Guest views are now limited to 12 pages. If you get an "Error" message, just sign in! If you need to create an account, click here.

Jump to content
  • CRYPTO REWARDS!

    Full endorsement on this opportunity - but it's limited, so get in while you can!

Taxes when we exchange


Floridian
 Share

Recommended Posts

On 5/11/2018 at 11:17 AM, Floridian said:

 

1.  No, that's wrong.  YOU HAVE TO PROVE IT to the IRS, when you bought it and how much you paid for it, or you pay the highest tax.

2.  You can only bring $10,000 at a time in or out of the country.

3.  If the dinar comes in at $1.00, exchanging $10,000 at a time at the airport exchange booth means 100 trips to the airport exchange booth if you want to exchange 1 million dinar.  You might look a little suspicious.  LOL

 

The government has gotcha!

 

 

 

exchanging Euros, no proof is required when you bought it--why IQD ?

which I.R.S. statute are you referring to

what if somebody bought IQD the exact day of the RV--once again, no proof of what they paid

  • Thanks 1
Link to comment
Share on other sites

2 hours ago, one2one said:

 

exchanging Euros, no proof is required when you bought it--why IQD ?

which I.R.S. statute are you referring to

what if somebody bought IQD the exact day of the RV--once again, no proof of what they paid

 

I believe if it turns out to be long term capital gains, you would have to provide proof that you have held it more than a year.  That’s why you may need proof.

 

Link to comment
Share on other sites

I just spoke to my friend who has his own company as a wealth manager. It will fall under long term capital gains at 15%. He did suggest to me if it is significant gain that for me to put it into Pennsylvania municipal bonds ( that is the state I live in). Collect 5.5% dividends and give the IRS the middle finger the rest of my life because it's non taxable. With the amount I hold that might be a wise option. In a 1 to 1 scenario after taxes I think I could make it on $330K a year tax free and pass the principle on to my son when it comes time.

Link to comment
Share on other sites

2 hours ago, billjr said:

I just spoke to my friend who has his own company as a wealth manager. It will fall under long term capital gains at 15%. He did suggest to me if it is significant gain that for me to put it into Pennsylvania municipal bonds ( that is the state I live in). Collect 5.5% dividends and give the IRS the middle finger the rest of my life because it's non taxable. With the amount I hold that might be a wise option. In a 1 to 1 scenario after taxes I think I could make it on $330K a year tax free and pass the principle on to my son when it comes time.

Yeah, you're gonna want to see a tax attorney post RV.

  • Upvote 1
Link to comment
Share on other sites

3 hours ago, billjr said:

I just spoke to my friend who has his own company as a wealth manager. It will fall under long term capital gains at 15%. He did suggest to me if it is significant gain that for me to put it into Pennsylvania municipal bonds ( that is the state I live in). Collect 5.5% dividends and give the IRS the middle finger the rest of my life because it's non taxable. With the amount I hold that might be a wise option. In a 1 to 1 scenario after taxes I think I could make it on $330K a year tax free and pass the principle on to my son when it comes time.

 

You still will have to pay tax when you exchange your dinars for dollars in order to put it into Municipal Bonds.

I doubt the State of Pennsylvania will accept dinar.  They will want you to invest dollars into their Municipal Bonds.

  • Upvote 1
Link to comment
Share on other sites

8 hours ago, Floridian said:

 

You still will have to pay tax when you exchange your dinars for dollars in order to put it into Municipal Bonds.

I doubt the State of Pennsylvania will accept dinar.  They will want you to invest dollars into their Municipal Bonds.

You know what they say about a good plan? It was great right up and until the point of implementation. Then it became...

  • Upvote 1
Link to comment
Share on other sites

18 hours ago, Floridian said:

 

I believe if it turns out to be long term capital gains, you would have to provide proof that you have held it more than a year.  That’s why you may need proof.

 

 

One of the reasons I believe this will wind up being ordinary income is because the IRS has never seen anything like this.  People do not normally buy the actual currency and hold onto it hoping for an increase in value then going to the bank to exchange it.  They have nothing in their tax code (even as crazy as it is) that specifically addresses this situation  Therefore - I believe they will go to the rules they currently have about

what I believe they will see as an over-the counter- currency exchange.  Most likely at the time this happens you will have 2 functional currencies, one being exchanged for the other at an institution or business that is able to do so.  This is the definition of an over-the-counter exchange and is regulated by IRS Code Section 988. This would mean ordinary income.

