Taxes when we exchange

[Floridian]

I'm not sure I agree with this.  I always thought - We bought it as an investment and we've been holding it so long, it's got to be LONG TERM Capital Gains.

Also, don't understand how taxing as Ordinary Income is "crazy beneficial" to us, as he states. 

 

5-9-2018  Newshound Guru BobTheTaxMan  …The advantage of the 2018 tax laws...are so beneficial to the dinar.  It’s like crazy beneficial…it changes entirely how you’re going to handle your dinar…A lot of people have been caught up in misinformation about how is the dinar going to be taxed.  So you understand it simply - The dinar is a currency which you have purchased, which you’ve got holding in a spot somewhere, whether it’s in a safely deposit box or under your mattress or somewhere you buried in the backyard in a coffee can, whatever you’ve done with it, it’s sitting there.  There is no determined exchange date so we don’t have a contract, which means we don’t get to take advantage of the benefits of that because we don’t have a contract.  We are not professional FOREX exchangers…They have a distinct advantage.  In their world 60% of whatever they exchange is treated as capital gains and 40% at ordinary income.  In our case we do not fit…  [NOTE:  This is NOT to be considered tax advice...At the appropriate time speak with your own tax and legal professionals.]

 

5-9-2018  Newshound Guru BobTheTaxMan  …We are not in the business of exchanging dinar.  We don’t have a clearance for the date of exchange. We don’t have any of that stuff.  We are just holders, anticipating it’s going to come to fruition.  The other one people get confused on is…If you went to travel and packed up and went to Iraq for a visit and you had some dinar with you when you came back, there was some left in your pocket and it increase in value…if it exceeded $200 of travel money then that would be considered as capital gains. It also meant you weren’t traveling with 10’s of millions of dinar.  Alright?  It’s just travel money.  I can assure you I have checked with so many places.  I have checked with well established CPA firms and attorneys.  I have had professional financial planners contact their tax attorneys and they all come back with the same thing.  It [Dinar] will be treated as ordinary income.   [NOTE:  This is NOT to be considered tax advice.  At the appropriate time speak with your own tax and legal professional] 

 

Edited May 10, 2018 by Floridian

[coorslite21]

Who really knows who this BobTheTaxMan is.........I wouldn't take any of this at face value.......just another wannabe guru who wants to see their worlds in print.......taken at face value.....

 

2 ways this goes down...........Uncle Sam Taxes this so they can figure out where to spend the windfall..........perhaps the Obama, HRC method........the USG knows best......the USG will take care of everyone, .......oh so well??

 

Trump & Company just give it to the people and the people decide how best to stimulate the economy........instead of those taxes given to the USG........that money goes to what "we the people" want.......and that stimulates the economy.

 

Perhaps it is true the USG holds 4.5 Trillion IQD........(and if this has been the master plan all along why wouldn't they)........they would have a good jump start to fixing the debt......and the people by stimulating the economy could help seal the deal.....

 

Time will tell...........but first let's see that change in value......as always.........JMO......CL

[Sage449]

I didn't buy as an "investment" but as an exchange when it became beneficial to me. 😃 Taxes are gonna be what will be, whether income or capital gains. Either way I'm offshore. 

[NEPatriotsFan1]

21 minutes ago, coorslite21 said:

Who really knows who this BobTheTaxMan is.........I wouldn't take any of this at face value.......just another wannabe guru who wants to see their worlds in print.......taken at face value.....

 

2 ways this goes down...........Uncle Sam Taxes this so they can figure out where to spend the windfall..........perhaps the Obama, HRC method........the USG knows best......the USG will take care of everyone, .......oh so well??

 

Trump & Company just give it to the people and the people decide how best to stimulate the economy........instead of those taxes given to the USG........that money goes to what "we the people" want.......and that stimulates the economy.

 

Perhaps it is true the USG holds 4.5 Trillion IQD........(and if this has been the master plan all along why wouldn't they)........they would have a good jump start to fixing the debt......and the people by stimulating the economy could help seal the deal.....

 

Time will tell...........but first let's see that change in value......as always.........JMO......CL

Agreed cL 

[King Bean]

While I'm not a tax professional, I did, however, stay at a Holiday Inn Express several times. Having said that, I did a google search which led me to stackexchange dot com and posed the question. This was simple response. Hope this helps a little.

 

"If you buy foreign currency as an investment, then the gains are ordinary income." 

[Floridian]

39 minutes ago, King Bean said:

While I'm not a tax professional, I did, however, stay at a Holiday Inn Express several times. Having said that, I did a google search which led me to stackexchange dot com and posed the question. This was simple response. Hope this helps a little.

 

"If you buy foreign currency as an investment, then the gains are ordinary income." 

 

Thanks, King Bean, but the answer you got doesn't make sense to me.

In my thinking (and training), long term INVESTMENT means Long Term Capital Gain.

Short term INVESTMENT means Short Term Gain, equal to Ordinary Income.

I guess we will have to wait and see exactly what the outcome will be.

[tankdude]

This topic is still up in the air. I'm leaning towards ordinary income myself...and here is the discussion that leads me that direction.

