TAXES..HELP!!!!!

[skitealwedrop]

Make an estimated tax payment of 35% when and if the RV occurs. That's what I plan to do. I want to pump some cash into the US economy. Let's not focus on greed.

[ExecConsult]

Mark, can you sum that up? What are the essential points being made?

What I am gathering is that because our Dollars was not exchanged for Dinar to see the Iraqi desert or purchase coos coos or any such thing and was alternately intentionally done as an :investment" then is is not a "personal" transaction matter, and that being the case I am now understanding that it would not be p personal income tax issue, but a capital gains one. IS THIS CORRECT? Is THAT what you are now saying?

Well you got the first part right. You are correct up through "it is not a 'personal' transaction." This is why that is important.

Section 988 says that income based on currency exchange is to be taxed as ordinary income (not capital gains). The one exception to that is for an individual making a "Personal Transaction." (Like buying coos coos) If you have a "Personal Transaction" then you get to claim capital gains. If you do not have a "Personal Transaction," the exception does not apply to you and you still have to pay ordinary income tax. (Pub. 525 Pg. 33 paraphrases the exception. Unfortunately it just does not apply to us.)

Hope I was more clear this time. If not, ask more questions.

Best of Blessings,

Mark

Make an estimated tax payment of 35% when and if the RV occurs. That's what I plan to do. I want to pump some cash into the US economy. Let's not focus on greed.

Pump it into the economy... I'd say that almost everyone on here agrees with that. However, we may not agree on the best way to do that. I think I can help the economy better by interacting directly with it than I can by handing the money over to the government and seeing what is left over to trickle out. Also, giving it to the government I lose control of determining which parts of the economy I want to support. The government will not help one friend hire another employee or another friend upgrade his equipment, but I could.

I know taxes are necessary for infrastructure, police, fire, etc... and I am happy to pay my taxes. I just don't want to pay more than the law says is my due. (Unfortunately, I believe that will be 35% anyway.)

Best of Blessings,

Mark

[kliklok00]

CAN SOMEONE PLEASE TELL ME THE PERCENTAGE THAT WE HAVE TO PAY WHEN WE CASH IN THE DINARS,FOR TAX PURPOSE ,SO I DONT HAVE A HEART ATTACK WHEN CASHING IN..THANK YOU, BASH ILL BASH BACK.. :lol:

Be safe! If you have held your IQD longer than 1 year (and can prove it), you pay 15% fed tax (long term cap gains). If you have held your IQD less than 1 year, you pay 35% fed tax (cap gains).

I'm in Texas and we have no state income tax so I can't help you there if you live in a state that has income tax.

I've heard a lot of different opinions from tax people---and like the gurus, they seem to be clueless yet all have connections. So, my encouragement is to be safe and pay the appropriate cap gains...

[kliklok00]

I suggest you read this thread. It has a lot of information which does NOT support your view. In fact what has been spelled out makes your advice dangerous.

I did read it...and Mark's very last post, very last sentence states what? Oh...35%

[ExecConsult]

Okay. IO do have a question. If one did purchase coos coos or whatever, like say, one applied something toward a financial involvement in Iraq, then. . . . the RV gains WOULD BE taxed as CAPITAL GAINS, right? If so, it would be to our advantage to have something lined up, I would think, ready to take advantage of. Correct. You get what I am saying? I am talking about bringing CAPITAL GAINS provision intentionally into play. Any comments on this?

That is a dangerous way to play with the IRS. The will simply look at the overall picture and say, "Hmmmm. Looks to me like you purchased dinar as an investment and just tried to get out of it. We are 'recharacterizing' your income as ordinary income. Then they would apply penalties and interest.

In the regulations they have an example of someone who has a currency they purchased for $100,000 which has grown to be worth $400,000. In order to avoid ordinary income taxes on an exchange the owner put it all into a new business and sold the business for $400,000 and claimed capital gains on the sale of the stock. The IRS came in and said the value of the company is based on the underlying currency which should have been taxed as ordinary income. Therefore, we are coming in and recharacterizing the entire sale of stock as ordinary income.

