Taxes

[amnyce]

Why will a tax on our gains be imposed? Technically it isn't a again, it's a currency exchange, no? When I come back from a vacation in Mexico, I am not taxed for exchanging my money back to US $$.

[hoopdog]

I wouldn't worry about it too much. It has to RV before we need to worry about paying any kind of taxes on it and I don't see it RV'ing anytime soon if at all.

[amnyce]

I'm not "worried". I'm trying to understand why taxes will be imposed. Apparently you don't understand why either.

[LR Bobert]

you will pay taxes on a increase and be required to complete financial form 104 at cash in. What that tax is yet, is not answered, but yes you will pay taxes on the gain.

[lotsofdinar]

"Why will a tax on our gains be imposed? Technically it isn't a again, it's a currency exchange, no?"

Because it is not a simple exchange. That is why some folks worry that it will be impossible to exchange the currency after an RV anywhere but within Iraq and only be able to exchange it for the new Dinar and not USD.

Welcome to currency speculation.

Edited January 3, 2012 by lotsofdinar

[KeepinTheFaith]

Simply because they can.

[Carrello]

Why will a tax on our gains be imposed? Technically it isn't a again, it's a currency exchange, no? When I come back from a vacation in Mexico, I am not taxed for exchanging my money back to US $$.

You are supposed to pay on any increase over $200.

[Carrello]

I'm not "worried". I'm trying to understand why taxes will be imposed. Apparently you don't understand why either.

You are right in trying to understand the taxes you will pay. There is a discussion on taxes about whether they will be categorized as capital gains (good) or regular income (not so hot). It looks like, according to an attorney what holds dinar, that it will be taxed as regular income, and in this case, probably at 35% for federal and whatever your state % is. Knowing this, I doubled my investment in order to end up with 60% (and who knows what the CBI spread and additional fees will be - just because you have a 25,000 note, does not mean you will get $25,000 if it RVs at 1:1). Having a corporation can get you out of the state taxes if you establish in the right state (Nevada, Delaware...)

You can read a lot of information in the Taxes Forum here, and you will need a good CPA that understands thoroughly, foreign currencies. Someone stated yesterday, that you need not a good attorney, but a good CPA that understands foreign currencies. Why? An attorney can give advice and if the advice is incorrect, there are no repercussions for the attorney. If a CPA gives the wrong advise, they can loose their license. If there is a question about the category you will fall into, pay the larger sum. It will be worth it. You can always get the money back, if you don't pay, the fees will be outrageous, and Uncle Sam will be all over this.

Don't forget, unless there is a stipulation from the Iraqi government, you do not have to cash out all at once. Cash a little, have a little fun, hire professionals, make a plan, figure out what to do to get the most from your money, and then carry it out

Read, read, read, and ask questions in the Tax Forums. The people that know the most typically like to share and help, and they post in the appropriate forum.

Amnyce, look for posts from ExecConsult, he is an attorney out of Kansas City that has done extensive IRS research with other attorneys that hold dinar.

[joseroque]

You will have to report any profit you make on the exchange and will be taxed accordingly. Of course, first you will deduct any expenses you may have incurred in.

On the tax form there are several places where it seems you can report this income so it's best to consult a CPA or tax attorney or, if you wish to complete the 1040 yourself, you can call IRS directly (not recommended) for assistance.

As I have said before, once the RV comes (no matter what year), I will not care what I will have to pay since I'll still have a lot left over for me and my family!