Adept1: Possibly NO tax on currency exchanges
Just received this from a reliable source:
FYI: This has been going around. It is true that straight currency exchanges have not been taxed in the past. Worth keeping in mind and consulting with your tax attorney when the time comes, and do not sign away any rights just because a banks suggests it.
The pivotal question is, can we prove this was not just an investment? Will a straight exchange be enough in this instance? Better be sure about your professional advice and get more than one opinion.
Some UPDATED, FRESH Tax Info, DO YOUR OWN RESEARCH
I have been talking with a smart, savvy ex-member that is well connected to a UST source. She shared some info she recently got about the taxes on our upcoming exchange. Here is what she said:
"There is no tax for a currency exchange. This is from my UST contact. Just don't sign the form saying your exchange is an investment. Ask the banker if you are required to sign it?
Obama is requiring the banks to give us the form to sign so he can collect capital gains tax ~ but we are not required to sign it by law. Be smart. READ the form and make sure there isn't any reference to an investment or you're stuck with taxes."
I asked her to elaborate some because if a form is presented I wanted her to share a strategy or idea on how to handle this portion of the appointment….here is what she shared.
"There is no tax for a currency exchange. After you sign your NDA (there) will be this other form the bank will want you to sign regarding the dinar being an investment. Ask the banker if you are "legally required to sign it? Get the banker to say no and remind him you are there for a currency exchange."
What I get from this is that we need to take control of the appointment when this comes up. The atmosphere of a banker appointment is usually a tone of "oh, sign here?, Okay".....which is probably how they want us to be.
However, if this is the law it should be looked at as one of these traps we have been hearing about. I plan on trying to get the answer by researching the topic before I go on my appointment. I will share what I find.
If any of you choose to research the topic or have any info to support or counter this please share with me what you find out.
Please DO NOT take this as direct Tax Advice from me...I am not a CPA nor is the person I got this info from.
RustyKatt: Once again Adept1, you go above and way beyond for us. This is something everyone of us should look into for ourselves and our future financial health. Nothing wrong in paying what we owe....but I have issues paying for something I don't have to or care to "donate" to.
JesusPost46: form 104 - exchange or investment (Tony spoke on that before)
McHowland: Thank you Adept1 your R&D was Excellent. I did talk to one of the top CPAs and tax attorneys in the country today in fact and he told me almost the same thing you just said except he was no knowledge of the investment form which makes sense.
He did say this was an exchange, however and he bet me that those (congressmen and senators and the friends who have conections) will pay a totally different tax then those who do not research this.
He is going to check further on the dinar but he is quite confident. The other currencies that are already being traded are to be treated as an exchange.
Dinarasaurus: When you convert Dinar to US dollars in exchange, you are not selling anything that brings taxable capital gain. You aren’t selling a house, or stock, or any of the normal capital-increasing gains. The IRS read-out states this, and it makes sense.
Therefore the IRS states that no capital gains tax is due when you cash-in Dinar. Read carefully the IRS findings and verify them for yourself.
Beware - if you put your US dollars into an interest bearing bank account (for even one day), you will gain interest and you will owe tax on the interest gained for each day. We’re advised to deposit dollars into a non-interest-bearing bank or credit union account.
Examine this IRS opinion regarding form 8938. The form was designed only to identify people with off-shore bank accounts or LLCs, or Corporations and get them to report their secret holdings.
Fortunately, none of the hype [about form 8938] applies to private citizens who happen to be holding foreign currency such as the Dinar or Vietnam Dong.
Call the IRS [Special Accounts Division]. The best thing is to get advice, with this kind of money, no one can wade through it on their own. Like Tony says, hold back 50% for whatever they come up with, I am.
4flashtrafficonly: I've been pounding through the IRS website and will continue to do so, my cause for concern is this:
No tax on currency exchange, ok, but the Dinar was not a "Currency" at the time of purchase so it is not the same as coming back from the EU and "exchanging" my Euros back into dollars.
The big question is Will The IRS Treat The Dinar As An Investment Because It Was Not Previously A Viable Currency And Therefore A Speculative Investment?
Further, the "Currency exchanges resulting in a gain of $200 or more should be treated as ordinary taxable income" issue still sticks in my head. The IRS does not want to penalize travelers for exchanging their currencies, however, they don't want to miss out on anything that might be construed as "Currency Trading" either.
I plan on finding my own answers AND hiring a top flight tax attorney to get a private letter ruling from the IRS, prepare my taxes, file my taxes and get a receipt marked paid in full from the IRS (my get out of jail free card)