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UNEEK

Foreign Currency Exchange Explained

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These are notes that someone transcribed from the Conference Call last night with Blaino - Dewey - Okie & others - I hope that some here with an open mind and some knowledge on the subject will share some dialogue with the other members -

I still feel it would be a benefit to all to at least listen to that call before making a harsh judgment against the information - JMHO

I would like to see some discussion about the information not about the source - that does not help or advance us at all in this investment - I feel sure it would be most appreciated by all that wish to learn - Thank you in advance for your intelligent offering and your time UNEEK

12-1-12 Okie Oil Man: You need to stop and consider that some of these rates that you guys are talking about according to the G7 informed me that they are strictly placement holder rates.

And this is also connected to these philanthropic and humanitarian programs (Prosperity Packages) with this because they are symbiotically related and they were sent out today (Friday) to be concluded being delivered by tomorrow (Saturday) night.

So it is all tied together. It doesn’t come from the same kitty but it starts from the same source and that source is China.

The Indian Rupee is going to be an optimum investment in the future and, believe this or not, the Iranian currency has dropped by ¾ this year.

It is worth ¼ of what it was so after they get the Iranian situation straightened out that probably will be our next opportunity because Iran is floating in oil.

When you are going to exchange our money go to a bank that has a international foreign exchange currency department and you trade for one of three things: Australian dollar, Hong Kong dollar, or Canadian dollar.

If you designate it in those denominations it is not a taxable event. That is an honest currency exchange (a 1031 exchange).

However, when you change it back to the U.S. dollar then it becomes a taxable event. I think that is an issue that most people need to consider because of the fiscal cliff going off the 31st of December that will take our capital gains from 15% to 20% so we need to not put everything we’ve got into USD.

And the way to get your money out of there (a multi-currency account on the private banking side of Wells Fargo, for example) is just have them issue a debit card. Your debit card will be debited in USD and I will let you read between the lines of what I am telling you.

There are two things in this world you can do - you can work the system or you can let the system work you.

Here is something else to evaluate relative to the taxation question. The Kuwaiti RV was not a taxable event. That is a legal historical precedent of it not being a taxable situation.

Unless the IRS retroactively writes a statute encompassing this we can use the Kuwaiti RV as a precedent setting measure to avoid (not evade) taxes.

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I listened to the call..........Okie has a new alias - "Texas Tom" or something like that but everyone on the call still addressed him as OKIE. I was somewhat impressed with the discussion (lots of banter about the dong). Unfortunately, at least with me, their reputations (Blaino,Okie, Poppy, etal) distorted my objective hearing quite a bit. Dewey I liked.......he sounds knowledgeable and credible.

Thanks for telling us up front this was from Okie.

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Regarding avoiding taxation, I have seen these arguments and similar arguments for a long time now. No matter how much I keep telling people about how it really works, they just keep popping up when people have forgotten me. :)

The original post said:

When you are going to exchange our money go to a bank that has a international foreign exchange currency department and you trade for one of three things: Australian dollar, Hong Kong dollar, or Canadian dollar.

If you designate it in those denominations it is not a taxable event. That is an honest currency exchange (a 1031 exchange).

Treasury Regulations, Subchapter A, Sec. 1.988-2 (a)(1)(ii) states as follows:

"Clarification of section 1031. An amount of one nonfunctional currency is not “property of like kind” with respect to an amount of a different nonfunctional currency."

In other words - Okie's idea to exchange to a different currency and escape gains will not work. In fact, the regulations take it a step further and state that any time a nonfunctional currency (for us that is ANY currency that is not US Dollars) is exchanged for ANYTHING else, gain or loss is figured by first assuming that the nonfunctional currency was exchanged for functional currency (US dollars) and then the US dollars were used to exchange for the item. (see 1.988-2 (a)(2)(ii)(B )) In fact, in example 2 under Treasury Regulation 1.988-1 (a)(9 )(ii) the regulation discusses exchanging a nonfunctional currency for hotel room, food, and vacation expenses as a taxable disposition of non-funcional currency.

As long as you are under the US tax system, if you take dinar and exchange it for ANYTHING other than dinar then you have to recognize gain or loss. There is no way around it.

Regarding capital gains, the post said:

I think that is an issue that most people need to consider because of the fiscal cliff going off the 31st of December that will take our capital gains from 15% to 20%....

Anyone who has done any real tax analysis (or has read mine) knows that we will not be looking at capital gains rates anyway. Because your ownership of dinar is for investment purposes, it is not a "personal transaction" under section 988. Therefore, you will be required to look at any income as "interest income" and pay ordinary income taxes on it.

Best of Blessings,

Mark

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Regarding avoiding taxation, I have seen these arguments and similar arguments for a long time now. No matter how much I keep telling people about how it really works, they just keep popping up when people have forgotten me. smile.gif

The original post said:

Treasury Regulations, Subchapter A, Sec. 1.988-2 (a)(1)(ii) states as follows:

"Clarification of section 1031. An amount of one nonfunctional currency is not “property of like kind” with respect to an amount of a different nonfunctional currency."

In other words - Okie's idea to exchange to a different currency and escape gains will not work. In fact, the regulations take it a step further and state that any time a nonfunctional currency (for us that is ANY currency that is not US Dollars) is exchanged for ANYTHING else, gain or loss is figured by first assuming that the nonfunctional currency was exchanged for functional currency (US dollars) and then the US dollars were used to exchange for the item. (see 1.988-2 (a)(2)(ii)(B )) In fact, in example 2 under Treasury Regulation 1.988-1 (a)(9 )(ii) the regulation discusses exchanging a nonfunctional currency for hotel room, food, and vacation expenses as a taxable disposition of non-funcional currency.

As long as you are under the US tax system, if you take dinar and exchange it for ANYTHING other than dinar then you have to recognize gain or loss. There is no way around it.

Regarding capital gains, the post said:

Anyone who has done any real tax analysis (or has read mine) knows that we will not be looking at capital gains rates anyway. Because your ownership of dinar is for investment purposes, it is not a "personal transaction" under section 988. Therefore, you will be required to look at any income as "interest income" and pay ordinary income taxes on it.

Best of Blessings,

Mark

ThankYou-1.gif for your comments with explanation -- They are "greatly" appreciated -- In reference to your statement about "your" tax analysis -- would those be listed in the forum and accessible to non VIP members??

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Quote

Unfortunately, at least with me, their reputations (Blaino,Okie, Poppy, etal) distorted my objective hearing quite a bit.

End Quote

Exactly... And how could that be any different?

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ThankYou-1.gif for your comments with explanation -- They are "greatly" appreciated -- In reference to your statement about "your" tax analysis -- would those be listed in the forum and accessible to non VIP members??

the analysis can be found here:

Best of Blessings,

Mark

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