 

 

[Floridian]

1 hour ago, tankdude said:

This topic is still up in the air. I'm leaning towards ordinary income myself...and here is the discussion that leads me that direction.

 

 

 

Thanks, Tankdude.  

After reading the whole article, it still sounds like Long Term Capital Gain to me.  I see this article was from 2010.

However, I don't think the pertinent facts have changed.

 

A number of my subscribers have presented me with the question of whether certain gains and losses on foreign investments are capital gains and losses and whether any net gains would be eligible for the 15% maximum tax on long term capital gains, if the holding period requirements are satisfied.

To answer this question, it's necessary to differentiate between different methods of acquiring an investment position in a foreign investment. The following is a non-technical interpretation of the rules in each of these situations.

1. The investor may purchase a foreign currency in exchange for U.S. dollars and hold the foreign currency as a capital asset. Any gain or loss would be a capital gain or loss.

Edited May 10, 2018 by Floridian

[Luigi1]

Luigi has plans to set 35% aside.

To be on the safe side, set 35% aside in a separate savings account for tax purposes.

If there is no tax on currency exchanges come 2018 tax season, enjoy your savings with interest.

If there is a ordinary income tax, you are all set. No worries.

Nobody really knows until the new updated tax codes are out.

We can't base today's tax code on future year's end tax codes as things do change.

[Pitcher]

It wouldn’t surprise me if they tax you at exchange, similar to if you were to take some money out of your retirement account.  If this goes 1-1 you can bet your last dollar the US Government.will get their due, better count on nothing less than 35%.

[tankdude]

2 hours ago, Luigi1 said:

Luigi has plans to set 35% aside.

To be on the safe side, set 35% aside in a separate savings account for tax purposes.

If there is no tax on currency exchanges come 2018 tax season, enjoy your savings with interest.

If there is a ordinary income tax, you are all set. No worries.

Nobody really knows until the new updated tax codes are out.

We can't base today's tax code on future year's end tax codes as things do change.

Luigi speaking with clarity!  

[caz1104]

3 hours ago, Floridian said:

 

Thanks, Tankdude.  

After reading the whole article, it still sounds like Long Term Capital Gain to me.  I see this article was from 2010.

However, I don't think the pertinent facts have changed.

 

A number of my subscribers have presented me with the question of whether certain gains and losses on foreign investments are capital gains and losses and whether any net gains would be eligible for the 15% maximum tax on long term capital gains, if the holding period requirements are satisfied.

To answer this question, it's necessary to differentiate between different methods of acquiring an investment position in a foreign investment. The following is a non-technical interpretation of the rules in each of these situations.

1. The investor may purchase a foreign currency in exchange for U.S. dollars and hold the foreign currency as a capital asset. Any gain or loss would be a capital gain or loss.

Not sure if there is a definitive answer...but this is as cut & dry as it gets....makes no never mind tho till Iraq gets up off its thumbs and does something......ANYTHING - lol

[bostonangler]

13 minutes ago, caz1104 said:

Not sure if there is a definitive answer...but this is as cut & dry as it gets....makes no never mind tho till Iraq gets up off its thumbs and does something......ANYTHING - lol

 

You got that right... Until they actually do it, it is a dream... LOL

 

B/A

[coorslite21]

Please don't forget that 2018 brings a new tax structure to the table.........as an example........the Corporate C tax has been reduced from 39% to 21%.......

 

I know people, with the right set of circumstances, that have used this to reduce their personal tax liabilities by Becoming a Corporation......

 

S Corporations are more individual friendly.........with a smaller % of tax savings.......

 

Regardless..........let's say you can save 10% on a $1 million windfall.........pretty worth while in my mind.....

 

Get with a tax professional on this ....2018 is a game changer and this strategy is working for many in their every day lives.........

 

Please don't take this as tax advice........but do run the concept by your tax person........

 

Hope this helps a few of you......

 

BTW......my understanding is a bank will not do any withholding on a currency exchange........not legally able to do so........at least at this time.....CL

 

[coorslite21]

8 hours ago, coorslite21 said:

Who really knows who this BobTheTaxMan is.........I wouldn't take any of this at face value.......just another wannabe guru who wants to see their worlds in print.......taken at face value.....

 

2 ways this goes down...........Uncle Sam Taxes this so they can figure out where to spend the windfall..........perhaps the Obama, HRC method........the USG knows best......the USG will take care of everyone, .......oh so well??

 

Trump & Company just give it to the people and the people decide how best to stimulate the economy........instead of those taxes given to the USG........that money goes to what "we the people" want.......and that stimulates the economy.

 

Perhaps it is true the USG holds 4.5 Trillion IQD........(and if this has been the master plan all along why wouldn't they)........they would have a good jump start to fixing the debt......and the people by stimulating the economy could help seal the deal.....

 

Time will tell...........but first let's see that change in value......as always.........JMO......CL

 

Guess I made BobTheTaxMan angry..........2 red rubles.........oh well........bring them on Bob..........

[magawatt]

I'm hoping for a capital gain @ 15% 

[Rmc10]

Expect to pay around 35%. The Government needs money.

