Losses in a foreign cash account due to devaluation of the foreign currency over time.

[jackk]

I have a foreign securities account tied to a foreign cash account for holding sales proceeds. I have paid capital gains on all sales while maintaining the proceeds in the foreign account. Due to devaluation of the foreign currency over time,  when I withdraw money and convert it to USD, I receive less than I declared for capital gains. Can I take a loss from the devaluation?

[LeeM · Accepted solution]

Yes, you can report your loss on your foreign currency conversion by following the steps below:

1. Select Personal taxes
2. Select Wages & income
3. Select I'll choose what I work on
4. Scroll to the section Less common income
5. Select the line that reads Misc income 1099-A 1099-C
6. Select the line Other Reportable Income

You will then add an item titled "Loss on foreign currency transactions." and enter the loss as a negative amount.

You may use the average exchange rate of 2015 or the exchange rate on the date you changed the money.

http://www.irs.gov/Individuals/International-Taxpayers/Yearly-Average-Currency-Exchange-Rates

http://www.oanda.com/currency/historical-rates/

[frhardin]

How can I claim the loss on the IRS forms?