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ExecConsult

ExecConsult Switching Sides??

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Thanx Adam. I am sure that people more educated in these things still can't find a way around the IRS. I will be thinking of going the LLC wrought from AZ.

Edited by cruzin'

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Thanx Adam. I am sure that people more educated in these things still can't find a way around the IRS. I will be thinking of going the LLC wrought from AZ.

LLC won't do you much good, this is one of the topics we have covered at length and in much detail in the VIP section.

Before you spend a few hundred on a useless LLC, I would strongly encourage you to spend $49 on VIP and get the REAL scoop on asset protection!

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hi Adam one question I was told that there was a small window to re-invest the gains to defer the taxes any comment ?

What Adam talks about in the VIP section is not so much a way to reinvest as a way to defer US taxes by deferring income recognition. This can be done the way the VIP section sets it up. It may also be able to be done through a "deferred sales trust." The absolute BEST way to hold your dinar in my humble opinion is in a Roth IRA so the gains are tax FREE not just tax DEFERRED.

Anyway, whether it is selling stock or exchanging IQD, at the moment of income recognition you have created a taxable event. Neither type of transaction enjoys any special rules that would allow you to avert taxes by reinvesting. The only things I can think of that allow that under our current laws are qualified retirement accounts, IRAs, and sale of your personal residence (though you don't have to reinvest it in a new home anymore- that used to be the rule).

Hope that is helpful.

Best of Blessings,

Mark

LLC won't do you much good, this is one of the topics we have covered at length and in much detail in the VIP section.

Before you spend a few hundred on a useless LLC, I would strongly encourage you to spend $49 on VIP and get the REAL scoop on asset protection!

An LLC won't do you a lot of good for taxes (unless you have a lot of capital investment you can expense), but an LLC can give great asset protection if it is set up correctly and in the correct jurisdiction. I would not use AZ to set up an LLC to hold dinar or investments. I'd use either Wyoming or Nevada personally.

What the VIP section suggests can be very effective if done properly. However, a domestic LLC, FLP, LLP, FLLLC, if properly drafted will provide great asset protection as well. (Sorry to disagree Adam.)

Best of Blessings,

Mark

P.S. See my profile for abbreviated professional disclaimer.

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Thank you Adam and Mark. I see i still need more education on this subject. I will do my studies as soon as i get more time on my hands, for right now 2 jobs is 2 too many LOL. But on a good note if a sizable RV hit i would cash in a small amount to pay of some debt at first then figure out my best options for the rest. Quick question: I can't get taxed till cashing in?? Right???

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Quick question: I can't get taxed till cashing in?? Right???

You don't get taxed until you have an income event. That means either exchange for US dollars OR exchange for anything else of value. In the event you exchange foreign currency for anything other than USD, the IRS Regulations state that the IRS would look at this as an exchange for dollars and using the dollars to purchase whatever you got at it's market value. (I only bring this up because some people thought they could avoid taxes by using dinar to exchange for homes and cars. Doesn't work.)

Best of Blessings,

Mark

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What Adam talks about in the VIP section is not so much a way to reinvest as a way to defer US taxes by deferring income recognition. This can be done the way the VIP section sets it up. It may also be able to be done through a "deferred sales trust." The absolute BEST way to hold your dinar in my humble opinion is in a Roth IRA so the gains are tax FREE not just tax DEFERRED.

Anyway, whether it is selling stock or exchanging IQD, at the moment of income recognition you have created a taxable event. Neither type of transaction enjoys any special rules that would allow you to avert taxes by reinvesting. The only things I can think of that allow that under our current laws are qualified retirement accounts, IRAs, and sale of your personal residence (though you don't have to reinvest it in a new home anymore- that used to be the rule).

Hope that is helpful.

Best of Blessings,

Mark

An LLC won't do you a lot of good for taxes (unless you have a lot of capital investment you can expense), but an LLC can give great asset protection if it is set up correctly and in the correct jurisdiction. I would not use AZ to set up an LLC to hold dinar or investments. I'd use either Wyoming or Nevada personally.

What the VIP section suggests can be very effective if done properly. However, a domestic LLC, FLP, LLP, FLLLC, if properly drafted will provide great asset protection as well. (Sorry to disagree Adam.)

Best of Blessings,

Mark

P.S. See my profile for abbreviated professional disclaimer.

Oh no, we don't disagree. A properly formed entity can help protect assets.

However:

Regarding Dinar, there is always a chance the USG could lock up all Dinar related transactions with a simple mention of anything Homeland Security related. After all, Iraq is in the Middle East. For this reason I choose to have my assets protected by a corporation that does not reside under the jurisdiction of the USG.