[Floridian]

More from Bob the Tax Man.  I still think he's wrong.  LOL LOL

We'll see soon enough.  I hope!

 

5-10-2018  Newshound Guru BobTheTaxMan  Number 1.  Ordinary income vs. capital gains.  It will be treated as ordinary income. Period. exclamation mark!  Number 2.  Some people have stated, “What I’m going to do to reduce taxes is I’m going to move to a state that does not have income tax. “  There are several states…that do not have income tax…those states that do not have an income tax make up for it in other ways.  Usually it’s going to be on property taxes, or it’s going to be a gas tax, sin tax…sales tax.  They are going to tax things heavily to compensate and make up for not having a particular income tax…It is hardly worth it, except for certain states, New York, California, Oregon is another that has a high tax rate, Hawaii.  Those states there are really high on their taxes…those are a consideration but to move to a state only because it doesn’t have income tax is a beguiling misdirection.  I would strongly encourage you to before you take that kind of a step to spend the time to research everything about that state…How are their economic needs being met?  [NOTE:  This is NOT to be considered tax advice.  At the appropriate time speak with your own tax and legal professional]   

[one2one]

how can the I.R.S. prove exactly when somebody bought the IQD, or how much they paid for it ?

why not just step across the border and exchange for Pesos, then back to USD.

 

or at an airport exchange booth----a little bit at a time ?

[Freedomwish]

21 hours ago, Luigi1 said:

Nobody really knows until the new updated tax codes are out.

We can't base today's tax code on future year's end tax codes as things do change.

 

My thoughts on the matter....

Edited May 11, 2018 by Freedomwish
Had 2 Whiskeys already

[Floridian]

1 hour ago, one2one said:

how can the I.R.S. prove exactly when somebody bought the IQD, or how much they paid for it ?

why not just step across the border and exchange for Pesos, then back to USD.

 

or at an airport exchange booth----a little bit at a time ?

 

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!

 

 

Edited May 11, 2018 by Floridian

[yendor]

Regardless of what anybody says or "feels",  the amount of or base of monies will be what the U.S. Government says that we will pay..... and that's the amount we will ALL pay ! Adam might have the solution to  tax "avoidance" with his OSI program. At my age (80), I can no longer tolerate the mind boggling it takes to keep up with all of the effort that I no longer have the energy for....... Just waiting to see if this l---o-o-o-ong journey we have taken will finally  END!

[ChuckFinley]

I would be I VIP and gifting. Let my company figure it out. 

[Floridian]

More from Bob the Tax Man.  I agree with him here.  He is correct in this instance:

 

 

5-11-2018  Guest Guru BobTheTaxMan  Because of the new tax law changes…the biggest advantage we have is to donate to charities in order to reduce your taxes…Charitable contributions is going to be one of the biggest chances you have of being able to reduce your taxes…when you choose to do that there are two things you need to be aware of.  1.  When you make you contribution as to a non-profit…you want to do it in dinar.    Do not do it in dollars.  The reason why:  If you are going to do it in dollars you have to exchange the dinar into dollars which makes it a taxable event.  You have to include that income on your tax returns and then add it into your Schedule A.  Who wants to add another million dollars to their income?  VERSES if you were to donate dinar, let’s say it was a million dinar and it came out at a dollar (I’m not saying it will…I’m just saying as a number.)  Then that will give you a 1 million dollar write off. [NOTE:  This is NOT to be considered tax advice in any way.  At the appropriate time speak with your own tax and legal professional] 

 

5-11-2018  Guest Guru BobTheTaxMan  ...So the institution that you are going to share that with is going to accept that as dinar and they would exchange it for dollars.  You would get a receipt showing the exchanged rate.  That receipt would then be applied to your Schedule A and you’d get a million dollar write off on your taxes.  The neat part is let’s say you did that but your taxes for that year were only $25,000 …whatever is left over from that schedule A on your charitable contributions which wasn’t take that first year is carried forward.  And carried forward.  And carried forward until it’s all used up.  I like that for a strategy simply because I like to prepay for everything.  And if I can prepay for my taxes this way, where I’m actually supporting a cause or a belief I have and not have to pay taxes then I would definitely rather do that.  Especially when I can carry it forward and carry it forward and carry if forward.   It gives me time to manage my new investment differently - better.  It’s a consideration.  Just be aware in order for that to really work for you, you’re going to have to donate your dinar as dinar…   [NOTE:  This is NOT to be considered tax advice in any way.  At the appropriate time speak with your own tax and legal professional]

 

Edited May 11, 2018 by Floridian

[yendor]

On 5/10/2018 at 3:07 PM, Luigi1 said:

Luigi has plans to set 35% aside.

To be on the safe side, set 35% aside in a separate savings account for tax purposes.

If there is no tax on currency exchanges come 2018 tax season, enjoy your savings with interest.

If there is a ordinary income tax, you are all set. No worries.

Nobody really knows until the new updated tax codes are out.

We can't base today's tax code on future year's end tax codes as things do change.

I am not a tax guy and haven't  spoken to one at this time, but I really won't plan on them taking  any less than around 50 %. If they take less than that I will be tickled pink..... and happy that this ride is finally over.