Taxes: Long-term equity investing abroad, what needs to be tracked?

I saw [this thread](https://www.reddit.com/r/JapanFinance/comments/1b73z5p/foreign_exchange_gain_taxable/) the other day related to foreign exchange gains among other posts on the topic relating to possible “ghost gains” when the yen weakens when compared to the original purchase time of an asset.

As an American who needs to invest outside of Japan, I’m looking to clarify specifically what I’ll need to track for the future withdrawals and tax filing considerations.

/u/starkimpossibility’s [comment](https://www.reddit.com/r/JapanFinance/comments/1b73z5p/foreign_exchange_gain_taxable/ktg57ay/) on that thread linked above caught my attention and I thought perhaps I’ve been overestimating what I need to track, but I’d rather ask and clarify if possible.

In a hypothetical situation as follows (assuming no/minimal fees):

* Exchange rate of 145 JPY to 1 USD
* Convert 1,000,000 JPY to, let’s say, $6,895 USD
* Send $6,895 USD to US investment account
* Buy 75 units of some ETF “X” at $91.50 per unit

… some number of years pass …

* Sell 20 units of said ETF “X” at $150 per unit
* Send $3,000 USD to Japan account
* Convert $3,000 USD to JPY at 170 JPY / USD
* Now have an additional 510,000 JPY in Japan yen bank account

In this scenario, I originally thought I’d need to track the lifecycle of every yenny (ie. initial foreign exchange rate, exchange rate at time of ETF purchase, purchase price of ETF, sale price of ETF, exchange rate at sale, and final exchange rate after USD transfer) and calculate the various deltas across the contained events. Is this accurate or can we more simply track just the USD-based gain of the asset, exchange rate at asset sold (for gain calculation), and rate when converted to yen for the potential forex gain?

Or is it also necessary to track the exchange rate at time of asset purchase so the gain calculation can include the delta in exchange rate (ie. (20 * $150 * 170 – 20 * $91.50 * 145) rather than (20 * $150 – 20 * $91.50) * 170)?

Sorry for the wall of text, appreciate any insight!

by bruxis

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