DavidNY Posted November 26, 2011 Report Share Posted November 26, 2011 Ive been browsing these forums for a few months now, and thought I'd share some info that I came across this week, when discussing the dinar situation with friends. In my understanding of the explanation below, since we hold the money in paper form, we will pay our gains as income tax. There will be no "capital gains" taxes, as it will be taxed as ordinary income. Here's to hoping everyone lives in Texas (no state income tax). See below Sec. 988. Treatment of certain foreign currency transactions (a) General rule Notwithstanding any other provision of this chapter - (1) Treatment as ordinary income or loss (A) In general Except as otherwise provided in this section, any foreign currency gain or loss attributable to a section 988 transaction shall be computed separately and treated as ordinary income or loss (as the case may be). ( Special rule for forward contracts, etc. Except as provided in regulations, a taxpayer may elect to treat any foreign currency gain or loss attributable to a forward contract, a futures contract, or option described in subsection ©(1)((iii) which is a capital asset in the hands of the taxpayer and which is not a part of a straddle (within the meaning of section 1092©, without regard to paragraph (4) thereof) as capital gain or loss (as the case may be) if the taxpayer makes such election and identifies such transaction before the close of the day on which such transaction is entered into (or such earlier time as the Secretary may prescribe). 2) Gain or loss treated as interest for certain purposes To the extent provided in regulations, any amount treated as ordinary income or loss under paragraph (1) shall be treated as interest 7 Link to comment Share on other sites More sharing options...
precious1 Posted November 26, 2011 Report Share Posted November 26, 2011 Thanks David for your find! I'm in Texas so NO state tax...well yet, anyways! Link to comment Share on other sites More sharing options...
DavidNY Posted November 26, 2011 Author Report Share Posted November 26, 2011 http://www.irs.gov/pub/irs-wd/1103022.pdf Bottom of page 2 Link to comment Share on other sites More sharing options...
coldwarvet Posted November 26, 2011 Report Share Posted November 26, 2011 Yup. That's exactly what my accountant, whom I've worked with for over 15 years, said as well. I'ts NOT capital gains, it's ordinary income. So it's taxed at whatever your particular income tax bracket is. I also got some very good advice from another CPA on this subject: bite the bullet up front, and pay whatever that ordinary income tax requires. The more you gyrate to try to avoid taxes, the more attention from the IRS your draw to yourself. I plan to get it over with and move on. 2 Link to comment Share on other sites More sharing options...
moneysoon Posted November 26, 2011 Report Share Posted November 26, 2011 Could one be pushed into a higher tax bracket based on the amount they cash in? 1 Link to comment Share on other sites More sharing options...
aliciadogz Posted November 26, 2011 Report Share Posted November 26, 2011 No state tax for washington state our govoner try to do a rich tax but voters voted it down.my geuss she new about rv Link to comment Share on other sites More sharing options...
MikeyBoy909 Posted November 26, 2011 Report Share Posted November 26, 2011 actually I think that if you hold onto the dinar for more than a year then the capital gains tax would be 15% and not 35%, if that is the case then i would rather pay the Capital Gains tax since it would be alot cheaper for me than paying ordinary California income tax. I've had my Dinar since 2004 so i'd rather pay theCapital Gains tax... Link to comment Share on other sites More sharing options...
coldwarvet Posted November 26, 2011 Report Share Posted November 26, 2011 MikeyBoy, if I were you I'd take a closer look at that link above to the IRS letter. The IRS will not recognize the income as capital gains, but ordinary income. If you look at the tax rates, for the higher brackets it's $104,892.50 plus 35% of the balance above $372,950. So it doesn't really matter how long you hold it, you'll still have to pay the rate based on ordinary income, not capital gains. Link to comment Share on other sites More sharing options...
magawatt Posted November 26, 2011 Report Share Posted November 26, 2011 I'm amazed that anyone can draw any conclusion out of that gobbledygook. How about about the thought of banding together to get a real deal tax lawyer (with clout) to wrangle a defensible argument that we are legitimate investors and have invested our resources in hazard to earn a profit. It should be considered a capital gain damnit. If this is the murky grey area it seems to be we could possibly win. Why should only the fat cats be able to wheedle fair taxation? I'd rather pay 15% cap gain and 10% to a lawyer than get bent over the tax table for a 34% beating. 4 Link to comment Share on other sites More sharing options...
