Selling property outside the US - gains are taxable, but how do they convert?
"Since you did not treat the house as a QBU, you have to use USD as your functional currency.  To calculate capital gains, you need to calculate the USD value at the time of purchase using the exchange rate at the time of purchase and the USD value at the time of sale using the exchange rate at the time of sale.  The capital gain / loss is then the difference between the two.  This link describes it in more detail and provides some references: http://www.maximadvisors.com/2013/06/foreign-residence/ That link also discusses additional potential complications if you have a mortgage on the house. This link gives more detail on the court case referenced in the above link: http://www.uniset.ca/other/cs5/93F3d26.html The court cases references Rev. Rul 54-105.  This link from the IRS has some details from that (https://www.irs.gov/pub/irs-wd/0303021.pdf): Rev. Rul. 54-105, 1954-1 C.B. 12, states that for purposes of determining   gain, the basis and selling price of property acquired by a U.S. citizen living in a foreign country should be expressed in United States dollars at the rates of exchange prevailing as of the dates of purchase and sale of the property,   respectively. The text of this implies it is for U.S. citizen is living in a foreign country, but the court case makes it clear that it also applies in your scenario (house purchased while living abroad but now residing in the US): Appellants agree that the 453,374 pounds received for their residence should be translated into U.S. dollars at the $1.82 exchange rate prevailing at the date of sale. They argue, however, that the 343,147 pound adjusted cost basis of the residence, consisting of the 297,500 pound purchase price and the 45,647 pounds paid for capital improvements, likewise should be expressed in U.S. dollar terms as of the date of the sale. Appellants correctly state that, viewed “in the foreign currency in which it was transacted,” the purchase generated a 110,227 pound gain as of the date of the sale, which translates to approximately $200,000 at the $1.82 per pound exchange rate. ... However fair and reasonable their argument may be, it amounts to an untenable attempt to convert their “functional currency” from the U.S. dollar to the pound sterling. ... Under I.R.C. § 985(b)(1), use of a functional currency other than the U.S. dollar is restricted to qualified business units (""QBU""s). ... appellants correctly assert that their residence was purchased “for a pound-denominated value” while they were “living and working in a pound-denominated economy,” ... And since appellants concede that the purchase and sale of their residence was not carried out by a QBU, the district court properly rejected their plea to treat the pound as their functional currency."
Is this possible and will it have the intended effect? From the US tax perspective, it most definitely is and will. Is my plan not very similar to Wash Sale? Yes, except that wash sale rules apply for losses, not gains. In any case, since you're not a US tax resident, the US wash sale rules won't apply to you. You're asking whether the shares you sold while being a US tax resident are taxable in the US. The answer is yes, they are. How you acquired them or what were the circumstances of the sale is irrelevant. When you acquired them is relevant to the determination of the tax treatment - short or long term capital gains. You report this transaction on your Schedule D, follow the instructions. Make sure you can substantiate the cost basis properly based on how much you paid for the shares you sold (the taxable income recognized to you at vest). "What would be the best strategy to avoid paying income taxes on the   sale after I move to another US state? Leaving the US and terminating your US residency before the sale closes. Otherwise consider checking your home country's tax treaty with the US. In any case, for proper tax planning you should employ a licensed tax adviser - an EA, CPA or an attorney licensed in your State (the one you'd be when the sale closes). No-one else is legally allowed to provide you tax advice on the matter. Because the company abroad is befriended, I have control over when   (and e.g. in how many chunks) the earnings of the sale flow into my   LLC. So I can plan where I live when that money hits my US account. I'm not familiar with the term ""befriended"" in this context, but form what I understand your description - its a shell corporation under your own control. This means that the transfer of money between the corporation and your LLC is of no consequence, you constructively received the money when the corporation got it, not the LLC. Your fundamental misunderstanding is that there's importance to when the money hits your US bank account. This is irrelevant. The US taxes your worldwide income, so it is taxed when you earn it, not when you transfer it into the country (as opposed to some other countries, for example India or the UK). As such, in your current scheme, it seems to me that you're breaking the US tax law. This is my personal impression, of course, get a professional advice from a licensed tax professional as I defined earlier." Capital losses from the sale of stocks can be used to offset capital gains from the sale of a house, assuming that house was a rental property the whole time.  