 

According to IRS Code Section 1256, which deals with long term and short term capital gains of currency trading, Over-the-counter foreign exchange options and currency swaps are not eligible.  

 

Remember - these are the same people that do not treat cryptocurrencies (Bitcoin, Ethereum, et. al.)  as currency, but as property.  Believe me - that makes paying for things with them in the US a major headache, as each transaction IS to be considered at a capital gain or loss - even if it's just for buying a cup of coffee or maybe a rug off of Wayfair. The record keeping is terrible.  

 

On a more practical note - I know for me I will probably have to treat it as ordinary income anyway - because I have no receipt for most of my Dinar.  I got my through a straight up exchange of currencies when I was in Iraq in 2005.  Just wanted to show everyone when I came home what an Iraqi millionaire looked like...with some extras to give to friends as souvenirs.  I sure hope they kept them...most of what I gave out we 10,000 dinar bills. 

  • Upvote 3
Link to comment
Share on other sites

18 minutes ago, tankdude said:

 

One of the reasons I believe this will wind up being ordinary income is because the IRS has never seen anything like this.  People do not normally buy the actual currency and hold onto it hoping for an increase in value then going to the bank to exchange it.  They have nothing in their tax code (even as crazy as it is) that specifically addresses this situation  Therefore - I believe they will go to the rules they currently have about

what I believe they will see as an over-the counter- currency exchange.  Most likely at the time this happens you will have 2 functional currencies, one being exchanged for the other at an institution or business that is able to do so.  This is the definition of an over-the-counter exchange and is regulated by IRS Code Section 988. This would mean ordinary income.

 

According to IRS Code Section 1256, which deals with long term and short term capital gains of currency trading, Over-the-counter foreign exchange options and currency swaps are not eligible.  

 

Remember - these are the same people that do not treat cryptocurrencies (Bitcoin, Ethereum, et. al.)  as currency, but as property.  Believe me - that makes paying for things with them in the US a major headache, as each transaction IS to be considered at a capital gain or loss - even if it's just for buying a cup of coffee or maybe a rug off of Wayfair. The record keeping is terrible.  

 

On a more practical note - I know for me I will probably have to treat it as ordinary income anyway - because I have no receipt for most of my Dinar.  I got my through a straight up exchange of currencies when I was in Iraq in 2005.  Just wanted to show everyone when I came home what an Iraqi millionaire looked like...with some extras to give to friends as souvenirs.  I sure hope they kept them...most of what I gave out we 10,000 dinar bills. 

 

Oh my gosh!  I sure hope your friends kept your gifts.  😁

This is a very interesting take on capital gains taxes, TankDude.  Thanks for this explanation.

True, the IRS has never had to deal with anything like this before.

Hopefully, if they say it's short-term gains, people will fight it.  Maybe with enough people fighting, they could change their minds about it.

Probably take a few years, though.  

I always have heard you should set aside 50% for taxes and fees, just in case.  Not at all fair, but when is the government fair?

  • Upvote 2
Link to comment
Share on other sites

17 hours ago, Floridian said:

 

You still will have to pay tax when you exchange your dinars for dollars in order to put it into Municipal Bonds.

I doubt the State of Pennsylvania will accept dinar.  They will want you to invest dollars into their Municipal Bonds.

Yes. After 15% taxes invest balance into PMB which dividends are completely tax exempt. Like I said I could make it on 330K a year tax free no problem.

  • Downvote 1
Link to comment
Share on other sites

9 hours ago, Theseus said:

You know what they say about a good plan? It was great right up and until the point of implementation. Then it became...

Better to have a game plan than none at all. LOL, all plans change. At least that has been my experience.

Link to comment
Share on other sites

1 hour ago, one2one said:

what about people who bought dinar on EBAY ? or somebody gave them 100,000 dinar as a gift

showing proof of exact date of purchase does not make common sense

 

If I had bought on Ebay I would have kept a copy of my order, showing date and price.

As far as getting dinar as a gift, the giftee is taxed the same as the giftor, if the gift was given more than a year before the RV.

