Multi-currency investments and Section 988 gains

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SomeCallMeTim

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Mar 11, 2026, 6:29:34 AM (20 hours ago) Mar 11

to Beancount

I’ve been working on a pattern to track:

* EUR cash lots with USD basis (for U.S. section 988-style FX gain/loss)
* A stock traded in EUR, with cost basis in EUR (not USD)
* Capital gains in both EUR and USD for tax reporting
* FX gain only when EUR is actually disposed (when a stock is bought with EUR, or when a EUR to USD conversion occurs)

I’d really appreciate feedback on whether this is idiomatic Beancount and if there are cleaner ways to express the same economics.

Below is a complete, runnable example with prices/rates chosen to keep the math simple. I’d love any feedback on more elegant patterns, potential pitfalls, or ways to simplify this while still keeping explicit EUR lots, EUR-based stock cost, and U.S. tax reporting needs (section 988-style FX plus capital gains in both currencies).

option "operating_currency" "USD"

1970-01-01 open Assets:US:Checking
1970-01-01 open Assets:EU:Checking
1970-01-01 open Assets:IBKR:BVME:IMBL
name: "Internazionale Imobiliare - Milan Exchange"
1970-01-01 open Income:US:FX:Sec988
1970-01-01 open Income:CapGains:USD
1970-01-01 open Income:CapGains:EUR
1970-01-01 open Equity:Tax:CapGains:Bridge
1970-01-01 open Equity:Opening-Balances

; ----------------------------------------------------------------------
; EUR/USD Price Table
; ----------------------------------------------------------------------

2026-02-01 price EUR 1.20 USD
2026-03-01 price EUR 1.15 USD
2026-04-01 price EUR 1.25 USD
2026-05-01 price EUR 1.30 USD
2026-06-01 price EUR 1.40 USD

; ----------------------------------------------------------------------
; Initial funding in USD
; ----------------------------------------------------------------------

2026-01-01 * "Initial funding of US Checking"
Assets:US:Checking 5000.00 USD
Equity:Opening-Balances -5000.00 USD

; ----------------------------------------------------------------------
; Buy EUR in two lots (these EUR lots later fund the IMBL buy)
; Lot 1: 500 EUR for 600 USD -> 1.20 USD/EUR
; Lot 2: 500 EUR for 575 USD -> 1.15 USD/EUR
; Combined EUR basis: 1175 USD
; ----------------------------------------------------------------------

2026-02-01 * "Buy EUR lot 1"
Assets:EU:Checking 500 EUR {"20260201"} @@ 600.00 USD
Assets:US:Checking -600 USD

2026-03-01 * "Buy EUR lot 2"
Assets:EU:Checking 500 EUR {"20260301"} @@ 575.00 USD
Assets:US:Checking -575 USD

; ----------------------------------------------------------------------
; Buy 100 IMBL with 1000 EUR (10 EUR/sh)
; At trade time, 1 EUR = 1.25 USD, so 1000 EUR = 1250 USD.
; Section 988 gain on EUR used: 1250 - 1175 = 75 USD.
; IMBL is kept with EUR cost; FX gain goes to Income:US:FX:Sec988.
; ----------------------------------------------------------------------

2026-04-01 * "Buy 100 IMBL with EUR, realize FX gain on EUR lots"
Assets:EU:Checking -500 EUR {"20260201"} @ 1.25 USD
Assets:EU:Checking -500 EUR {"20260301"} @ 1.25 USD
Assets:EU:Checking 1000 EUR @@ 1250 USD
Income:US:FX:Sec988 -75 USD
Assets:IBKR:BVME:IMBL 100 IMBL {"20260401"} @@ 1000 EUR
Assets:EU:Checking -1000 EUR

; ----------------------------------------------------------------------
; Sell the 100 IMBL for EUR, no immediate 988 gain
; Price: 11 EUR/sh -> proceeds 1100 EUR.
; EUR/USD = 1.30, so proceeds get a new USD basis 1430.
; Capital gain: 100 EUR, also tracked in USD (130 USD) for tax.
; ----------------------------------------------------------------------

2026-05-01 * "Sell 100 IMBL for EUR, record EUR capital gain"
Assets:IBKR:BVME:IMBL -100 IMBL {"20260401"}
Assets:EU:Checking 1100.00 EUR
Income:CapGains:EUR -100.00 EUR
Assets:EU:Checking -1100.00 EUR @@ 1430.00 USD
Assets:EU:Checking 1100 EUR {"20260501"} @@ 1430.00 USD
Income:CapGains:USD -130 USD @@ 100.00 EUR
Equity:Tax:CapGains:Bridge 100 EUR

; ----------------------------------------------------------------------
; Later EUR -> USD conversion (where section 988 is realized)
; Assume one month later, 1 EUR = 1.40 USD.
; EUR disposed: 1100 EUR
; USD received: 1540 USD
; FX gain: 1540 - 1430 = 110 USD (section 988-style).
; ----------------------------------------------------------------------

2026-06-01 * "Convert 1100 EUR back to USD, realize section 988 gain"
Assets:EU:Checking -1100 EUR {"20260501"}
Income:US:FX:Sec988 -110.00 USD
Assets:US:Checking 1540.00 USD