K-Dog : I’ve heard some say they would travel to Baghdad to exchange but then you have to re-enter the U.S. with suitcases full of cash which must be reported upon re-entry to the U.S. to avoid seizure and prosecution…From my viewpoint title 26 sec. 988 is right on point, mentions gains and losses from a foreign currency exchange. Perhaps many folks want it to be long term capital gains but I submit that it’s clear from the statute unless there is case law and/or appellate law that contradicts 988.
