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The IRS has no official exchange rate. Generally, it accepts any posted exchange rate that is used consistently. if you receive income evenly throughout the tax year, you may translate the foreign currency to U.S. dollars using the yearly average currency exchange rate for the tax year.if you have a single transaction such as the sale of a business that occurred on a single day, use the exchange rate for that day.For specific rates you may use following sources:
Treasury Department's Currency Exchange Rate - http://fms.treas.gov/intn.html
Federal Reserve Bank - http://www.federalreserve.gov/econresdata/statisticsdata.htm
U.S. Department of Agriculture - http://www.usda.gov/
In additional you may use any of following sources:http://www.x-rates.com/http://www.xe.com/http://www.oanda.com/currency/converter/
The exchange from Pounds to USD is not taxable - but if you have a gain on that exchange - the gain might be taxable.The IRS position is found in IRS publication 525 - www.irs.gov/pub/irs-pdf/p525.pdf
See page 30 - middle column - Foreign currency transactions. If you have a gain on a personal foreign currency transaction because of changes in exchange rates, you do not have to include that gain in your income unless it is more than $200. If the gain is more than $200, report it as a capital gain.
I wasnt clear, I meant Massachusetts state tax on such an exchange
Massachusetts state income tax is applied on the gain realized from currency exchange.There is no state tax on the fact of currency exchange. Only on the gain.
Massachusetts complies with federal regulations mentioned above - for personal foreign currency transactions - the gain below $200 is not taxable, but the gain above $200 is added to other taxable income.
So the rate you dont know?
Do you mean tax rate or currency exchange rate?
state tax rate
on the currency exchange gain
The gain on currency exchange transactions is a capital gain - below $200 - the tax rate is zero- above $200 - if held less than a year - the tax rate is 12%;- - - if held more than a year - the tax rate is 5.25%These are state income tax rates.