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ExecConsult

What the IRS REALLY has to say?

24 posts in this topic

Any of you who have read my posts know that I have been preaching that an investment in Dinar will have ordinary income treatment instead of capital gains. I have already had my analysis corroborated by an "International Examiner" at the IRS. She was kind and actually supplied me more information that supports my analysis.

Anyway, I got to thinking, "We see so many different answers coming from the IRS help lines. I wonder if they could get it right with a little nudging in the right direction."

(Mostly I did this just for fun. If you want to see the more serious post on the topic click on the following link and go to post #4:
http://dinarvets.com/forums/index.php?/topic/45350-real-tax-information/ )

So I called the IRS help line. The lady I got on the phone brings up the same mumbo jumbo about publication 525 p.33 and I stopped her and told her I was aware of it and where it came from (section 988) and that in section 988 "Personal Transaction" was very narrowly defined. She told me that she didn't have the ability to research the topic and I'd have to use their email service. So I did. On the 21ST I posted the following question:
__________________________________________________________________________________________________________
[b][i]Holding physical non-traded currency (Iraqi Dinar). So not under 1256.

Pub 525 & Sec. 988(e)(2) say for personal transaction income is capital gains. But 988(e)(3) defines personal transaction narrowly.

What is treatment for following circumstances:

Purchased Dinar as investment - exchange after 1yr for profit

Receive Dinar as gift - exchange after 1yr at profit over basis

Purchased Dinar because working in Iraq - return to US, hold for 1yr and exchange for profit.

Thanks,
Mark[/i][/b]
______________________________________________________________________

About a week later I received the following:

"Due either to unusual demand or the nature of your question, we have not been able to respond within the normal time. Please accept our apology for the delay. We will respond as quickly as our resources allow. Thank you for your patience."

I laughed and continued to wait. What came yesterday was a humdinger:

_______________________________________________________________________
The Answer To Your Question Is:
Thank you for using our service. Our basic Electronic Tax Law Assistance is designed to assist the general public in complying with their Federal tax obligations. Our goal is to provide complete and accurate responses to as many taxpayers as possible. With that goal in mind and to maximize our resources, we are unable to provide assistance on highly technical and complex issues that involve lengthy research. Due to the technical or complex nature of your inquiry we are unable to provide a response via this service. You may utilize our web site http://www.irs.gov/, or a private research service to supplement the information provided within the IRS publications. You may also want to consider the use of a tax professional to address the specific issue.
Taxpayers may view the Internal Revenue Code (Title) 26, at the U. S. House of Representatives web site at http://uscode.house.gov/lawrevisioncounsel.shtml and the Code of Federal Regulations 26, at the U. S. National Archives and Records Administration web site at http://www.access.gpo.gov/nara/cfr/cfr-table-search.html.
I hope this helps.
_______________________________________________________________________
I was disappointed but had to laugh at the same time.

In other words, "we don't have a clue and the only way you get someone who knows what they are talking about at this level is to pay someone to get a Private Letter Ruling from us."

I'm not expecting a lot of response to this. I just thought it was funny and wanted to share.

Best of Blessings,
Mark
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[quote name='ExecConsult' date='04 January 2011 - 03:14 PM' timestamp='1294175684' post='328653']
Any of you who have read my posts know that I have been preaching that an investment in Dinar will have ordinary income treatment instead of capital gains. I have already had my analysis corroborated by an "International Examiner" at the IRS. She was kind and actually supplied me more information that supports my analysis.

Anyway, I got to thinking, "We see so many different answers coming from the IRS help lines. I wonder if they could get it right with a little nudging in the right direction."

(Mostly I did this just for fun. If you want to see the more serious post on the topic click on the following link and go to post #4:
http://dinarvets.com/forums/index.php?/topic/45350-real-tax-information/ )

So I called the IRS help line. The lady I got on the phone brings up the same mumbo jumbo about publication 525 p.33 and I stopped her and told her I was aware of it and where it came from (section 988) and that in section 988 "Personal Transaction" was very narrowly defined. She told me that she didn't have the ability to research the topic and I'd have to use their email service. So I did. On the 21ST I posted the following question:
__________________________________________________________________________________________________________
[b][i]Holding physical non-traded currency (Iraqi Dinar). So not under 1256.

