Met with a Tax Attorney today

[masterdinar]

Today I took the plunge...I signed a retaining letter for $285.00 per hour with one of the best tax attorneys in CT. I have done extensive reading and study on the subject and felt pretty confident going into the meeting that this investment would be treated as ordinary income. The meeting only confirmed what I already knew. This investment will be treated as ordinary income. The statute in the tax code that causes the confusion refers to companies that are invested in derivatives. It does not control individuals making a pure currency play. The good news is that since this is to be treated as ordinary income if we should take a hit and for some reason the current dinar became worthless currency we would be able to take it as an ordinary loss and be able to write down the entire investment. If it was a capital gain then the loss could only be written down as a capital loss at 20 percent or so.

Another great point that came out of the meeting was the fact that our personal estate should be looked at as a continuum that starts at birth and ends at death. In CT large estates are subject to estate tax...There is a Federal Estate Tax and a State Estate Tax. There is an exemption for Federal Estate Tax for the first 10 nillion dollars. There is also an exemption for State Estate Tax of 3 and half million dollars but our esteemed governor Malloy wants to lower the exemption to 2 million dollars. How this effects us is quite simple the Federal Estate Tax due on amounts over the 10 million dollar exemption is in the high 30s percent, the State Estate Tax due over the expected 2 million dollar exemption is around 10 percent. Given the fact some people are heavily invested and may be in a position to profit well into the multi-millions of dollars, many may find themselves with way more than they actually need. Upon death huge amounts of monies may be last to Federal and State Estate Taxes. The attorney recommended that if you are in this situation that it might be more beneficial to gift actual dinars to your children now. A gift of pre-revalued dinar will result in a highly leveraged gift. For example, a million dinar gift would only reduce your Federal and State Estate Tax exemption by the $1000.00 that you invested in purchasing the dinar. However, if you wait until after revaluation and you gift your children 1 million or more dollars then your Federal and State Estate Tax exemption will be in the amount of dollars gifted after revaluation. In this case your Federal and State Tax exemption will now be reduced by a full 1 million dollars. This will have greater consequences if your gift to your children is greater than 2 million as now upon your death the entire estate would now be subject to 10 percent State Estate Tax, which is $100,000.00 per million. At the Federal Level the amount of your estate that is over the 10 million dollar exemption will be subject to 39 percent Federal Estate Tax or $390,000.00 per million. This is $490,000.00 per million when you combine the State and Federal Estate Tax over exemptions...this is not chump change.

This attorney did not feel as though CT would engage in any state windfall tax on large profits from the Dinar reval. But between the 35 percent ordinary income tax and the CT State income tax...which is now at 6 percent but Gov. Malloy has asked for 6.5 percent but the Democratic state legislature wants more so we could be looking at 7.5 percent. This would mean about 42.5 percent for federal and state income taxes plus bank spread would be taken off the top. I would say 55 percent is about what can be expect to be left with...that is about $550,000.00 per million. The good news is you would not have to look over your shoulder for the IRS to come crashing down on you...you could spend your money in any way you wished without any worries at all.

He also touched upon how to pay the taxes due upon revaluation. He said that you would have to file a quarterly estimate of tax due in the same quarter you cash out and you will have to continue paying your quarterly estimated tax throughout the year or you will be subject to penalties and interest as you have essentially withheld money that was due to the government.

This attorney did not think very much about off shore Trust Funds established for the purpose of avoiding taxes...he said quite clearly that the US Government is all over foreign accounts and anyone caught trying to avoid taxes in this manner not only would risk losing the account but would have to deal with the criminality of the situation.

While this meeting may end up costing me $700-$900 it was worth the peace of mind I have from knowing what is the correct and legal way to proceed after revaluation.

[cocklebur]

Thanks for the research!

[rjboots1]

Thanks for sharing, MD. Good confirmation, and food for thought on the gifting idea.

[merc49]

Thanks for sharing your information, it is very much appreciated and enlightening. Great food for thought.

[txdinargirl]

Thanks for sharing your information. I need to find a tax attorney of my own. I've been waiting until the rv because my husband thinks I've lost my mind for investing in the dinar. I think this is one time when he won't mind if I'm right and he's wrong.

[S2_D2]

Thanks for the info. I need to do the same

[kinglizzy99]

great info md...thanks a 'million'!

[mark1]

thanks for the info--will help me decide how to handle my situation

[kittycat]

Great post. Thanks!

[wgb52]

Sorry other "best tax lawyers" have the opinion that these can be claimed as capital gains. In addition the statement "

If it was a capital gain then the loss could only be written down as a capital loss at 20 percent or so. " is false. Capital losses can be deducted in full against capital gains. In the event there are no gains $3000 / yr / couple or $1,500 /individual may be deducted from income. Any remaining balance may be carried forward for future claims.

[dinnie]

We will not know for sure if it is ordinary income or capital gains until AFTER it RV's. Then the IRS will make a ruling.

[summershah]

Thanks for the info. Great post. :) :)

[TRERUMPH]

i have a question, how come there is a tax when the only thing you are doing is exchanging money?????????? can someone please tell me about this???????

[Farmall]

i have a question, how come there is a tax when the only thing you are doing is exchanging money?????????? can someone please tell me about this???????

IF the Iraqi currency was already a worldwide traded currency ie Candadian dollar vs US dollar, and you took a trip to Iraq and exchanged say $5000 dollars for Iraqi money and went to Iraq on vacation, there would be no tax. I go back and forth to Canada sometimes several times a year and exchange money their and here with no tax ramifications whatsoever. This Dinar purchase you have made is considered and "investment" no matter how you look at it, meaning you will be liable for tax at some point whether you cash in at the bank and pay the tax on income or funnel the money through a Corp. At some point the DInar will RV we may or may not make money based on what happens over their, if you make money on the investment you will be liable for tax at some point.

My take on the situation, I am sure there will be those who will question my "authority" to make these claims, so take my comment for whatever it is worth to you.

[okane]

Sorry other "best tax lawyers" have the opinion that these can be claimed as capital gains. In addition the statement "

If it was a capital gain then the loss could only be written down as a capital loss at 20 percent or so. " is false. Capital losses can be deducted in full against capital gains. In the event there are no gains $3000 / yr / couple or $1,500 /individual may be deducted from income. Any remaining balance may be carried forward for future claims.

Very True ..... and they change the rules all the time. Best to be prepared