Help me understand tax Cost Basis of spot forex...

Hi all,

My tax guy is asking for the Cost basis (ACB) of the forex trades. I'm trying to figure out if a spot forex trade is the same as an options or futures trade? Is this the case? I'm not sure how to lay out each trade... or report the ACB.

So say for instance I have a trade like this:

0.04 lots of GBPJPY
Open Price: 141.589
SL: None (hidden)
TP: 140.592
Close: 140.59
Swap: -3.561
Profit: 48.64

How could I report on the cost basis of this trade?

Thanks in advance!

How would I calculate the cost basis of this?

Dear stubish,

I would ask that question to the Tax guy as it should be his job. What you need to clear up is if the Fx account is treated as a re-investment and not capital gains. Most likely the gains are cash gains and not subjected to the cost basis. Quote from investopedia " also referred to as the tax basis, is important especially if you reinvested dividends and capital gains distributions instead of taking the earnings in cash." By closing the trade you are taking the cash in my opinion. Please note, this is not financial advice, but only my opinion. Your tax guy should know this stuff.

Please do post back a reply when you find out in case someone else has the same question

Kind Regards,
Tzamo

Wow, my accountant asked me if I lost or made money and how much. I take it his basis was P&L.

IDK if this helps https://www.schwab.com/resource-cent...our-cost-basis but seems like Cost basis accounting is more for stocks with tangible underlying asset value where you actually own a piece of property than Forex which is basically a virtual figure based trading of hot air.