A good rule of thumb is . . . If it looks like a duck and walks like a duck . . . the IRS is going to see it as a duck.

Best of Blessings,

Mark

[Adam Montana]

You know, it occurs to me that many people are missing one important point: no matter how much research you do, no matter how strong your argument is... the IRS will win if it comes down to your opinion vs theirs.

If they decide you, as a US taxpayer, owe XX% taxes... then you're going to pay XX% taxes, whether it's 20, 30, 50, or 90%. End of story, I don't care how "unfair" you think it is. I don't care who is in office, what our economy needs, or how often the stars have aligned this month. None of that is relevant.

Mark (ExecConsult) is giving very sound advice to everyone - plan on paying the higher end of the scale, and even then be very careful because you COULD be penalized for more if they happen to make a different ruling other than what you "thought" was correct.

I feel very bad for those that are blindly insisting that this is a capital gains situation - all of my research, education, and advisers say it is highly unlikely that we will get that "lucky".

Personally, I don't recall many cases where the IRS has taken less when they have a chance to take more.

Heck, I have NEVER received a call from them stating I overpaid... but I've heard plenty of stories about them doing the opposite!

Good luck, everyone.

[shwngo]

That is a dangerous way to play with the IRS. The will simply look at the overall picture and say, "Hmmmm. Looks to me like you purchased dinar as an investment and just tried to get out of it. We are 'recharacterizing' your income as ordinary income. Then they would apply penalties and interest.

In the regulations they have an example of someone who has a currency they purchased for $100,000 which has grown to be worth $400,000. In order to avoid ordinary income taxes on an exchange the owner put it all into a new business and sold the business for $400,000 and claimed capital gains on the sale of the stock. The IRS came in and said the value of the company is based on the underlying currency which should have been taxed as ordinary income. Therefore, we are coming in and recharacterizing the entire sale of stock as ordinary income.

A good rule of thumb is . . . If it looks like a duck and walks like a duck . . . the IRS is going to see it as a duck.

Best of Blessings,

Mark

Mark,

Thank You for all of your help on these issues. I don't understand why people are dicounting your work on this matter. Most of us appreciate the effort that you put in. Keep up the good work.

[alleekat]

Hi Mark, I have an interesting situation. My husband was stationed in Iraq in 2007. He was training Iraqi soldiers and had very close relationships with Iraqi soldiers and interpreters. While there he traded USD for Iraqi currency,not only because he was at Iraqi bases most of the time and used the IQD to purchase items while there but that he also believed he would be deployed again and wanted to be prepared. After his deployment, he brought what was left over home thinking it would come in handy when he went back over, but instead was deployed to Afghanistan. When he was discharged last year and came home for good we were unpacking his personal items and found the IQD stored away. When we researched what we should do with it we found these sites so hung on to it. So even though it was not purchased as an investment at first we have hung onto it because of its potential. Do we consider this an investment because that is what it eventually(hopefully) will become or consider it a personal transaction because that was the original intent? We don't mind paying what we owe in taxes but don't want to pay more than what we should either.

[N2DEEP]

35% (Cap & Gains) the end!!!!

[Adam Montana]

=================================================

Mark, can you sum up what Forbes is saying about taxation of Dinar profits and relate it to what you have spelled out and/or explain what differences there may be?

LINK

Your link is the opinion of one person, not a "Forbes" official statement.

[Adam Montana]

FORBES, to my knowledge, is a publication with various authors. What else is Forbes if not that? And I would very much like to see what Mark says in relation to the FORBES nationally published information about the Dinar and taxation. Me, I don't care who wrote the stuff.

When you say "Forbes" you lead people to believe a well known entity is responsible for the opinion. This isn't the case here, not to mention this particular author has waffled on the subject of Dinar several times. I would hardly call him a credible source, and definitely not worthy of being called "Forbes" as anything other than a contributor.

