports/rpt/treasRptRateExch/currentRates.htm). Now if I follow the first IRS link, the exchange rate is provided as 69.56, whereas Treasury Reporting Rates of Exchange as of December 31, 2016 for India is 67.8. Which rate am I suppose to use?

[DDollar · Accepted solution]

You have a choice of which rate to use, so use the one that is most beneficial to you.  According to the IRS:

Use the exchange rate prevailing when you receive, pay, or accrue the item. If there is more than one exchange rate, use the one that most properly reflects your income. You can generally get exchange rates from banks and U.S. Embassies.

The IRS also lists the following resources for obtaining an exchange rate:

Governmental Resources

• Treasury Department's Currency Exchange Rate
• Federal Reserve Bank
• U.S. Department of Agriculture

External Resources

• Oanda.com
• xe.com
• x-rates.com