Foreign stock capital gain ended up with loss due to currency depreciation (2 of 2).

[Pokemon2]

In 2013, I opened a dedicated brokerage account with a U.S. institution for trading stocks on the Japanese market. I would like to know how I should report capital gain on the sale of stocks versus loss of value due to currency exchange rate changes.

Below is a summary of account activities. Numbers are for illustrative purpose only:
2013/10 Deposit USD50.50
2013/10 Exchange from USD25.00 to JPY2,445.25
2013/11 Exchange from USD25.50 to JPY2,492.88
2014/02 Buy 600 shares of XYZ for JPY1,077.00 (only invested about half of the entire fund in accont)
2014/03 Buy 600 shares of XYZ for JPY1,077.00
2014/06 Receive XYZ dividend JPY22.20
2014/06 Pay foreign tax on XYZ dividend JPY3.40
2015/03 Sell 1200 shares of XYZ for JPY2541.50 (capital gain in JPY)

Dividend income and associated foreign tax paid were reported in 2014 income tax return.

Due to certain circumstances, I am planning to withdraw the entire fund from the account sometime in 2015. However, due to the current depreciated value of JPY against USD, my withdrawal when exchanged back to USD would be approximately USD44.99, incurring a loss from my entire investment made in 2013.

Questions:
1) Do I still treat the sale of stocks made in 2015 a capital gain?
2) How do I claim the loss in 2015 due to exchange rate changes?

 

[xylene]

It seems this is applicable, but you need professional tax help.

https://www.law.cornell.edu/uscode/text/26/988

 

[davew128]

Xylene has it right. Currency gains/losses are covered under 988 and are ordinary not capital. Although the concept itself in the context of reporting is complex, the issue itself is covered at length and a simple google search would have found dozens of articles and threads covering it.

 

[Pokemon2]

"Xylene" & "devew128" Thank you very much for your help. I am reviewing them in detail at this time, but I have not fully digested how exactly I can apply yet. So, in the meantime, if any of you or anyone else has further advice, I would greatly appreciate it. Thank you again for continuous support.