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If a US citizen were to exchange USD to some other currency, and then some time later, exchange that currency to yet another but not back to USD nor spent for goods or services (yet), is that a realized gain/loss for tax purposes?

For instance, suppose that USD is converted to GBP, which is then converted to EUR:

  • Is any gain/loss in value when converting GBP to EUR considered "realized" at this time for tax purposes?
  • If so, is it valued at the USD/GBP rate? or the USD/EUR rate?
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Changing currencies has no tax implications for US citizens, and most likely, for citizens of most other countries too. There might be an issue with regard to wealth tax for denizens of countries that levy such taxes.

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  • Not true at all. IRS says "If a US taxpayer engages in a transaction denominated in nonfunctional currency, it will most likely result in a foreign currency exchange gain or loss, separate from the underlying transaction... The foreign currency exchange gain or loss is determined separately from the underlying transaction and is generally reported as ordinary gain (loss) as a result of undertaking a transaction denominated in a nonfunctional currency under IRC 988."
    – user71659
    Dec 22, 2017 at 21:52

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