In contrast the currency approach more readily realizes gains at ordinary income rates, but any losses are ordinary and easier to realize and carryforward as NOL.
I really want to know how currency exchange works for a typical individual, can you tell me how one would deal with the following scenario, on a federal income tax level?
1) Juan drives up to Canada
2) Juan withdraws $500 CAD from an ATM using a US/USD-based debit card
3) Juan's checking account balance is reduced by $625 USD
4) Juan's need for the cash vaporizes and he drives back to the US with it
5) Juan goes to his local bank branch and exchanges the $500 CAD for $575 USD
Obviously Juan lost $50 in these transactions. It sounds like you are suggesting that would be a claimable loss.
If that is correct, I would love to know how Juan would claim this loss. If it is incorrect, please refer to my prior posts in this thread and help me understand or find a document that indicates when/how to know one can claim such a loss. If the rules for losses are different than gains, please point me toward information affirming that as well.