Pub 525 & Sec. 988(e)(2) say for personal transaction income is capital gains. But 988(e)(3) defines personal transaction narrowly.

What is treatment for following circumstances:

Purchased Dinar as investment - exchange after 1yr for profit

Receive Dinar as gift - exchange after 1yr at profit over basis

Purchased Dinar because working in Iraq - return to US, hold for 1yr and exchange for profit.

Thanks,
Mark[/i][/b]
______________________________________________________________________

About a week later I received the following:

"Due either to unusual demand or the nature of your question, we have not been able to respond within the normal time. Please accept our apology for the delay. We will respond as quickly as our resources allow. Thank you for your patience."

I laughed and continued to wait. What came yesterday was a humdinger:

_______________________________________________________________________
The Answer To Your Question Is:
Thank you for using our service. Our basic Electronic Tax Law Assistance is designed to assist the general public in complying with their Federal tax obligations. Our goal is to provide complete and accurate responses to as many taxpayers as possible. With that goal in mind and to maximize our resources, we are unable to provide assistance on highly technical and complex issues that involve lengthy research. Due to the technical or complex nature of your inquiry we are unable to provide a response via this service. You may utilize our web site http://www.irs.gov/, or a private research service to supplement the information provided within the IRS publications. You may also want to consider the use of a tax professional to address the specific issue.
Taxpayers may view the Internal Revenue Code (Title) 26, at the U. S. House of Representatives web site at http://uscode.house.gov/lawrevisioncounsel.shtml and the Code of Federal Regulations 26, at the U. S. National Archives and Records Administration web site at http://www.access.gpo.gov/nara/cfr/cfr-table-search.html.
I hope this helps.
_______________________________________________________________________
I was disappointed but had to laugh at the same time.

In other words, "we don't have a clue and the only way you get someone who knows what they are talking about at this level is to pay someone to get a Private Letter Ruling from us."

I'm not expecting a lot of response to this. I just thought it was funny and wanted to share.

Best of Blessings,
Mark
[/quote]
All of the talk about how the IRS treats certain activities regarding taxes is nothing more than talk until you verify you are subject to the rules they impose. Read "Cracking The Code" and you will discover what I mean.
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[size="3"]For what it's worth, I've had conversations with tax attorney's and showed them the conflicting IRS rules (pointing to the IRS pub that says treat it as "capital gains" and another IRS pub which indicates it should be treated as "general income"). Anwway, the advice was "because the IRS provides conflicting rules, use either one, but make sure you copy the IRS pub and retain in your possession so as to support the type of tax you are paying".

Of course, I'll be pointing to the IRS Pub that says "Capital Gains"......[/size]
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[quote name='ExecConsult' date='04 January 2011 - 02:14 PM' timestamp='1294175684' post='328653']
Any of you who have read my posts know that I have been preaching that an investment in Dinar will have ordinary income treatment instead of capital gains. I have already had my analysis corroborated by an "International Examiner" at the IRS. She was kind and actually supplied me more information that supports my analysis.

Anyway, I got to thinking, "We see so many different answers coming from the IRS help lines. I wonder if they could get it right with a little nudging in the right direction."

(Mostly I did this just for fun. If you want to see the more serious post on the topic click on the following link and go to post #4:
[url="http://dinarvets.com/forums/index.php?/topic/45350-real-tax-information/"]http://dinarvets.com...ax-information/[/url] )

So I called the IRS help line. The lady I got on the phone brings up the same mumbo jumbo about publication 525 p.33 and I stopped her and told her I was aware of it and where it came from (section 988) and that in section 988 "Personal Transaction" was very narrowly defined. She told me that she didn't have the ability to research the topic and I'd have to use their email service. So I did. On the 21ST I posted the following question:
__________________________________________________________________________________________________________
[b][i]Holding physical non-traded currency (Iraqi Dinar). So not under 1256.

Pub 525 & Sec. 988(e)(2) say for personal transaction income is capital gains. But 988(e)(3) defines personal transaction narrowly.

What is treatment for following circumstances:

Purchased Dinar as investment - exchange after 1yr for profit

Receive Dinar as gift - exchange after 1yr at profit over basis

Purchased Dinar because working in Iraq - return to US, hold for 1yr and exchange for profit.