Regarding Taxes, a domestic entity won't help much for exactly the reason you just mentioned - you can't trade Dinar for houses or cars and avoid paying taxes! At the end of the year, your gains (through the corp) are added up and you pay taxes on the full amount. Once again, I prefer to let a foreign corp receive the gains immediately... I will reap the benefits on my own terms, in my own time, and I will pay much less taxes than the average bear.

Another point we sort of disagree on is the IRA - that's a great tool if you don't want to touch your money until you reach a certain age. It's not appropriate to assume everyone on this board is an ancient codger like yourself!

( :lol: kidding of course :lol: )

An IRA is a great vehicle for many people, but it's not a "one size fits all" solution.

As always, thank you for your insight and contributions! :tiphat:

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Another point we sort of disagree on is the IRA - that's a great tool if you don't want to touch your money until you reach a certain age. It's not appropriate to assume everyone on this board is an ancient codger like yourself!

( :lol: kidding of course :lol: )

An IRA is a great vehicle for many people, but it's not a "one size fits all" solution.

As always, thank you for your insight and contributions! :tiphat:

Bless you Adam - you are the first person ever to think of me as mature enough to be called a "codger." :lol:

Agreed - not one size fits all - can get around age requirement if you annuitize the payment stream (payments come out in substantially similar payments). You also have the 5 year rule for waiting for 5 years from the initial funding until you can get at it. Still even if you violate the 5 year rule, the numbers are pretty favorable. It is a good thing to look at but, as with all advice you read here, discuss it with a competent adviser in relation to your own circumstances before acting.

Best of Blessings,

Mark

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WooHOoo!! (I hope.)

I was Just informed by the attorney who convinced me to do the IRS submission to begin with. The IRS has published their Priority Guidance Plan and Section 988 is now on the plan.

Before we get too excited, it is unclear if they will address the issues regarding section 988 which we need them too, but I am hopeful that this is in response (at least partially) to my submission and we will get the guidance and direction we need.

WHAT THIS MEANS?

There are a total of 317 projects the IRS has decided are priorities for giving guidance on for July 2011 through June 2012. Section 988 is one of the 317 projects. Now we have to wait and see if the guidance they give for section 988 is of any real help to Dinar investors.

Best of Blessings,

Mark

Edited by ExecConsult
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Like everyone else Mark, much thanks and appreciation for all your efforts. We probably (should) owe you a million $ in attorney fees by now (at $400/hour). Anyway. . .

Being a soon-to-be old codger, how do I put Dinars into a Roth? What do I do/who do I go to do this? I'm assuming I understood your earlier post correctly: Dinars ===> Roth.

Thanks.

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An LLC is an excellent thing to use to own stuff with, where the LLC does no business whatsoever. It just holds title anonymously to a car or house.

And when you sell, there are no taxes. You sell the LLC, not the vehicle or the house. The LLC retains ownership.

It's true that the LLC is good to own stuff. However, when you sell, if you have an income, you must pay taxes on that income regardless of whether you sell the assets out of the LLC or you sell the LLC interests. In fact, with regard to foreign currency, the IRS has an example in the regulations where someone places foreign currency in a business entity. The foreign currency has appreciated about $300,000. Since any exchange gains would be at ordinary income levels, instead of exchanging the currency the individual sold the stock in the company hoping to get capital gains treatment for the income. The IRS came in and said since the value of the company was based on the appreciation of the foreign currency, capital gains would not be allowed and they reclassified the income as ordinary income.

Anyway, whether you sell the assets or sell the LLC, any income triggers tax.

Best of Blessings,

Mark

Like everyone else Mark, much thanks and appreciation for all your efforts. We probably (should) owe you a million $ in attorney fees by now (at $400/hour). Anyway. . .

Being a soon-to-be old codger, how do I put Dinars into a Roth? What do I do/who do I go to do this? I'm assuming I understood your earlier post correctly: Dinars ===> Roth.

Thanks.

You made me smile. Anyone who wants to pay me $400/hour for what I have done here is certainly not going to be refused. However, I usually ONLY charge $250/hour. Anyway, you are most welcome.

You can not take current dinar and place it into a Roth IRA. You must fund the Roth with US dollars and then instruct the IRA custodian to use the funds to purchase new dinar. To accomplish this you must have a self-directed Roth IRA and an IRA custodian who is willing to purchase and hold dinar as an investment. There are many companies out there. When DinarTrade was still up and running, they had a relationship with Entrust. However, Entrust would not hold the dinar once purchased and people had to use a third party company to hold the dinar. I have been referring anyone who asks over to NAFEP. They are an IRA company set up to hold hard assets in IRA. They will hold dinar in their gold vaults.

I hope that is helpful.

Best of Blessings,

Mark

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ExeConsult.... Thanks for all your help and the time you invest in your explanations.

Question: will we be taxed every year on the dinar rv or just a one time deal? Like a lot of others I plan on putting it into my LLC as a fund holding until I decide the best place to invest.