 

The person who gives dinar needs proof of gift (notarized letter or the like) so that they won't be taxed for the money they gave away.  They need something to show the gift was actually given.  This establishes the date of the gift and the correct taxes to be paid by both giftor and giftee.

 

The way I understand it, if you gave the gift more than a year before the RV, it will be a Long-Term Capital Gain to the person who got the gift.

If you gave the gift less than a year before the RV, it will be a Short-Term Capital Gain to them.

 

This is the way I understand it but we will have to see when the time comes, exactly how the government is going to treat this gain.

 

 

 

Link to comment
Share on other sites

1 hour ago, Floridian said:

 

If I had bought on Ebay I would have kept a copy of my order, showing date and price.

As far as getting dinar as a gift, the giftee is taxed the same as the giftor, if the gift was given more than a year before the RV.

 

The person who gives dinar needs proof of gift (notarized letter or the like) so that they won't be taxed for the money they gave away.  They need something to show the gift was actually given.  This establishes the date of the gift and the correct taxes to be paid by both giftor and giftee.

 

The way I understand it, if you gave the gift more than a year before the RV, it will be a Long-Term Capital Gain to the person who got the gift.

If you gave the gift less than a year before the RV, it will be a Short-Term Capital Gain to them.

 

This is the way I understand it but we will have to see when the time comes, exactly how the government is going to treat this gain.

 

 

 

what about soldiers who bought dinar in Iraq ?

and how can the dinar be singled out for special rules that do not apply to any other foreign currencies ?

how can the I.R.S. have time to deal with every person who exchanges IQD for USD ?

Link to comment
Share on other sites

12 minutes ago, one2one said:

what about soldiers who bought dinar in Iraq ?

and how can the dinar be singled out for special rules that do not apply to any other foreign currencies ?

how can the I.R.S. have time to deal with every person who exchanges IQD for USD ?

 

Okay, look, you can think up all kinds of scenarios.

I was just trying to be helpful using information that I have read regarding this, over the many years I've been in it.

 

The bottom line is that no one really knows how Uncle Sam is going to treat this occurrence, as it has never happened before.

My best advice is to set aside 50%, just in case, because if they want to tax it as ordinary income and you have spent too much money, you will be hit with hefty fines for not paying the correct tax.  We will all know how far the government's hand is in our pocket when the RV happens.

  • Like 2
  • Upvote 1
Link to comment
Share on other sites

On a more practical note - I know for me I will probably have to treat it as ordinary income anyway - because I have no receipt for most of my Dinar."  And this is why I said in my previous post that you need to keep your receipts so you have proof of purchase, if you bought your dinar and held it for over a year, when you file your taxes you definitely file it long term capitol gains, if the IRS comes back on an audit, you have proof you had your dinar " AS AN INVESTMENT"  and held it over a year hence long term capitol gains.

  • Upvote 1
Link to comment
Share on other sites

On 5/20/2018 at 10:30 AM, madness said:

On a more practical note - I know for me I will probably have to treat it as ordinary income anyway - because I have no receipt for most of my Dinar."  And this is why I said in my previous post that you need to keep your receipts so you have proof of purchase, if you bought your dinar and held it for over a year, when you file your taxes you definitely file it long term capitol gains, if the IRS comes back on an audit, you have proof you had your dinar " AS AN INVESTMENT"  and held it over a year hence long term capitol gains.

That's great if they decide to do it that way....but I didn't get a receipt.  I walked up to a number if different merchants in Iraq ( I was deployed) and simply exchanged US dollars for dinar...would have done it at a bank but they wouldn't allow us in...*LOL*

 

  • Upvote 1
Link to comment
Share on other sites

1 minute ago, tankdude said:

That's great if they decide to do it that way....but I didn't get a receipt.  I walked up to a number if different merchants in Iraq ( I was deployed) and simply exchanged US dollars for dinar...would have done it at a bank but they wouldn't allow us in...*LOL*

 

Same boat...got most of mine on the FOB!!

  • Upvote 1
Link to comment
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
 Share

  • Recently Browsing   0 members

    • No registered users viewing this page.



  • Testing the Rocker Badge!

  • Live Exchange Rate

×
×
  • Create New...

Important Information

By using this site, you agree to our Terms of Use.