Determining the basis for capital gain [duplicate]
If you make money in currency speculation (as in your example), that is a capital gain. A more complicated example is if you were to buy and then sell stocks on the mexican stock exchange.  Your capital gain (or loss) would be the difference in value in US dollars of your stocks accounting for varying exchange rates.  It's possible for the stocks to go down and for you to still have a capital gain, and vice versa.