C_BOLT Posted September 13, 2010 Report Share Posted September 13, 2010 Hello all, We hear confusion ragarding taxes - I thought I would post this information for your reference. A couple days ago I was researching the IRS site combing for anything relating to currency. Also used GOOGLE. The Google search found this website. It speaks directly to currency trading, etc. I sent an email and attached below is my email and their response. My disclaimer - I am not saying this is 100% correct nor wrong. For that matter most of our information is subject to interpretation - same as the great leaway in how CPA's, Attorneys, and even IRS agents handle the laws. __________________ -----Original Message----- From: David Seabolt [mailto:David_Seabolt@abc-xyz.com] Sent: Saturday, September 11, 2010 11:17 AM To: info@greencompany.com Subject: Exotic Currency Thank you for your assistance. I am going to be very specific and simple in my situation and question. I have a quantity of the Iraqi Dinar. I have purchased these over a period of 10-12 months. The exchange rate is/was $1 USD = 1160 IQD. The anticipated adjustment to the IQD could be anywhere from .86 USD = 1 IQD upwards to possibly over $3.00 USD to 1 IQD. I am in the lower income tax bracket with family, mortgage, etc. My question or request for guidance relates to the reporting of any gain realized in this speculation activity. Best Regards, David Seabolt ___________________ Hi David: In general holding actual foreign currency is ordinary income or loss, not capital gains. Consider a consultation if you need more help. We answer questions on the Iraqi Dinar often. Take care, Robert A. Green, CPA Direct email: rgreen@greencompany.com CEO Green & Company CPAs LLC (GreenTraderTax.com) 888-558-5257 (toll-free in US only), or 646-224-6923 (worldwide); 212-658-9502 fax www.greentradertax.com, www.greentraderfunds.com www.greenenergyactiveinvestors.com Attend our free conference calls and other events to ask quick questions, get acquainted with us, and for good education on our subjects. Simply join our email list to get an invitation (see box on the bottom of our home page). Author of The Tax Guide for Traders (McGraw-Hill) and Green's 2010 Trader Tax Guide Under applicable U.S. Treasury Regulations we are required to inform you that any advice contained in this email or any attachment hereto is not intended or written to be used, and cannot be used, either (i) to avoid penalties imposed under the Internal Revenue Code, or (ii) for promoting, marketing, or recommending to another party any tax-related matter addressed herein. 5 Link to comment Share on other sites More sharing options...
tallone41 Posted September 13, 2010 Report Share Posted September 13, 2010 Thank you for your research CBolt! I will be consulting futher with an CPA. Go RV!!!! Link to comment Share on other sites More sharing options...
gonefishn Posted September 13, 2010 Report Share Posted September 13, 2010 Thanks for the info!!!! Link to comment Share on other sites More sharing options...
pegsue Posted September 13, 2010 Report Share Posted September 13, 2010 Thanks for the post. I see a couple of websites listed but do you have an actual link? Link to comment Share on other sites More sharing options...
C_BOLT Posted September 13, 2010 Author Report Share Posted September 13, 2010 Sorry about that - Actually this is the page that I bookmarked. Very interesting read. http://www.greencompany.com/EducationCenter/GTTRecCurrency.shtml Link to comment Share on other sites More sharing options...
radar47 Posted September 13, 2010 Report Share Posted September 13, 2010 Thanks for the information. Link to comment Share on other sites More sharing options...
GJM Posted September 13, 2010 Report Share Posted September 13, 2010 Thanks for the post. It would have been more informative if Robert Green, CPA, in his response could have given an IRS code reference to back up us opinion. I have read other professional opinions that selling your dinar would be treated as an ordinary gain/loss treatment, subject to Section 988 and not "income". The IRS treats the gains on selling one's personal gold, coin or stamp collection, as a capital gain. Their IRS references state "almost everything you own for investment is a capital asset." See link: http://www.irs.gov/newsroom/article/0,,id=170634,00.html Most of the dinar owners' transactions represent not incidential exhange of currency for travel but large sums of investment that have been intentionally held for a year or more in anticipation of gains in value. Link to comment Share on other sites More sharing options...
GJM Posted September 13, 2010 Report Share Posted September 13, 2010 Thanks for the post. It would have been more informative if Robert Green, CPA, in his response could have given an IRS code reference to back up us opinion. I have read other professional opinions that selling your dinar would be treated as an ordinary gain/loss treatment, subject to Section 988 and not "income". The IRS treats the gains on selling one's personal gold, coin or stamp collection, as a capital gain. Their IRS references state "almost everything you own for investment is a capital asset." See link: http://www.irs.gov/newsroom/article/0,,id=170634,00.html Most of the dinar owners' transactions represent not incidential exhange of currency for travel but large sums of investment that have been intentionally held for a year or more in anticipation of gains in value. Forgot to include further research. Section 988 was enacted as a way for the IRS to tax companies that earn income from fluctuations in foreign currency exchange rates as part of their normal course of business, such as buying foreign goods. Where there are currency gains or losses in connection with a trade or business or with the management or administration of investment assets, the gain is treated as an ordinary gain (rather than as a capital gain) and any loss is generally treated as an expense. However, where currency gains or losses are incurred in connection with the purchase of an investment, the gain or loss on the currency change on realization (usually from selling) is a capital gain or loss and is included as part of the total capital gain or loss on the investment. See link below regarding US Taxation on Foreign Currency Gains. http://www.maximadvisors.com/knowledge-library/international-tax-planning/US-Taxation-Foreign-Currency-Gains-Losses Link to comment Share on other sites More sharing options...
Recommended Posts