Taxes From A To Z (2018): X Is For

Shutterstock It’s my annual “Taxes from A to Z” series! If you’re wondering whether you can claim home office expenses or whether to deduct a capital loss, you won’t want to miss a single letter. X is for For most taxpayers, reporting income is pretty straightforward because it’s typically in dollars. But what if you receive all or part of your income in foreign currency? You must translate that foreign currency into U.S. dollars since you must report income and expenses on your federal income tax return in U.S. dollars. The timing of the conversion depends on your functional currency. For most taxpayers, your functional currency is the U.S. dollar. An exception exists for qualified business units (QBUs). A QBU is a separate and clearly identified unit of a trade or business that maintains its own books and records. However, a QBU only meets the exception if it does not conduct business in dollars; does not have its principal…

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