Hi,
We are totally shocked about what happened to us. Has anyone experienced the same? Can anyone help?

We are L1 visa - expatriates from Germany. We came to the US in 2006 and have filed our second tax return this year. We sold securities from our German account last year which we had bought a long time ago – before we moved to the US. Our tax consultant based her calculations on the Dollar exchange rate from the time when we bought and the rate from the time when we sold the securities. So a loss or a small gain in Euros in her calculations turned out to be a huge gain in Dollars. But we never realized this gain. Immediately after selling the securities in Euros in Germany, we invested the money again in Germany. The money never left our German Euro-account and we never realized the gain in Dollars.

We cannot believe that US tax law works like that. Is there any way we could calculate the amount differently, e.g. base the calculation on only one exchange rate or convert the Euro amount of the gain/ loss into Dollars? On the IRS website it says a qualified business unit (QBU) can be dealt with differently – does our account qualify for that?

If you can help we would really appreciate that. Thank you!!!