A more accurate (and honest) way to pose your question is this:

"Mark, what do you think of Robert Green's opinion of the tax law regarding the Dinar? His article is found on the Forbes website here."

But if we're simply debating just to debate...

Never let the details get in the way of a good story, right?

[Adam Montana]

Good point.

[ExecConsult]

=================================================

Mark, can you sum up what Forbes is saying about taxation of Dinar profits and relate it to what you have spelled out and/or explain what differences there may be?

LINK

They are simply saying the same thing that I did. When they say it does not trigger personal use treatment. That is the same as when I said it does not fit the "Personal Transaction" definition so you don't get the Personal Transaction exception listed in 988 (e ). We are both saying it is ordinary income, not capital gains.

NOW

To throw you a loop. Though I firmly believe this is the current IRS stance on the issue, I have also argued the other side. I made a submission to the IRS for their annual priority guidance list. In that submission I argue that capital gains is what makes sense. If you are interested in that post, you can find it here:

Best of Blessings,

Mark

[Nadita]

Mark,

Been thinking about what you said about paying as capital gain 15% and then escrowing the balance of 20% in mutual funds earning some income and wait if IRS catches on this, if not after 3 years, it's all ours again to spend.

The question is how much penalty and interest will IRS impose if in fact they find out we are paying too little for the taxes...? isn't that the rule is you need to pay at least 90% of what you pay in taxes in previous year...? say...I paid $25K in taxes last year to federal..so when this dinar rv's, if I were to pay the IRS $50K in taxes to cover my 15% gain on dinar investments... as long as I paid more than the previous year, IRS can't impose penalty and interest...?

Please correct me on this one...

Thanks

[ExecConsult]

A more accurate (and honest) way to pose your question is this:

"Mark, what do you think of Robert Green's opinion of the tax law regarding the Dinar? His article is found on the Forbes website here."

Robert Green really knows his stuff and worked with a tax attorney by the name of George Mueller in developing his opinion. While I am in agreement with what they say is the IRS position, I believe they are playing it safe. I think there is enough argument (see the link at the end of my last post) that we "should" qualify for the exception that I think a person with a lot of risk tolerance could claim it and back it up in Court if challenged. Then, even if you lose, you could not be accused of fraud. If you win, it could save dinar investors millions.

Incidentally, I think you would probably lose it it actually did go to Court. However, there is a valid legal argument for any who want to pursue it.

Best of Blessings,

Mark

[Adam Montana]

Well, a problem with the Tax Court is that it is not a real court, it's just administrative office of the IRS. It's their own thing. They own it and they operate it. You can't take a tax issue into a genuine Constitutional Article 3 Court to my knowledge.

Sounds like the kind of fun I'd rather avoid

[Adam Montana]

I would imagine so.

However. . . as it turns out I was only half right about the Tax Court.

[/size]

That is saying, to be able to use a regular "real" court, a Constitutional Article 3 Court, you have to pay up in advance. I would imagine that would include prospective penalties. Everything. In other words, in a Tax Court, you are "Guilty" until you prove yourself "Innocent."

Now, while there have been wins in the Tax Court, they are rare, and make news. Some cases are told about in articles on the Net. They are big deals.

This is yet another reason I subscribe to the IBC method of asset protection. If your funds are frozen here in the US, how can you possibly pay up front for a fair trial?

I keep my money in a legal offshore account that the IRS/USG can't touch. I report it every year, as I am supposed to. I pay my taxes to the letter of the law. But they can NOT freeze my funds, which means I will always be able to pay for attorneys and in a case like the one we are discussing - a fair trial.

[rollinthedice]

Thanks for the info. We all should know that when dealing with the IRS it will never be that cut and dry. They will get their hands on all that they can. It is their job. Y'all have a great day and all joking aside the information that I have gathered from this site has been most helpful to a newbie like me. Thanks

[ExecConsult]

Mark,

Been thinking about what you said about paying as capital gain 15% and then escrowing the balance of 20% in mutual funds earning some income and wait if IRS catches on this, if not after 3 years, it's all ours again to spend.