If it was your principal residence, the capital gains are not taxed.  If you used it as both a rental and a principal residence, then it gets more complicated: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/rprtng-ncm/lns101-170/127/rsdnc/menu-eng.html "the state of New Mexico provides guidance in this exact situation. On page 4: Gross receipts DOES NOT include: Example: When the seller passes tax to the buyer, the seller should   separate, or “back out”, that tax from the total income to arrive at   ""Gross Receipts,"" the amount reported in Column D of the CRS-1 Form.   (Please see the example on page 48.) and on page 48: How do I separate (“back out”) gross receipts tax from total gross receipts?  See the following examples of how to separate the gross   receipts tax:  1) To separate (back out) tax from total receipts at the   end of the report period, first subtract deductible and exempt   receipts, and then divide total receipts including the tax for the   report period by one plus the applicable gross receipts tax rate.  For example, if your tax rate is 5.5% and your total receipts    including tax are $1,055.00 with no deductions or exemptions, divide   $1,055.00 by 1.055. The result is your gross receipts excluding tax   (to enter in Column D of the CRS-1 Form) or $1,000.  2) If your tax   rate is 5.5%, and your total gross receipts including tax are   $1,055.00, and included in that figure are $60 in deductions and   another $45 in exemptions:  a) Subtract $105 (the sum of your   deductions and exemptions) from $1,055. The remainder is $950. This   figure still includes the tax you have recovered from your buyers.  b) Divide $950 by 1.055 (1 plus the 5.5% tax rate). The result is   $900.47.  c) In Column D enter the sum of $900.47 plus $60 (the amount   of deductible receipts)*, or $960.47. This figure is your gross   receipts excluding tax." You pay taxes on capital gains when you realize your gains by selling the investment property.  Also, in the US, taxes on capital gains are computed at special rates depending on your current income level, and so when you realize your gains two years from now, you will pay taxes on the gains at the special rate then applicable to your income level for the year of sale. Remember also that the US Congress  can change the tax laws at any time between now and the time you sell your stocks, and so the rates you are looking at now may have changed too. As I understand it, capital gains from real estate sales in India can be shielded from income tax entirely if the proceeds of the sale are invested in certain specific types of bonds (Rural Highway Contruction Authority of India?) for a period of three years beginning no later than x months (6 months?) after completion of the sale. Perhaps this applies to sales of inherited real estate only and not to commercial property or residential property acquired by purchase since there is no step-up of basis on death as occurs in the US, and in all likelihood, records of the purchase price of the inherited property are lost in the mists of time, and so the basis of the investment is effectively zero (or treated as such by the revenue authorities) The interest paid by these bonds is included in taxable income. Perhaps @Dheer will be willing to correct any mistakes in the above. So, it may be necessary to check whether (a) the interest income from the bonds was declared on Form 1040 Schedule B for each year (b) whether the appropriate boxes (the ones that ask whether the taxpayer has signature authority over foreign accounts etc) were checked on Schedule B or not, (c) whether Form TD 90-22.1 was filed each year or not (this is the FBAR requirement) Note that if the total value of the accounts is less than US $10K during the entire year, then the taxpayer is supposed to check NO on Schedule B and need not file Form TD 90-22.1.  Also, there is a separate requirement to file a Form 8938 for certain specific types of investments.  There was a two-part article describing these rules in Forbes magazine some time ago, and this is available on-line (Part 1 and  Part II) As @superjessi says, the IRS might be lenient if the only issue is not filing the forms in timely fashion, and the taxpayer is voluntarily coming into compliance even though the filing is late. They are likely to be less  forgiving if the foreign income was not reported, and still remains unreported even after filing the various forms. According to the answers to this question, you generally aren't taxed on gains until you sell the asset in question. None of those answered specifically for the U.K., so perhaps someone else will be able to weigh in on that. To apply those ideas to your question, yes your gains and losses are