Thanks

GO RV

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I have set up Roth Ira LLC last year by http://www.irafinancialgroup.com/.

I am required to hold dinars in safety deposit box at my local bank.

The fees cost more than Entrust.

If anyone interest, check http://www.irafinancialgroup.com/.

Also check how long it will take to set up depending where the state you live to receive article.

It took me about one month.

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ExeConsult.... Thanks for all your help and the time you invest in your explanations.

Question: will we be taxed every year on the dinar rv or just a one time deal? Like a lot of others I plan on putting it into my LLC as a fund holding until I decide the best place to invest.

Thanks

GO RV

Short Answer

NO - you will not be taxed every year on income from an RV

Longer Answer

You are taxed each year on what you earned in the year. You have income from the RV when you make an exchange IQD into USD (or anything else of value). If you exchange it all in one year, you will pay your taxes for the income for that year.

Hope that is helpful.

Best of Blessings,

Mark

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Mark,

A smile is good. I was basing the rate off of what the Los Angeles attorney fees are reaching. :) Thanks for your reply.

4profit,

Good lead. Thanks, too.

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That was an amazing post Exec. Please keep us posted and let us know if you hear anything. I am a tax professional here in Colorado and am very interested in the outcome. Thanks again. Hakuna Matata

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hello exec,

i'm in south Florida. I gather from your reply that the IRS will clarify the issues brought up in your letter to them; please post a link to their findings when they publish it and since they tend to speak in a language that most of us can not understand, will you break it down for us? I hope you will. thanks for your wonderful post.

Best regards,

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It's true that the LLC is good to own stuff. However, when you sell, if you have an income, you must pay taxes on that income regardless of whether you sell the assets out of the LLC or you sell the LLC interests. In fact, with regard to foreign currency, the IRS has an example in the regulations where someone places foreign currency in a business entity. The foreign currency has appreciated about $300,000. Since any exchange gains would be at ordinary income levels, instead of exchanging the currency the individual sold the stock in the company hoping to get capital gains treatment for the income. The IRS came in and said since the value of the company was based on the appreciation of the foreign currency, capital gains would not be allowed and they reclassified the income as ordinary income.

Anyway, whether you sell the assets or sell the LLC, any income triggers tax.

Best of Blessings,

Mark

You made me smile. Anyone who wants to pay me $400/hour for what I have done here is certainly not going to be refused. However, I usually ONLY charge $250/hour. Anyway, you are most welcome.

You can not take current dinar and place it into a Roth IRA. You must fund the Roth with US dollars and then instruct the IRA custodian to use the funds to purchase new dinar. To accomplish this you must have a self-directed Roth IRA and an IRA custodian who is willing to purchase and hold dinar as an investment. There are many companies out there. When DinarTrade was still up and running, they had a relationship with Entrust. However, Entrust would not hold the dinar once purchased and people had to use a third party company to hold the dinar. I have been referring anyone who asks over to NAFEP. They are an IRA company set up to hold hard assets in IRA. They will hold dinar in their gold vaults.

I hope that is helpful.

Best of Blessings,

Mark

ExecConsult- could you please site the ruling concerning LLC holding foreign currency and the tax implications at exchange. Thanks

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That was an amazing post Exec. Please keep us posted and let us know if you hear anything. I am a tax professional here in Colorado and am very interested in the outcome. Thanks again. Hakuna Matata

Thanks - I will certainly keep this thread updated with anything from the IRS on topic.

hello exec,

i'm in south Florida. I gather from your reply that the IRS will clarify the issues brought up in your letter to them; please post a link to their findings when they publish it and since they tend to speak in a language that most of us can not understand, will you break it down for us? I hope you will. thanks for your wonderful post.

Best regards,

I certainly HOPE that the IRS will clarify the issue. However, they might not respond to my submission at all. They could give guidance on a completely different area of section 988 and completely ignore us. I don't THINK that will be the case, but it could be. IF the IRS gives guidance on our issues, I will brake them down the best I can.

ExecConsult- could you please site the ruling concerning LLC holding foreign currency and the tax implications at exchange. Thanks

I think that you might have misread the part of my post that you quoted above. It was not an IRS ruling. It was an example in the IRS regulations. Those are not binding under the law. However, they are to give us guidance and direction on the IRS' current stance and interpretation of the law. It lets you know how any IRS auditor would decide an issue. The "business entity" was not actually an LLC but the initial example is given of a corporation and the statement is made that it would have been the same done as a partnership. The quote follows:

(Section 988 Regulations 1.988-1(a )(11 )

(11) Authority to include or exclude transactions from section 988

(i) In general. The Commissioner may recharacterize a transaction (or series of transactions) in whole or in part as a section 988 transaction if the effect of such transaction (or series of transactions) is to avoid section 988. In addition, the Commissioner may exclude a transaction (or series of transactions) which in form is a section 988 transaction from the provisions of section 988 if the substance of the transaction (or series of transactions) indicates that it is not properly considered a section 988 transaction.

