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How does one book a currency exchange loss?

Let's assume:

  • I have an account in GBP.
  • I have an account in USD.
  • I pay taxes in USA.

Let's assume following transactions:

  • I made 100k GBP in the beginning of 2016 and booked it at 150k USD.
  • I converted 100k GBP to USD at the end of 2016 and received 125k USD.

Tax time is there so let's assume:

  • I pay 25% taxes on income. That's 25% of 150k USD.

Question:

  • How do I book the loss of 25k USD because of currency conversion?
  • What if I only converted 50k GBP at the end of 2016?
  • 1
    Currency speculation losses? – DJohnM Feb 9 '17 at 5:26
  • @DJohnM This is not about speculation, but about being paid in another currency and how to book these deposits. – brt Feb 9 '17 at 21:34
  • The IRS may say you received 150 K USD, and need to declare this; bought GBP and held for a year, converted back to USD with a 25k USD loss in currency speculation... – DJohnM Feb 9 '17 at 21:55

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