Does the cost basis change over time due to exchange rates?

Does Money keep track of the cost basis for investments in foreign currence 
in the base currency or in the investment currency? The reason I ask is 
because I have investments where the cost basis amount  in foreign currency 
is different from the buy amount in foreign currency. I would have expected 
the cost basis to stay fixed in the investment currency but it could be that 
it changes with the exchang rate towards the base currency. Does someone know 
about this?

Thanks.
0
Christian1 (55)
4/5/2007 3:14:02 PM
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Are we talking about what Money does or how the tax laws work?

I'm betting the answer to the latter is that your basis is set in stone at 
the original--then current--exchange rate.

As to the former, my suspicion is the same--the conversion implicit in that 
transaction is the one that will be used for cost basis and any future 
comparison to the cost basis will also implicitly convert the share back to 
the default currency using a current exchange rate. Thus, 1,000 shares of 
some Euro denominated invest bought for $10,000 at, say, a 0.90 $ to ? 
conversion (a $10,000 buy of 1,000 ?9 shares) will show a $2,082 gain if the 
same shares are still worth ?9 but the ? that sold for $1.11 when you bought 
it now buys $1.34 (a 0.7449 $ to ? conversion or a 1.342 ? to $ conversion) 
when you sell it. (Hopefully I got the example right. This stuff messes with 
my mind.)

"Christian" <Christian@discussions.microsoft.com> wrote in message 
news:0706643B-427D-4198-9E7F-7E7E73A6C3A3@microsoft.com...
> Does Money keep track of the cost basis for investments in foreign 
> currence
> in the base currency or in the investment currency? The reason I ask is
> because I have investments where the cost basis amount  in foreign 
> currency
> is different from the buy amount in foreign currency. I would have 
> expected
> the cost basis to stay fixed in the investment currency but it could be 
> that
> it changes with the exchang rate towards the base currency. Does someone 
> know
> about this?
>
> Thanks. 


0
4/5/2007 4:54:31 PM
I hasten to add that I don't *know* how Money treats it. I'm extrapolating 
from how I think it stores currency conversion transactions to how I suspect 
it works with that data in this case.

If you need to know for sure, I'd setup a test case in a test file and look 
to see what it does.

"Christian" <Christian@discussions.microsoft.com> wrote in message 
news:0706643B-427D-4198-9E7F-7E7E73A6C3A3@microsoft.com...
> Does someone know
> about this? 


0
4/5/2007 4:57:09 PM
Boy did it mangle the Euro...

"Dick Watson" <littlegreengecko@mind-enufalready-spring.com> wrote in 
message news:em4vVM6dHHA.2332@TK2MSFTNGP04.phx.gbl...
> Are we talking about what Money does or how the tax laws work?
>
> I'm betting the answer to the latter is that your basis is set in stone at 
> the original--then current--exchange rate.
>
> As to the former, my suspicion is the same--the conversion implicit in 
> that transaction is the one that will be used for cost basis and any 
> future comparison to the cost basis will also implicitly convert the share 
> back to the default currency using a current exchange rate. Thus, 1,000 
> shares of some Euro denominated invest bought for $10,000 at, say, a 0.90 
> $ to Euro conversion (a $10,000 buy of 1,000 ?9 shares) will show a $2,082 
> gain if the same shares are still worth Euro 9 but the Euro that sold for 
> $1.11 when you bought it now buys $1.34 (a 0.7449 $ to Euro conversion or 
> a 1.342 Euro to $ conversion) when you sell it. (Hopefully I got the 
> example right. This stuff messes with my mind.)
>
> "Christian" <Christian@discussions.microsoft.com> wrote in message 
> news:0706643B-427D-4198-9E7F-7E7E73A6C3A3@microsoft.com...
>> Does Money keep track of the cost basis for investments in foreign 
>> currence
>> in the base currency or in the investment currency? The reason I ask is
>> because I have investments where the cost basis amount  in foreign 
>> currency
>> is different from the buy amount in foreign currency. I would have 
>> expected
>> the cost basis to stay fixed in the investment currency but it could be 
>> that
>> it changes with the exchang rate towards the base currency. Does someone 
>> know
>> about this?
>>
>> Thanks.
>
> 


0
4/5/2007 4:59:27 PM
In microsoft.public.money, Dick Watson wrote:

>I hasten to add that I don't *know* how Money treats it. I'm extrapolating 
>from how I think it stores currency conversion transactions to how I suspect 
>it works with that data in this case.

If I remember previous discussions correctly, Money records the
purchase price in the "Account currency". As exchange rates change,
the basis value in a different currency would follow the exchange
rate. That would cause a problem in filling out capital gains taxes
if the account currency was not the same as the taxing body
currency.

0
via_newsgroup (13114)
4/5/2007 5:10:50 PM
Perhaps I leaped to an assumption about something I wasn't in a position to 
test here. If the Investment Cash Account is in a non-default currency and 
the investment is made from the Investment cash account, I could see where 
this would probably be an issue.

If the Investment is made from a cash account in the default currency, then, 
well, test it to find out...

"Cal Learner-- MVP" <via_newsgroup@please.tnx> wrote in message 
news:auaa13pl9fltein6ba3ce9ei22v9k5au4c@4ax.com...
> In microsoft.public.money, Dick Watson wrote:
>
>>I hasten to add that I don't *know* how Money treats it. I'm extrapolating
>>from how I think it stores currency conversion transactions to how I 
>>suspect
>>it works with that data in this case.
>
> If I remember previous discussions correctly, Money records the
> purchase price in the "Account currency". As exchange rates change,
> the basis value in a different currency would follow the exchange
> rate. That would cause a problem in filling out capital gains taxes
> if the account currency was not the same as the taxing body
> currency.
> 


0
4/5/2007 7:56:56 PM
Reply:

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