You’re a U.S. company buying parts from Japan, selling in Europe, or expanding into Brazil. Every transaction involves a different currency, and exchange rates dance up and down daily. The U.S. tax system has to answer a tricky question: how do we measure profit when business takes place in yen, euros, or reais? This chapter explains exactly that—how tax law treats currency conversions and decides when a currency swing creates a taxable gain or loss.