A few years ago I received a large donation in foreign currency (GBP) in a foreign bank account. The bank account has been sitting idle earning zero interest over the past few years. This year I have decided to convert the foreign currency to USD. Do I have to pay taxes on the differential?
For example. In 2016 I received 100K GBP. At the time the GBP/USD rate was 1.2, thus I declared a gift received for $120K.
In 2020 I converted the 100K GBP at a GBP/USD rate of 1.3. Thus I now have in my US bank account $130K. Before I had 100K GBP. Now I have $130K USD.
Do I need to pay taxes on the difference between the actual $130K and the $120K declared on the gift date? if yes, is it ordinary income?
If it were a loss, would I have been able to claim it? Thanks!
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Unless you do this as a sale & purchase on the forex market converting money you have is not a taxable event. This would be akin to taking coins into the bank to switch to paper money.
Unless you do this as a sale & purchase on the forex market converting money you have is not a taxable event. This would be akin to taking coins into the bank to switch to paper money.
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