RVCardinal Posted November 26, 2011 Report Share Posted November 26, 2011 I notice this letter is answering questions regarding a corporation or business. Treas. Reg. § 1.954-2(g)(4)(i) provides that a U.S. shareholder can elect to include in its computation of FPHCI the excess of foreign currency gains over losses or the excess of foreign currency losses over gains attributable to any section 988 transaction (except gains or losses treated as capital gain or loss under section 988(a)(i)(). Thus, the general rule of Treas. Reg. § 1.954-1©(1)(ii) that net foreign currency losses may not reduce income in any other category of FPHCI would not apply if the CFC has made this election because the regulations specifically provide that the excess of foreign currency losses over foreign currency gains may reduce other categories of FPHCI. Foreign currency gains can be treated as long or short term capital gains. Even this IRS letter mentions this..... (except gains or losses treated as capital gain or loss under section 988(a)(i)(). One thing is for sure.... the IRS will have to have more clear cut rules and regulations on the way the money is taxed if the RV happens. Link to comment Share on other sites More sharing options...
Carrello Posted November 26, 2011 Report Share Posted November 26, 2011 We have a member here, an estate planning attorney and dinar holder, Mark, handle ExecConsult, that has been very helpful with tax information and quesitons. He and several other attorneys have written the IRS to get clarificaiton on the income vs. capitals gains question. The link below will take you to his IRS letter. Mark's informtion is great and I would advise anyone with tax questions to search for his comments for review. Considering his is a dinar holder, you can't find an advocate more on our tax side than Mark. Link to comment Share on other sites More sharing options...
fnbplanet Posted November 26, 2011 Report Share Posted November 26, 2011 If the "Occupiers" have their way, 100% won't be enough - they want blood in the streets too. My link 2 2 Link to comment Share on other sites More sharing options...
skitealwedrop Posted November 26, 2011 Report Share Posted November 26, 2011 I've heard that the "little o" wants to raise the capital gains tax next year. Are there any CPA's out there that would care to chime in on the subject? btw: little o = obama Link to comment Share on other sites More sharing options...
fuzzy77 Posted November 26, 2011 Report Share Posted November 26, 2011 One thing is for sure.... the IRS will have to have more clear cut rules and regulations on the way the money is taxed if the RV happens. Why would they? the harder it is to understand the more they can extort from us without explanation or face an opponent who can definitively win in court! If clarity was even relevant we sure wouldn't have the tax code we have now! Link to comment Share on other sites More sharing options...
moneysoon Posted November 26, 2011 Report Share Posted November 26, 2011 Have the 2011 tax books been printed yet? Any changes that are of importance that would indicate an immenent (2011) RV. Link to comment Share on other sites More sharing options...
Blu Collar Guru Posted November 26, 2011 Report Share Posted November 26, 2011 YOU CAN FIND THE DETAILED DEFINITION OF A (CGT) CAPITAL GAINS TAX ON WIKIPEDIA Link to comment Share on other sites More sharing options...
8YRHOLDER Posted November 27, 2011 Report Share Posted November 27, 2011 Been holding on to dinar for 8+ years waiting for RV. What if it actually does RV and it turns into a global accepted currency could you not just go to a bank outside the USA and cash in avoiding all US tax issues. Or according to the IRS website you can make unlimited gifts to your spouse tax free could you not just "give" your profits to you spouse and not have to pax any taxes? any thoughts? Link to comment Share on other sites More sharing options...
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