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Old 07-20-2004, 09:31 PM
canonicalman
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Captial Gains on Currency Exchange?

VA

Are gains on currency exchange considered a capital gain? For example, let's say I convert USD10,000 to some amount of AUD. At a later time, I convert the AUD back which results in a value of USD11,000. Does this constitute a capital gain of USD1,000? Or is this just a conversion of one kind of cash to another and is not counted?
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Old 07-20-2004, 09:40 PM
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It is a capital gain. You bought foreign currency hoping it would pay a better return than US currency via the exchange rate. Alternatively, you could treat it like ordinary income, but would lose any capital gains treatment, so why bother?
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