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U.S. Citizen / Foreign Stock Trades

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  • U.S. Citizen / Foreign Stock Trades

    A citizen of the United States has a brokerage account in Germany. A U.S.
    investment manager executes trades on the German market, and at the end of
    the year gives the U.S. Citizen a summary of such trades indicating date
    acquired, date sold, purchase price and sale price. The investment manager
    also gives the U.S Citizen a total for dividend income for the year. All
    numbers are in EURO's.

    Are the any IRS publications that deal with how this is reported? For
    example:

    If Stock A is bought 2/27/02 at 1200 Euro and sold 04/04/04 at 1700 Euro,
    does the U.S. Taxpayer convert the gain of 500 Euro based on the 04/04/04
    exchange rate? Or does the taxpayer convert the 1200 based on the 2/27/02
    exchange rate and the 1700 based on the 04/04/04 exchange rate?

    Do you use an average exchange rate for 2004 to convert the dividend income
    to U.S. Dollars, or do you convert based on the day the dividend was
    credited to your account?



  • #2
    U.S. Citizen / Foreign Stock Trades

    On 4/1/05 5:12 PM, in article [email protected], "G
    Scotty" <[email protected]> wrote:
    A citizen of the United States has a brokerage account in Germany. A U.S. investment manager executes trades on the German market, and at the end of the year gives the U.S. Citizen a summary of such trades indicating date acquired, date sold, purchase price and sale price. The investment manager also gives the U.S Citizen a total for dividend income for the year. All numbers are in EURO's. Are the any IRS publications that deal with how this is reported? For example: If Stock A is bought 2/27/02 at 1200 Euro and sold 04/04/04 at 1700 Euro, does the U.S. Taxpayer convert the gain of 500 Euro based on the 04/04/04 exchange rate? Or does the taxpayer convert the 1200 based on the 2/27/02 exchange rate and the 1700 based on the 04/04/04 exchange rate? Do you use an average exchange rate for 2004 to convert the dividend income to U.S. Dollars, or do you convert based on the day the dividend was credited to your account?
    Each transaction is converted to US$ on the date it occurs.
    --
    Tom Healy, CPA
    Boulder, CO
    Web: http://www.tomhealycpa.com

    Comment


    • #3
      U.S. Citizen / Foreign Stock Trades

      Thank you for answering. Can anyone point me to a source ,--- a reg or
      publication etc where this is discussed?

      "Thomas Healy" <[email protected]> wrote in message
      news:BE734DAC.8F66%[email protected]
      On 4/1/05 5:12 PM, in article [email protected], "G Scotty" <[email protected]> wrote:
      A citizen of the United States has a brokerage account in Germany. A
      U.S.
      investment manager executes trades on the German market, and at the end
      of
      the year gives the U.S. Citizen a summary of such trades indicating date acquired, date sold, purchase price and sale price. The investment
      manager
      also gives the U.S Citizen a total for dividend income for the year.
      All
      numbers are in EURO's. Are the any IRS publications that deal with how this is reported? For example: If Stock A is bought 2/27/02 at 1200 Euro and sold 04/04/04 at 1700
      Euro,
      does the U.S. Taxpayer convert the gain of 500 Euro based on the
      04/04/04
      exchange rate? Or does the taxpayer convert the 1200 based on the
      2/27/02
      exchange rate and the 1700 based on the 04/04/04 exchange rate? Do you use an average exchange rate for 2004 to convert the dividend
      income
      to U.S. Dollars, or do you convert based on the day the dividend was credited to your account? Each transaction is converted to US$ on the date it occurs. -- Tom Healy, CPA Boulder, CO Web: http://www.tomhealycpa.com

      Comment


      • #4
        U.S. Citizen / Foreign Stock Trades

        Do you breakout the gain on a foreign stock trade between the portion
        attributable to the loss from the decline in the dollar and show that as
        ordinary loss, and then show the portion attributable to the rise in the
        Euro as LT capital gain?


        Comment


        • #5
          U.S. Citizen / Foreign Stock Trades

          I said that wrong.

          Do you breakout the gain on a foreign stock trade between the portion
          attributable to the loss from the decline in the dollar and show that as
          ordinary loss, and then show the portion attributable to the rise in the
          stock price (in Euro's) as LT capital gain?

          Example:
          02/01/02 buy 1 sh StockA for $1000 when the dollar is .7 - costing 700 Euro
          04/01/04 sell 1 sh StockA for 900 Euro when the dollar is .8 - netting
          $1,125

          This shows a gain of $125.

          Do you break that down further, and say you have a $250 capital gain (900 -
          700 = 200 / .8 = $250)
          and a $125 ordinary loss from the declie in the dollar ($1000 * .1 decline)
          + ($250 * .1 decline) = $125

          Or does that only apply if you are trading foreign currency, rather than
          trading IN foreign currency?


          Comment

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