Sorry, but the Quaker Oats thread was far more interesting for meThis is an incomplete story.
I went to the tax office yesterday. I thought I had everything together (have always done it on my own), and was gulping at the large (overseas) capital gains I was going to have to pay taxes on. I had talked to one specific NTA person the week before, and requested him again. He took a look at my two-page excel sheet, and his response was, "You'll be paying too much in taxes, you need to do this another way."
He explained that there were two ways to calculate those gains. The first is the way that I was using. Here, you specify the security, dates purchase & sold, # of shares, amounts on each date--and then use the FX rate on each of those dates to convert to yen, then gain/loss, and so on.
The problem was that it was only this past autumn that I realized that many trades in 2013 were generating unrealistic paper profits. For example, say I bought something for $10,000 in Oct. 2012. At that time the exchange rate was about 80/$. Further, and just as an example, say that I sold that same thing for $10k in Dec. 2013, when the f/x rate was 100/$.
In $ terms, there is no profit or loss, but in yen terms it appears that I bought for 800,000 yen and sold for 1,000,000. An apparent 200,000 yen "gain"....! (A paper gain.)
In past tax filings here I've always used the purchase and sale dates for any given thing to calculate f/x conversions. In previous years when the yen was strengthening this worked in my favor--there were even dollar-based gains that looked like losses.
But a large amount of what I sold in 2013 (when the yen was weakening), was what I had bought during the previous year or two. Let's say I have about X-thousand dollars in "true" capital gains (dollar-based), but the weakening yen, and using the specific purchase/sale dates for conversion of dollar values into yen, magnified that X figure by a factor of almost 10. Some dollar-based losses turned into yen-based gains, and any actual gains were amped up even further.
The NTA guy said that the date-specific dollar/yen conversion method was something someone like himself would use--if he wanted to buy an ETF he would go convert some money, send it abroad, buy that ETF, and then repatriate the funds when he sold. In that situation, the dates are important. He said my case looked different and that I should try to calculate the conversion rates differently (more favorably).
How, I asked? I explained that I'd been here for a very long time, and that I'd been regularly converting yen into dollars (probably twice a year, on average). He suggested that I use those exchange rates. (Back to this in a minute.)
In this discussion, he also pointed out a second point of view. Profits/losses on money that has never been in Japan (converted to yen). Say you had $10k in an account in the U.S. before you landed here. If you invested that and made a profit, you would of course have to pay tax on that, but based only on the conversion of that profit into yen on the sale date. Additionally, foreign income while you are here in Japan--you pay tax on it of course, but since it has never been in Japan, when using that foreign income to trade the need to convert to yen on a given security's purchase & sale dates does not apply. Dividends, too. Again, they are paid abroad, and while they are taxed here, when using those to then trade, using the date-specific method to calculate gains does not apply. This chunk of the explanation seemed to be "Money that was produced in dollars stays in dollars."
So back to how to use past, more favorable FX rates (money that was at one time in yen). This will be a new calculation for me, and I think I need some help. I've already gotten a local accountant's contact info, one who has experience with foreigners like myself. I spent yesterday afternoon online with one of my banks, and after downloading about 10 years of past monthly statements, started printing those PDFs. In this case, the records are there, and the challenge will be cataloging the FX actions on a spreadsheet. Hopefully, this one account may substantiate an adequate number of more favorable FX transactions. (In the earlier 2000s, and then further back into the 1990s, I was using a different bank or two, and while there are probably records, those are not online.)
The next few days are going to be busy with this, but I'm hoping it will save me some significant money (to turn this to bikes, altho I've got enough of those, the possible savings would make most anything do-able).
In case you haven't got it, the message here is: Keep all records of FX conversions forever.
And now, back to your usual programming.