Tax Guide for Traders and a GREAT website

[C_BOLT]

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.

[tallone41]

Thank you for your research CBolt! I will be consulting futher with an CPA. Go RV!!!!

[gonefishn]

Thanks for the info!!!!

[pegsue]

Thanks for the post.

I see a couple of websites listed but do you have an actual link?

[C_BOLT]

Sorry about that - Actually this is the page that I bookmarked.

Very interesting read.

http://www.greencompany.com/EducationCenter/GTTRecCurrency.shtml

[radar47]

Thanks for the information.

[GJM]

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.

[GJM]

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