Thanks,
Mark[/i][/b]
______________________________________________________________________

About a week later I received the following:

"Due either to unusual demand or the nature of your question, we have not been able to respond within the normal time. Please accept our apology for the delay. We will respond as quickly as our resources allow. Thank you for your patience."

I laughed and continued to wait. What came yesterday was a humdinger:

_______________________________________________________________________
The Answer To Your Question Is:
Thank you for using our service. Our basic Electronic Tax Law Assistance is designed to assist the general public in complying with their Federal tax obligations. Our goal is to provide complete and accurate responses to as many taxpayers as possible. With that goal in mind and to maximize our resources, we are unable to provide assistance on highly technical and complex issues that involve lengthy research. Due to the technical or complex nature of your inquiry we are unable to provide a response via this service. You may utilize our web site [url="http://www.irs.gov/"]http://www.irs.gov/[/url], or a private research service to supplement the information provided within the IRS publications. You may also want to consider the use of a tax professional to address the specific issue.
Taxpayers may view the Internal Revenue Code (Title) 26, at the U. S. House of Representatives web site at [url="http://uscode.house.gov/lawrevisioncounsel.shtml"]http://uscode.house....oncounsel.shtml[/url] and the Code of Federal Regulations 26, at the U. S. National Archives and Records Administration web site at [url="http://www.access.gpo.gov/nara/cfr/cfr-table-search.html."]http://www.access.gp...le-search.html.[/url]
I hope this helps.
_______________________________________________________________________
I was disappointed but had to laugh at the same time.

In other words, "we don't have a clue and the only way you get someone who knows what they are talking about at this level is to pay someone to get a Private Letter Ruling from us."

I'm not expecting a lot of response to this. I just thought it was funny and wanted to share.

Best of Blessings,
Mark
[/quote]


Greetings Mark,

I appreciate your investigation, and the time spent on this subject matter.
Unfortunately, it is not a surprise regarding IRS's incompetence of not being able to produce an answer.
And yet, do we have any DV's on here with Kwaiti's RV experience who may have a resolution for this?
I would think Adam Montana surely would have an answer for these questions.
Is there anyone on here who have filed taxes post Kwaiti's RV?

Any legitimate response would be grateful.
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[quote name='boomcreek' date='04 January 2011 - 03:24 PM' timestamp='1294176280' post='328663']
All of the talk about how the IRS treats certain activities regarding taxes is nothing more than talk until you verify you are subject to the rules they impose. Read "Cracking The Code" and you will discover what I mean.
[/quote]
They work in the common law while they have you work in the corporate law- This way all governments will screw you up because you dont know what your talikg about. Thats the way they want it. Rothchild has done this when A. R othchild had an advisor look into this and it was crafted. When you learn these 2 factors then you have to learn how to operate in both like they do and ALL politians and then and only then will you win. Wesley Snipes would have won his case on income tax if he hadve had someone who understood both. When you admit to something OR admit to knowing MORE Than they then it is then you will end up teaching them and that is when you find yourself in trouble because you are NOT ALLOWED To smarter than the ones putting the screws to you---LISTEN UP -----WORD-Vern
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:lol:

I've been telling people this for a while now - there is no way to know how we will be taxed, even the IRS doesn't know yet! Great post, Exec.

[quote name='Capital stack' date='04 January 2011 - 03:51 PM' timestamp='1294177880' post='328698']
Greetings Mark,

I appreciate your investigation, and the time spent on this subject matter.
Unfortunately, it is not a surprise regarding IRS's incompetence of not being able to produce an answer.
And yet, do we have any DV's on here with Kwaiti's RV experience who may have a resolution for this?
I would think Adam Montana surely would have an answer for these questions.
Is there anyone on here who have filed taxes post Kwaiti's RV?

Any legitimate response would be grateful.
[/quote]

There was no way to hold the currency over a year with the Kuwaiti RV - I paid normal income taxes.

I wish I knew then what I know now.
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[quote name='boomcreek' date='04 January 2011 - 03:24 PM' timestamp='1294176280' post='328663']
All of the talk about how the IRS treats certain activities regarding taxes is nothing more than talk until you verify you are subject to the rules they impose. Read "Cracking The Code" and you will discover what I mean.
[/quote]
They work in the common law while they have you work in the corporate law- This way all governments will screw you up because you dont know what your talking about. Thats the way they want it. Rothchild has done this when A. Rothchild had an advisor look into this and it was crafted. When you learn these 2 factors then you have to learn how to operate in both like they do and ALL politians and then and only then will you win. Wesley Snipes would have won his case on income tax if he hadve had someone who understood both. When you admit to something OR admit to knowing MORE Than they then it is then you will end up teaching them and that is when you find yourself in trouble because you are NOT ALLOWED To be smarter than the ones putting the screws to you---There is no law for income tax -- it is all voluntary--- its a make work project-learn the rules of the road- why do you think the rich dont pay. ? Do you think Rothchild pays? Where does it say they are better than you? -The Pres. says that he will tax the rich. yup he has and then they have programs for them that give it all back and it all lies on our and your kids back- Trust me on this one. This all can be proven-LISTEN UP -----WORD-Vern
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[quote name='jomans' date='04 January 2011 - 03:36 PM' timestamp='1294176998' post='328683']
[size="3"]For what it's worth, I've had conversations with tax attorney's and showed them the conflicting IRS rules (pointing to the IRS pub that says treat it as "capital gains" and another IRS pub which indicates it should be treated as "general income"). Anwway, the advice was "because the IRS provides conflicting rules, use either one, but make sure you copy the IRS pub and retain in your possession so as to support the type of tax you are paying".

Of course, I'll be pointing to the IRS Pub that says "Capital Gains"......[/size]
[/quote]
I hate to say this - I hate to turn a lighthearted post into something serious, but I've got to chime in here. Also, I don't want anyone to think that I am bashing here. I just need to be sure that people are not missled on one of my posts.

I'm sorry to have to tell you this, but your attorneys are wrong. I never say that lightly. However, there are IRS investigators who actually do know this stuff inside and out and they would agree with me. (Is that presumptuous of me? I am very sure of myself on this one.)

For those of you who don't know this - I am an attorney currently limiting my practice to estate planning, asset protection, and to a lesser extent business organizations. This requires that I deal with tax issues on a semi-regular basis. (I haven't been practicing that much the last couple of years.) I have done quite a bit of research into this area. The stuff you have shown your attorneys is NOT conflicting. It just looks like it is until you research it more. If you really want to understand it, read my analysis at the link above.

What your attorneys have advised you will save you from any penalties for fraud. You may even get away with it (not that this is what I am advocating). However, the IRS has the authority under section 988 to "recharacterize" your income from capital gains to ordinary income. So, if you plan to pay capital gains, be sure to figure out what it would have cost to pay ordinary income taxes. Place the difference in an interest bearing account so that if they do come back and assess additional taxes and interest, you have the money ready to pay them (or to hire an attorney to fight them). If they leave you alone for three years, you should be good to spend the rest of it.

(My original post was really kind of a joke.) To get a "binding" opinion from the IRS, I would need to pay for a Private Letter Ruling. However, that only works for specific circumstances for an individual case (not general guidance for all of us) and I already know the answers anyway. I have had my analysis "informally" corroborated by an "international Investigator" in the IRS. It is actually pretty plain. Following is what the answers should have been:

Scenario 1: Bought dinar as investment - ordinary income (not a "personal transaction" under section 988(e)(3))
Scenario 2: Received as a gift - capital gains - (is a "personal transaction" )
Scenario 3: Bought in Iraq while working there. Depends on the facts. Good basis to say it should receive capital gains treatment if you only acquired Dinar for the purpose of carrying on day to day activities. However, if you have 100 million dinar - some hidden in room in Iraq and some mailed back to US - it is hard to say was not an investment purchase - that you were just using it for daily expenses. This scenario depends on the facts. You should be able to support the facts in case of any audit.

Best of Blessings,
Mark

[quote name='Capital stack' date='04 January 2011 - 03:51 PM' timestamp='1294177880' post='328698']
Greetings Mark,

I appreciate your investigation, and the time spent on this subject matter.
Unfortunately, it is not a surprise regarding IRS's incompetence of not being able to produce an answer.
And yet, do we have any DV's on here with Kwaiti's RV experience who may have a resolution for this?
I would think Adam Montana surely would have an answer for these questions.
Is there anyone on here who have filed taxes post Kwaiti's RV?

Any legitimate response would be grateful.
[/quote]
Greetings Capital stack,

You are welcome for my investigation, but the real investigation is written in the post that you will find at the link I provided above.

Apparently some people did not understand that I didn't contact the IRS because I needed the answers. I already knew the answers well before I ever contacted the IRS. I just wanted to see if I could get someone to give me the right answers without paying for a PLR. The answer is a resounding NO.

I only posted this because I thought their lack of ability to answer these questions was funny. (Maybe that is my boring attorney sense of humor coming through.)

There is no way the average citizen could get this type of analysis without paying big bucks to an attorney or paying the IRS directly to get a private letter ruling. The only information they can get from the IRS when calling in is wrong. If you know enough to get more specific like I did - you don't get anything at all. It is sad.

Best of Blessings,
Mark
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I appreciate your contribution on this matter. I have quoted you several times on this issue, but some folks here just don't seem to get it and want to walk the tight rope. Thanks again for your post.
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Want to thank you for your input on the tax issue. You have provided the best info we have had access to, and most of us appreciate it very very much! The rest just don't want you to be right! I am wondering if you have an idea about the status if your Corporation "received it as a gift" pre-rv, as many of us here have done. Thanks so much Mark!
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[quote name='ExecConsult' date='04 January 2011 - 06:24 PM' timestamp='1294183466' post='328811']
I hate to say this - I hate to turn a lighthearted post into something serious, but I've got to chime in here. Also, I don't want anyone to think that I am bashing here. I just need to be sure that people are not missled on one of my posts.

I'm sorry to have to tell you this, but your attorneys are wrong. I never say that lightly. However, there are IRS investigators who actually do know this stuff inside and out and they would agree with me. (Is that presumptuous of me? I am very sure of myself on this one.)

For those of you who don't know this - I am an attorney currently limiting my practice to estate planning, asset protection, and to a lesser extent business organizations. This requires that I deal with tax issues on a semi-regular basis. (I haven't been practicing that much the last couple of years.) I have done quite a bit of research into this area. The stuff you have shown your attorneys is NOT conflicting. It just looks like it is until you research it more. If you really want to understand it, read my analysis at the link above.

What your attorneys have advised you will save you from any penalties for fraud. You may even get away with it (not that this is what I am advocating). However, the IRS has the authority under section 988 to "recharacterize" your income from capital gains to ordinary income. So, if you plan to pay capital gains, be sure to figure out what it would have cost to pay ordinary income taxes. Place the difference in an interest bearing account so that if they do come back and assess additional taxes and interest, you have the money ready to pay them (or to hire an attorney to fight them). If they leave you alone for three years, you should be good to spend the rest of it.

(My original post was really kind of a joke.) To get a "binding" opinion from the IRS, I would need to pay for a Private Letter Ruling. However, that only works for specific circumstances for an individual case (not general guidance for all of us) and I already know the answers anyway. I have had my analysis "informally" corroborated by an "international Investigator" in the IRS. It is actually pretty plain. Following is what the answers should have been:

Scenario 1: Bought dinar as investment - ordinary income (not a "personal transaction" under section 988(e)(3))
Scenario 2: Received as a gift - capital gains - (is a "personal transaction" )
Scenario 3: Bought in Iraq while working there. Depends on the facts. Good basis to say it should receive capital gains treatment if you only acquired Dinar for the purpose of carrying on day to day activities. However, if you have 100 million dinar - some hidden in room in Iraq and some mailed back to US - it is hard to say was not an investment purchase - that you were just using it for daily expenses. This scenario depends on the facts. You should be able to support the facts in case of any audit.

Best of Blessings,
Mark


Greetings Capital stack,

You are welcome for my investigation, but the real investigation is written in the post that you will find at the link I provided above.

Apparently some people did not understand that I didn't contact the IRS because I needed the answers. I already knew the answers well before I ever contacted the IRS. I just wanted to see if I could get someone to give me the right answers without paying for a PLR. The answer is a resounding NO.

I only posted this because I thought their lack of ability to answer these questions was funny. (Maybe that is my boring attorney sense of humor coming through.)

There is no way the average citizen could get this type of analysis without paying big bucks to an attorney or paying the IRS directly to get a private letter ruling. The only information they can get from the IRS when calling in is wrong. If you know enough to get more specific like I did - you don't get anything at all. It is sad.

Best of Blessings,
Mark
[/quote]
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MARK

Thanks for your work. I have a question? If I buy stock, mutual fund, real estate or any other investment I can think of, any gain or loss is short or long term capital gain or loss. Any income or dividends is taxed as ordinary income. If I buy dinar as investment what makes it different from other investments? I have read your posts and if I missed this I am sorry
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Mark, again I want to thank you for all of your work in this matter. I hope that in someway you will get rewarded for your efforts and that this isn't just a waste of your time.

God bless you and your family
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Wow!! Thank you again for all of your input. Great information, you are such a blessing to this site. Thanks for sharing.
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Thank you very much, You are driving your point home,However belated. I found it more informative the second time i read..................
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Uh, yeah... This WOULD be laughable if not for one little fly in the ointment and that is that I'm too busy with the minutia. I'm getting ready for tax day... B)
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WOW, REALLY? Hmmmm THANKS [img]http://dinarvets.com/forums/public/style_emoticons/default/smile.gif[/img]
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[quote name='jomans' date='04 January 2011 - 03:36 PM' timestamp='1294176998' post='328683']
[size="3"]For what it's worth, I've had conversations with tax attorney's and showed them the conflicting IRS rules (pointing to the IRS pub that says treat it as "capital gains" and another IRS pub which indicates it should be treated as "general income"). Anwway, the advice was "because the IRS provides conflicting rules, use either one, but make sure you copy the IRS pub and retain in your possession so as to support the type of tax you are paying".

Of course, I'll be pointing to the IRS Pub that says "Capital Gains"......[/size]
[/quote]
If you go the capital gains route, you'll be hit later with the ordinary income rate plus interest and maybe penalty.......I recommend you claim it as ordinary income and then later, if the IRS comes out with a definitive statement or ruling to the contrary and says it should be capital gains you'll just get some more money back......no penalty....no interest. JMO B)
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[quote name='Hungrytorv' date='04 January 2011 - 06:32 PM' timestamp='1294187569' post='328894']
MARK

Thanks for your work. I have a question? If I buy stock, mutual fund, real estate or any other investment I can think of, any gain or loss is short or long term capital gain or loss. Any income or dividends is taxed as ordinary income. If I buy dinar as investment what makes it different from other investments? I have read your posts and if I missed this I am sorry
[/quote]
Greetings Mark (ExecConsult),
Your expertise and experience is appreciated. In a perfect world the IRS's double talk in the regs could easily be used against them...or so it would seem in a rational fair perfect world. But then the IRS (as it is) wouldn't exist in that world so there would be no need. But living in this world I still have spunk and often am driven to fight (argue) for what is right even when up against a big bully(when they want to be). So that leads me to ask the same question that is posted above. What IS the difference between an investment in Dinars and an investment in Stock, mutual funds or real estate? And thus why is one capital Gains and the other not?
Thanks for your help and all your posts Mark. I do have to compliment you on your wise thoughts on how to prepare for a worst case scenario in dealing with the trecherously untrustworthy and unclear.
Paying the full long term capital gains tax of 15 % while holding back the balance that would equal regular income taxes in a interest earning account is very wise and cautious. When dealing with poisonous snakes , always carry anti-venom serum just in case you get bit. My research with CPA's and other tax attorneys has been coming up with an answer of "15 % long term capital gains" for dinars held over a year. If these "Professionals" lead their clients to file as long term capital gains.....it would seem to me that an awful lot of well meaning law abiding people could be caught off guard and unaware in the tangled web woven by the king of Loop Holes-the IRS. And since our current administration has pushed the IRS's go go go button, I think its safe to say that many individual dinar sellers will be hearing an aggressive knock on their door.
I mean think of it, full regular taxes as opposed to Long term capital gains taxes would mean Millions if not Billions in additional funds in IRS coffers. With those Kind of numbers why wouldn't they jump thru those loop holes they created for just a day as this ...RV day cashin.
Just a thought but I wonder if all of the additional IRS employee's that have been put on the job are , in part, a preparation for RV day? Just a thought.
Thanks again.
Proverbs
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I think the most important thing for anyone to take from this, and the reason Exec found it amusing:

[color="#FF0000"][size="3"][b]Even the IRS doesn't have a clue how this will be treated.
[/b][/size][/color]
Now, if the IRS doesn't know - how can some clown on a message board or in a chat room know? How can even a tax attorney know?

NOBODY KNOWS. Nobody will know until it happens and an official ruling is made.

[b]At this time, there is no official ruling. Anyone who says they know for sure what you will pay on the gains is either lying or confused.
[/b]
I know a lot of people are strict planners and [b][i]need to know NOW [/i][/b]how much they will pay, and I am sorry to be the bearer of bad news... but nobody can give you that answer.

Plan, protect, prepare the best you can... but be ready to switch to plan B or C if you have to!

Here are my basic plans:

1. Diversify as much as possible - Cash, Warka, ISX.
1.a. After the RV, diversify MORE! ReInvest in the Post RV investments I have been working on for 5+ years.

2. Protect as much as possible with my foreign corporation.
2.a. Pay and report everything our VIP professionals instruct me to!

3. Shop, shop, shop! When it's time to cash in a 35% tax will only add insult to injury if I neglected to get the most value at cash in time!
3.a. Tip: ([url="http://dinarnews.net/cashinguide.php"]Read this[/url])

4. No matter what, I am not getting emotionally attached to any one "plan"
4.a. All of the things we don't know now will be public knowledge [i]very soon[/i] after the RV. We have to make a decision, move fast, and move smart.
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While it is true that there has been no announced position dealing with our particular circumstances and that none of us can know for sure (100%) exactly what will happen. This stuff is not rocket science for those trained in tax analysis. Also, while those dealing with the general question line may be unequipped to deal with these types of technical questions. I guarantee that there are plenty of agents who can analyze this with one eye tied behind their back. If the IRS agent auditing you has a question, they will contact their office for a memorandum from someone who knows what they are doing. It was no problem whatsoever for the International Investigator i sent my analysis to to get back with me quickly with additional information showing why I was correct. There were even people above her that could have been contacted if necessary (but it isn't).

Maybe I can not be 100% without a policy memo from the IRS or some supreme court case. However, it is my job to analyze things like this (well sometimes its my job and sometimes I am just a guy telling you what he thinks like today). In the legal profession part of what you do is gain an understanding of how the players will act. In family law or criminal law you need to know your judge. Here, I just need to understand how things are analyzed. Absent some miraculous change in law or discovery in the code, the IRS is going to assess personal income tax rates to any income from investment in physical foreign currency.

Though I am hesitant to disagree with the prior post, I must let you know that I am not swayed in the slightest in my convictions.

This really is not rocket science for the tax world. It is just a little uncommon. That is why there is differing information out there.

Best of Blessings,
Mark
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My opinion remains that there is nobody who can tell you with 100% certainty how this will play out in the long run.

[quote name='ExecConsult' date='05 January 2011 - 10:35 AM' timestamp='1294245332' post='329605']
.. it is my job to analyze things like this ...
[/quote]

We both know that when it comes down to it, it will be "your analysis" vs the "IRS decision"... I think I know which one wins, regardless of how "right" you may or may not be.

Even the best defense attorneys lose a case once in a while, and they don't do part of the time when they lose. Tax attorneys and financial planners don't take half of the hit if they make a decision that costs their clients money, either.

I'm not attacking you here, please don't take offense - I do appreciate your posts. I'm just pointing out the other side of the coin.

Thanks for the good posts and best regards! :twothumbs:
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Never thought you were attacking me. Always appreciate your input. Thanks for the thumbs up.

Mark

[quote name='AmyM' date='04 January 2011 - 06:21 PM' timestamp='1294186914' post='328882']
Want to thank you for your input on the tax issue. You have provided the best info we have had access to, and most of us appreciate it very very much! The rest just don't want you to be right! I am wondering if you have an idea about the status if your Corporation "received it as a gift" pre-rv, as many of us here have done. Thanks so much Mark!
[/quote]
You are most welcome. Glad I have been of some assistance.

Corporations don't receive gifts. Either they buy stuff or they receive capital contributions. If you have "gifted" dinar to a corporation, you have really made a capital contribution which will maintain the same nature of the asset as when you owned it. The corp will have to adjust owner's equity to balance the value of the gift.

Best of Blessings,
Mark

[quote name='Hungrytorv' date='04 January 2011 - 06:32 PM' timestamp='1294187569' post='328894']
MARK

Thanks for your work. I have a question? If I buy stock, mutual fund, real estate or any other investment I can think of, any gain or loss is short or long term capital gain or loss. Any income or dividends is taxed as ordinary income. If I buy dinar as investment what makes it different from other investments? I have read your posts and if I missed this I am sorry
[/quote]
I haven't researched it enough to know the policy behind the decision to govern foreign currency differently from other capital assets. However, it has its own section (988) that gives specific rules to how it is to be handled. I'm sure it never anticipated the type of transaction we are dealing with. It was written primarily for work with foreign corporations or foreign investments but the rules for dealing with physical currency were included as well. Anyway, under principles of legal construction, when there is a specific law regarding how something should be done it always trumps the general rule.

I don't know that I ever differentiated currency transactions from other asset classes in my posts. You probably didn't miss anything. I simply analyzed the law that controls our transactions.

Best of Blessings,
Mark

[quote name='proverbs' date='05 January 2011 - 01:44 AM' timestamp='1294213490' post='329292']
Greetings Mark (ExecConsult),
Your expertise and experience is appreciated. In a perfect world the IRS's double talk in the regs could easily be used against them...or so it would seem in a rational fair perfect world. But then the IRS (as it is) wouldn't exist in that world so there would be no need. But living in this world I still have spunk and often am driven to fight (argue) for what is right even when up against a big bully(when they want to be). So that leads me to ask the same question that is posted above. What IS the difference between an investment in Dinars and an investment in Stock, mutual funds or real estate? And thus why is one capital Gains and the other not?
Thanks for your help and all your posts Mark. I do have to compliment you on your wise thoughts on how to prepare for a worst case scenario in dealing with the trecherously untrustworthy and unclear.
Paying the full long term capital gains tax of 15 % while holding back the balance that would equal regular income taxes in a interest earning account is very wise and cautious. When dealing with poisonous snakes , always carry anti-venom serum just in case you get bit. My research with CPA's and other tax attorneys has been coming up with an answer of "15 % long term capital gains" for dinars held over a year. If these "Professionals" lead their clients to file as long term capital gains.....it would seem to me that an awful lot of well meaning law abiding people could be caught off guard and unaware in the tangled web woven by the king of Loop Holes-the IRS. And since our current administration has pushed the IRS's go go go button, I think its safe to say that many individual dinar sellers will be hearing an aggressive knock on their door.
I mean think of it, full regular taxes as opposed to Long term capital gains taxes would mean Millions if not Billions in additional funds in IRS coffers. With those Kind of numbers why wouldn't they jump thru those loop holes they created for just a day as this ...RV day cashin.
Just a thought but I wonder if all of the additional IRS employee's that have been put on the job are , in part, a preparation for RV day? Just a thought.
Thanks again.
Proverbs
[/quote]
Thanks for your (and everyone else') kind comments. Like your thoughts on the IRS - agreed - they will most likely go after information aggressively. Interestingly enough collecting income tax costs about $0.55 on the dollar. However, collecting estate taxes only costs about $0.17 on the dollar because people are willing to pay it and avoid the emotional trauma - they just want everything over. I'm betting the IRS goes after Dinar investors as the same type of "low hanging fruit" with great returns for minimum investment.

Love your "perfect world" comment.

Best of Blessings,
Mark
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[quote name='TimS' date='04 January 2011 - 11:27 PM' timestamp='1294201666' post='329210']
If you go the capital gains route, you'll be hit later with the ordinary income rate plus interest and maybe penalty.......I recommend you claim it as ordinary income and then later, if the IRS comes out with a definitive statement or ruling to the contrary and says it should be capital gains you'll just get some more money back......no penalty....no interest. JMO B)
[/quote]

LMAO, that's a good one. How often have u known our Govt. to be so willing and able to admit that they were wrong in taxing a person or corp. and give a credit on the amount they over taxed? Usually it's the other way around, if you don't pay enough tax your obviously receiving a letter in the mail within a months time explaining that u didn't pay enough tax and that you'll have to such and such date to pay the remaining amount of incure penalties.
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