Dinar Taxes

[puzhalsta]

Lots of comments. First post. Thanks to such a great group of people for giving us a platform to discuss this crazy rollercoaster and find solidarity in our insanity. :-)

To the point. There's been a lot of back and for on taxes with regard to the Dinar windfall that we WILL recieve maybe, at some point in the (hopefully) (very) (near) future.

This has really bugged me because everyone seems to be armchair CPAs and Tax Attorneys, myself included. Did some research. This is one of the more comprehensive articles that seemd to cut to the chase of our dilema.

Link to full article

There's a lot of info that I don't think pertains to us, so here are the unedited snippets. Cheers!

Currency trading is like commodity trading in general

Most currency traders seek to be treated like commodities and futures traders, in that their trading gains and losses are treated as section 1256 contracts. Both business traders and investors report section 1256 contracts as capital gains and losses on Form 6781 (Gains and Losses from Section 1256 Contracts and Straddles). This allows them to split the gains and losses 60/40 on Schedule D: 60 percent long-term, 40 percent short-term. This 60/40 split gives commodities traders and investors an advantage over securities traders. 60% is taxed at the lower long term capital gains rates (up to 15%) and 40% is taxed at the higher short-term capital gains rates (or “ordinary rate” up to 35%).

The current maximum blended 60/40 rate is 23%, which is 12% less then the maximum rate of 35% on short term securities (or cash forex trading if you don’t elect out of IRC 988, see below). Certainly, a 12% tax rate reduction is worthwhile to pursue for all currency traders.

Cash forex is subject to IRC

[Dryden01]

It should be noted in passing that the Obama Administration is seeking to add a new medicare tax on top of the capital gains taxes as a part of his healthcare "reform." It's just another socialist predation on investors that encourages the hope in so many that the Obamacare proposition fails entirely. Not only do the people reject socialism but most in opposition to it realize they can't afford socialism either.

[seastallion]

I am not a Foreign Exchange "trader". I purchased a product 'in hand' and will resell it. NOT the same as traders.

[xdmed]

seastallion that is what i have been wondering about if we didnt aquire dinare through a forex trade with a forex account shouldnt it be treated different

[puzhalsta]

You're right. It's not the same as being a trader. That's why I only posted the parts that were relevant to currency in hand. IRS Code says that you have to pay taxes on any increase over $600 in any one calendar year. But I guess we all take certain chances, don't we?

[dwhite1971]

Great Information. What if I go to the Caymen's?

[Kenneth]

I'll just say oops like Rangel, Geithner, Daschle and the rest of the democratic tax cheats do.

[gtrstringer]

Good tax info...thanks!

[DaveH]

I will post this one more time...this law applies to us thru 2010 unless the big O hole figures out a way to change it...means about 15% plus state tax or less for most of us

10 Facts About Capital Gains and Losses

IRS Tax Tip 2010-35

Have you heard of capital gains and losses? If not, you may want to read up on them because they might have an impact on your tax return. The IRS wants you to know these ten facts about gains and losses and how they could affect your tax situation.

1. Almost everything you own and use for personal purposes, pleasure or investment is a capital asset.

2. When you sell a capital asset, the difference between the amount you sell it for and your basis – which is usually what you paid for it – is a capital gain or a capital loss.

3. You must report all capital gains.

4. You may deduct capital losses only on investment property, not on property held for personal use.

5. Capital gains and losses are classified as long-term or short-term, depending on how long you hold the property before you sell it. If you hold it more than one year, your capital gain or loss is long-term. If you hold it one year or less, your capital gain or loss is short-term.

6. If you have long-term gains in excess of your long-term losses, you have a net capital gain to the extent your net long-term capital gain is more than your net short-term capital loss, if any.

7. The tax rates that apply to net capital gain are generally lower than the tax rates that apply to other income. For 2009, the maximum capital gains rate for most people is15%. For lower-income individuals, the rate may be 0% on some or all of the net capital gain. Special types of net capital gain can be taxed at 25% or 28%.

8. If your capital losses exceed your capital gains, the excess can be deducted on your tax return and used to reduce other income, such as wages, up to an annual limit of $3,000, or $1,500 if you are married filing separately.

9. If your total net capital loss is more than the yearly limit on capital loss deductions, you can carry over the unused part to the next year and treat it as if you incurred it in that next year.

10. Capital gains and losses are reported on Schedule D, Capital Gains and Losses, and then transferred to line 13of Form 1040.

For more information about reporting capital gains and losses, see the Schedule D instructions, Publication 550, Investment Income and Expenses or Publication 17, Your Federal Income Tax. All forms and publications are available at IRS.gov or by calling 800-TAX-FORM (800-829-3676).

http://www.irs.gov/newsroom/article/0,,id=106799,00.html

[puzhalsta]

Great Information. What if I go to the Caymen's?

The Caymen's is a different deal all together. But I'd still be careful. Bank's fill out SARs (suspicious activity reports) and report them to the IRS when you have deposits or withdrawals that are outside your normal course of activity.

So if you do the Caymen account and then transfer money to your US account, you could get flagged.

One thing I am doing to shield this potential windfall is I am setting up a Charitable Trust.

Here's a link for an overview.

http://www.charitytrusts.org/types-of-charitable-trusts.php