On Fri, 30 Jan 2009 22:57:04 EST, Lanny Williams
<lanny[at]loxinfo.co.th> wrote:

- quote -

With services like onanda and the online data from US
Treasury people don't have to track the rate.

- quote -

If there are only a few transactions, e.g. a stock trade, I
use the actual rate. In this person's case it wouldn't be
that difficult with there apparently being only 12
transactions. For corporate clients with thousands of
transactions I use the average rate just like you do.

Regardless the original poster can't use the year-end rate.

---
Drew Edmundson, CPA
Cary, NC

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Drew Edmundson wrote:
- quote -


That's why IRS will accept an average rate. I always use the average
exchange rate published by the Federal Reserve in early January. Even
the US embassy here in Bangkok provides the average shown on this
report. This is an average for the entire year, not the end-of-year rate.

Lanny K. Williams, CPA
Nawarat, Williams & Co., Ltd.
Income Tax Services for Expatriate Americans

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On Thu, 29 Jan 2009 11:31:22 EST,
"removeps-groups[at]yahoo.com" <removeps-groups[at]yahoo.comwrote:

- quote -


- quote -

get the ability to use the end of year rate from that quote?
The IRS site has it right, exchange rate on the date of the
transaction.

---
Drew Edmundson, CPA
Cary, NC

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On Jan 26, 10:09 am, h8yurs...[at]yahoo.com wrote:

- quote -

FYI, don't forget to take the foreign earned income exclusion and
foreign tax credit, if they apply to you.

The IRS page at

http://www.irs.gov/businesses/small/...130524,00.html

links to "Treasury Department's Currency Exchange Rate".

On that page, it says

Treasury Reporting Rates of Exchange as of December 31, 2008
SOUTH AFRICA - RAND 9.4660

The IRS page also refers to "Oanda.com".

On the page http://www.oanda.com/convert/fxhistory you can get the
exchange rate for every day of the year.

So I did USD to ZAR from 01/01/08 to 12/31/08.

On

12/31/2008 9.46490000

The average was

Average (366 days): 8.27506

So it looks like you can use the year-end exchange rate. Just say you
were following the "Treasury Department's Currency Exchange Rate".

Also, the above is the interbank rate. When you really transfer
money, you get a worse exchange rate. The typical cash rate on 12/31

12/31/2008 9.84349600

The IRS page also links to the "Federal Reserve Bank". And this page
gives daily, monthly, and annual exchange rates. They have a link
called weekly, but it appears to be the daily rates also.

For the monthly rate in December 2008 it says

SOUTH AFRICA RAND 9.9227

At oanda.com, I showed exchange rates from 12/01/08 to 12/31/08. The
results are

12/31/2008 9.46490000
Average (31 days): 10.01004

The Federal Reserve's number for December is closer to the average, so
maybe the Federal Reserve uses average rates, while the Treasury
department uses the year-end rate.

And finally, the IRS page links to "U.S. Department of Agriculture".
It appears to have monthly and annual exchange rates. However, when I
click "Real Monthly Country Exchange Rates" it does not open the xls
file. Maybe a bug in the website.

So I'm pretty confused. From the IRS page, it looks like you can pick
which method you want.

Another fair exchange rate to use, at least to me, is the exchange
rate the day you transferred money to the US. But what if you didn't
transfer any money.

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I’ve seen a number of (older) posts discussing functional currencies
and exchange rate conversions. However, none seem to fully address my
case...

I’m a US citizen, been living/working in West Africa 4 years-plus,
with my payroll deposited in a European bank, in euros. In previous
years, I regularly wired the money back to the States, but since the
dollar began to slide I’ve kept virtually the entire 2008 salary in
Europe. Don't know if it's relevant, but I typically only visit the
States once a year... if that has any impact on the functional
currency.
According to most of the posts, the proper way to convert to dollars
is to use the rate on the date of payment (monthly paydays). This
year, however, there is a benefit to using the year-end rate. Assuming
a salary of Euro20k/month and historical rates from Oanda, gross
income is:

US$339k using the method: SUM(monthly_payroll x monthly_exchange_rate)
US$325k using the method: dec31_exchange_rate x SUM(monthly_payroll)

If I didn’t actually convert the euros to dollars, is it appropriate
to apply 31st December exchange rate to the entire annual salary?
If not, can I show a loss at year-end due to currency fluctuation?
In either case, what happens in subsequent years: Do I need to show
loss/gain for currency fluctuations at year-end or when/if I convert
to dollars?

Thanks in advance for the guidance.

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >