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If the value of the US dollar is greater than what I originally exchanged it for, is it considered capital gain? If so, how do I determine the amount I gained?

EDIT: For example, I traded $100 USD for Mexican pesos. I spent some of that money (logically I now have less than $100 USD). But for some reason, the value of the peso skyrocketed so when I go to trade my remaining pesos for USD, I get back $1000.

marked as duplicate by Nathan L united-states Jul 13 '17 at 17:33

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  • If you are in US, then your basis is USD. So can you elaborate the transaction? Did you buy some other currency and sold it later there by making a gain in Fx? – Dheer Jul 11 '17 at 3:27
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    I will wait for someone from US to put an answer. Say of the $100 worth Mexican pesos, you spent $10 worth of Mexican pesos. So on the balance of $90 you got a value of $1000. There is a Fx Gain of $910 on which capital gains tax would be due. Some one with knowledge of US capital gains can indicate when the taxes are due; on actual conversion back to $1000 or notionally when the value appreciates. Generally for individuals it would be when the conversion happened. Only corporates / Fx dealers may use accruals and pay on notional gain/loss. – Dheer Jul 11 '17 at 3:35
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If you make money in currency speculation (as in your example), that is a capital gain.

A more complicated example is if you were to buy and then sell stocks on the mexican stock exchange. Your capital gain (or loss) would be the difference in value in US dollars of your stocks accounting for varying exchange rates. It's possible for the stocks to go down and for you to still have a capital gain, and vice versa.

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