(ii) Example. The following example illustrates the provisions of this paragraph (a)(11).

Example. B is an individual with the U.S. dollar as its functional currency. B holds 500,000 Swiss francs which have a basis of $100,000 and a fair market value of $400,000 as of October 15, 1989. On October 16, 1989, B transfers the 500,000 Swiss francs to a newly formed U.S. corporation, X, with the dollar as its functional currency. On October 16, 1989, B sells the stock of X for $400,000. Assume the transfer to X qualified for nonrecognition under section 351. Because the sale of the stock of X is a substitute for the disposition of an asset subject to section 988, the Commissioner may recharacterize the sale of the stock as a section 988 transaction. The same result would obtain if B transferred the Swiss francs to a partnership and then sold the partnership interest.

I hope that is helpful.

Best of Blessings,

Mark

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"I certainly HOPE that the IRS will clarify the issue. However, they might not respond to my submission at all. They could give guidance on a completely different area of section 988 and completely ignore us. I don't THINK that will be the case, but it could be. IF the IRS gives guidance on our issues, I will brake them down the best I can."

thanks exec. i hope 1. we rv at a decent rate and 2. their guidance will leave us with a good amount in our pockets.

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IRS Releases Guidance on Foreign Financial Asset Reporting 12/15/2011

IRS Releases Guidance on Foreign Financial Asset Reporting

IR-2011-117, Dec. 14, 2011

WASHINGTON—The Internal Revenue Service in coming days will release a new information reporting form that taxpayers will use starting this coming tax filing season to report specified foreign financial assets for tax year 2011.

Form 8938 (Statement of Specified Foreign Financial Assets) will be filed by taxpayers with specific types and amounts of foreign financial assets or foreign accounts. It is important for taxpayers to determine whether they are subject to this new requirement because the law imposes significant penalties for failing to comply.

The Form 8938 filing requirement was enacted in 2010 to improve tax compliance by U.S. taxpayers with offshore financial accounts. Individuals who may have to file Form 8938 are U.S. citizens and residents, nonresidents who elect to file a joint income tax return and certain nonresidents who live in a U.S. territory.

Form 8938 is required when the total value of specified foreign assets exceeds certain thresholds. For example, a married couple living in the U.S. and filing a joint tax return would not file Form 8938 unless their total specified foreign assets exceed $100,000 on the last day of the tax year or more than $150,000 at any time during the tax year.

The thresholds for taxpayers who reside abroad are higher. For example in this case, a married couple residing abroad and filing a joint return would not file Form 8938 unless the value of specified foreign assets exceeds $400,000 on the last day of the tax year or more than $600,000 at any time during the year.

Read More Link on Right

Instructions for Form 8938 explain the thresholds for reporting, what constitutes a specified foreign financial asset, how to determine the total value of relevant assets, what assets are exempted, and what information must be provided.

Form 8938 is not required of individuals who do not have an income tax return filing requirement.

The new Form 8938 filing requirement does not replace or otherwise affect a taxpayer’s obligation to file an FBAR (Report of Foreign Bank and Financial Accounts). For more go to the FBAR page on this website.

Failing to file Form 8938 when required could result in a $10,000 penalty, with an additional penalty up to $50,000 for continued failure to file after IRS notification. A 40 percent penalty on any understatement of tax attributable to non-disclosed assets can also be imposed. Special statute of limitation rules apply to Form 8938, which are also explained in the instructions.

Form 8938, the form’s instructions, regulations implementing this new foreign asset reporting, and other information to help taxpayers determine if they are required to file Form 8938 can be found on the FATCA page of irs.gov.

See TD 9567.

http://www.irs.gov/irs/article/0,,id=251216,00.html

http://www.xxxxxxxxxxx.com/1/post/2011/12/irs-releases-guidance-on-foreign-financial-asset-reporting.html

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On my listserve we have been discussing form 8938 and the reporting requirements for quite a while now. I still have access to a webinar on the topic. However, I never thought to mention it to my fellow dinarians. Why, you ask? Because it does not apply to most of us.

The purpose of the form and the law behind it is to better capture those assets people are HOLDING IN FOREIGN COUNTRIES. Most of us are holding our assets in the U.S. and even purchased them from a U.S. dealer.

Unless you have a Warka account or other substantial holdings outside of the U.S., you should not worry about that form. It does not affect your Dinar holdings in the U.S. You are not holding foreign assets. You are holding U.S. domesticated assets that you just happened to originate from a foreign country.

Best of Blessings,

Mark

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