Need to pay a high capital gain tax despite no gain

It’s time to consider your tax and I have calculated my capital gains. Tricky thing in my case is an exchange rate. Yen’s appreciation favors me because my capital gain/loss of trading US stocks needs to be converted in JPY. On the other hand,Yen’s depreciation really hurts me.
In 2015, thus far I have made a capital gain of $376, but the same gain is JPY 1,341,637 in Yen. I have never converted currency between $ and JPY to conduct those trades, but on paper my capital gain is JPY 1,341,637 which is $11,114 if I convert it into US$ with today’s exchange rate. I made only $376, but I have to pay at least $11,114@20.61% = $2,291 as a capital gain tax! This is mainly because of RAI’s acquisition of LO. I bought LO shares when JPY was very high against US$ (JPY 80.98 and JPY 94.58)and RAI’s LO acquisition happened on June 12 this year when JPY was 122.96 for 1 US$. Capital gain on paper from that transaction alone is JPY 1,099,093. I was a very happy shareholder of LO’s. I enjoyed more than 6% of YOC. Then, suddenly this taxable transaction happened.
I think that I was very unfortunate and I don’t know how to deal with this big tax bill that I have to pay next March. A sad thing often occurs in your life. This is one of the that kind of events.

Disclosure: Long RAI

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「Need to pay a high capital gain tax despite no gain」への3件のフィードバック

  1. It’s all new to me with the currency conversion. I’ve made some buys on European mutual fund in my 401k, I hope the euro will get back to what it was, when the stock go sideway, I’d stand to make 50% profit. I would imagine as the world economy get back to its previous levels, invest in foreign stocks will pay off in the long run. As for you, when the fed increase rate, the USD will increase substantially, whatever in your porofolio, will be a big profit. 🙂

    いいね

    1. Thank you for the comment again. When it comes to dividend growth investing, I think an American resident is the best. In Japan there is only one dividend growth company more than 20 years of track record, which is Kao. http://toyokeizai.net/articles/-/77559?page=2
      However, its dividend yield is just 1.25%. That’s why I need to invest in the US despite the risk of exchange rate. I bet on the US and I will continue.

      いいね

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