QUESTION:
I recently did taxes for a citizen of Great Britian now living (and
working)in the U.S. He sold his house in England after renting it out for a
year. He is able to exempt part of the gain since it was his main residence
for almost two years and he sold it due to a job move. Our biggest problem
is the difference in valuation in the currency. When he bought the house,
the exchange rate was $1.50 lb for $1.00 U.S. When he sold the house, the
exchange rate was $1.65 lb for $1.00 U.S. That means he has a gain also due
to the exchange rate. My question (finally, I get to my question). Can this
gain be considered part of the gain for sale of the house (and therefore
excluded as part of the gain on the house) or does it have to be considered
an investment gain (a separate transaction) and put on Schedule D? I wrote
to the IRS but they completely ignored the question and just sent me to a
publication that had nothing about this.
Thanks you for your help.
