If I have 20,000 euros in a bank abroad in Europe and the exchange rate
Is $1.40/ Euro the money that I will transfer here to the States will
Be equivalent to $28,000. Is the 8,000 difference between currencies considered
An income based on the increase and therefore a tax liability ?

Yian2010

Hello y:

You'll have more dollars than you had euros, but you won't have made any INCOME. Therefore, there'll be no income tax due.

However, if you bought euros cheaper than you're selling them for, there MIGHT be a capital gains tax.

excon

Well, Excon is partly right. There will be a currency gain if you bought them for less than the current exchange rate but it will be ordinary income.

No it is not income.
If you buy or sell currency, you have taxable income or loss.