The question is how much penalty and interest will IRS impose if in fact they find out we are paying too little for the taxes...? isn't that the rule is you need to pay at least 90% of what you pay in taxes in previous year...? say...I paid $25K in taxes last year to federal..so when this dinar rv's, if I were to pay the IRS $50K in taxes to cover my 15% gain on dinar investments... as long as I paid more than the previous year, IRS can't impose penalty and interest...?

Please correct me on this one...

Thanks

I AM NOT A CPA - though I have a bit of knowledge that overlaps this field and was once qualified to sit the CPA exam, I am not a CPA and it has been a long time since my accounting education. I'll tell you what my thoughts are below but please seek competent counsel from a CPA on this issue.

The rule you are talking about is not for all penalties. It is for penalty for not making larger estimated tax payments. So, if you paid $25,000 last year in taxes, post RV you could pay $25,000 and not have to pay any more estimated (quarterly) tax payments. You would pay the rest of your taxes by April 15 of the following year. (That means you can have the money work for you for a while longer.)

In regards to penalties applied for underpayment of taxes when the IRS disagrees with you, I am not aware of any unless you have been doing something wrong. If you have a legally sound reason for making your claim and can support it, you should not be penalized but only charged interest on the unpaid amounts the IRS assesses.

I hope that is helpful.

Best of Blessings,

Mark

This is yet another reason I subscribe to the IBC method of asset protection. If your funds are frozen here in the US, how can you possibly pay up front for a fair trial?

I keep my money in a legal offshore account that the IRS/USG can't touch. I report it every year, as I am supposed to. I pay my taxes to the letter of the law. But they can NOT freeze my funds, which means I will always be able to pay for attorneys and in a case like the one we are discussing - a fair trial.

I know a lot of people in the VIP/OSI groups are doing it right, but I have talked to a few who are only going halfway to avoid a little extra cost. Therefore I thought I'd add this caution:

In addition to the tax saving using an IBC, many people want to use them for asset protection. The problem is that many of those people will take the cheap rout and ONLY set up an IBC and contribute their dinar to the IBC. The problem is that for asset protection, the structure is only halfway done. If you set up an IBC and own the stock of the IBC personally here in the US, any creditor who wins against you (including the IRS) has no need to go to a foreign jurisdiction to make any claim. They simply claim and take your stock in the IBC, because you own that personally here in the US. Once they take your stock, they own the IBC and they don't need your permission to do anything.

THE NEXT STEP

To complete the asset protection structure, you must have the IBC stock owned in an asset protection structure. This could be anything from a Wyoming LLC to a foreign asset protection trust in Nevis or the Cook Islands.

Best of Blessings,

Mark

[Adam Montana]

I know a lot of people in the VIP/OSI groups are doing it right, but I have talked to a few who are only going halfway to avoid a little extra cost. Therefore I thought I'd add this caution:

In addition to the tax saving using an IBC, many people want to use them for asset protection. The problem is that many of those people will take the cheap rout and ONLY set up an IBC and contribute their dinar to the IBC. The problem is that for asset protection, the structure is only halfway done. If you set up an IBC and own the stock of the IBC personally here in the US, any creditor who wins against you (including the IRS) has no need to go to a foreign jurisdiction to make any claim. They simply claim and take your stock in the IBC, because you own that personally here in the US. Once they take your stock, they own the IBC and they don't need your permission to do anything.

THE NEXT STEP

To complete the asset protection structure, you must have the IBC stock owned in an asset protection structure. This could be anything from a Wyoming LLC to a foreign asset protection trust in Nevis or the Cook Islands.

Best of Blessings,

Mark

I agree with you 100% there. I think most of the people you are referring to understand that as well - most of them are simply waiting until after the RV to finalize the domestic corp. It's truly not needed at this point anyway, so I agree with that line of action.

P.S. The rule you are referring to in the first part of your post is called "Safe Harbor".