taxable. If you originally traded something worth $100 for the bitcoins, then when you converted back to dollars you received $200, you would have a $100 gain, simply on the foreign exchange trade. That is, this $100 of income is in addition to any income you made from your business (selling goods). Unless your investments are held within a special tax-free account, then every sale transaction is a taxable event, meaning a gain or loss (capital gain/loss or income gain/loss, depending on various circumstances) is calculated at that moment in time. Gains may also accrue on unrealized amounts at year-end, for specific items [in general in the US, gains do not accrue at year-end for most things]. Moving cash that you have received from selling investments, from your brokerage account to your checking account, has no impact from a tax perspective. Huh. It appears it's only currencies in sterling that are fully exempt. https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg12602   Government manuals are more detailed than .gov but still not perfect as it's HMRCs interpretation of legislation and has been overturned in the past.  There is also another (old) article here about foreign currency transactions. https://www.taxation.co.uk/articles/2010/10/27/21191/currency-gains  I have never come across forex capital gains in practice but I've learnt something today! Something to look out for in the UK as well I guess. You only have to pay taxes when you convert to dollars. Most exchanges I think have to track their users and provide them with reports for tax purposes. Just holding bitcoin and watching it go up in value does not trigger a taxable event. There is a fourth option - pay those taxes. Depending on the amounts, it might be the easiest way - if you make 34.49 in interest, and pay 6 $ in taxes on it, and be done, that might not be worth any other effort. If the expected taxable amount is significant, moving (most of it) to index funds or other simply switching existing investments to ‘reinvest’ instead of ‘pay out in cash’ would be the best approach. Again, some smaller amounts in savings or checkings accounts are probably not worth any effort. Transferring the money to the US doesn’t save you taxes, as any interest would still be taxable. You have a risk to lose on the conversion back and forth (and a potential to gain - the exchange rate could go either way!), so if you are sure you go back, it’s not a good idea to move the money. In theory, when you obtained ownership of your USD cash as a Canadian resident [*resident for tax purposes, which is generally a quicker timeline than being resident for immigration purposes], it is considered to have been obtained by you for the CAD equivalent on that date.  For example if you immigrated on Dec 31, 2016 and carried $10k USD with you, when the rate was ~1.35, then Canada deems you to have arrived with $13.5k CAD. If you converted that CAD to USD when the rate was 1.39, you would have received 13.9k CAD, [a gain of $400 to show as income on your tax return].  Receiving the foreign inheritances is a little more complex; those items when received may or may not have been taxable on that day. However whether or not they were taxable, you would calculate a further gain as above, if the fx rate gave you more CAD when you ultimately converted it. If the rate went the other way and you lost CAD-value, you may or may not be able to claim a loss. If it was a small loss, I wouldn't bother trying to claim it due to hassle. If it's a large loss, I would be very sure to research thoroughly before claiming, because something like that probably has a high chance of being audited. This doesn't sound very legal to me. Real estate losses cannot generally be deducted unless you have other real estate income. So the only case when this would work is when that person has bunch of other buildings that do produce income, and he reduces that income, for tax purposes, by deducting the expenses/depreciation/taxes for the buildings that do not. However, depreciation doesn't really reduce taxes, only defers them to the sale. As mhoran_psprep said - all the rest of the expenses will be minimal. "If your friend is loaning you KRW which you are then converting to USD, then there are tax implications.  This would be a Section 988 transaction so ""gains"" or ""losses"" made during repayment (partial or complete) due to fluctuations in exchange rate would be treated as ordinary gains or losses. For example, imagine you borrow 100,000 KRW and, at the time you borrow it, this is worth exactly 100,000 USD.  At some future point, you repay 20,000 KRW.  If the exchange rate at that point is such that 20,000 KRW is worth 15,000 USD, then the IRS sees that you have ""gained"" 5,000 USD in ordinary income.  This is a particular concern if the loan is a mortgage and you refinance the mortgage at a moment in time with a more ""favorable"" exchange rate than the exchange rate when you first got the mortgage. See http://www.investopedia.com/terms/s/section-988.asp for some additional discussion."