Answers to questions - Cap Gains

[creativex2c]

I've been reading the forum for several months now and have gotten quite a bit of great information on it. Unfortuantely I've not 'saved' the information so I would like to ask my questions and see if everyone who has the info can answer them here.
First off, I can't remember why it was said not to purchase 25K notes over the others. Was there any basis for this?
Second, I understand we'll have to pay capital gains if we cash out before we've held them a year, but can anyone tell me the % cap gains are and also will you have to pay income tax at the end of the year on your amount cashed in?
And finally, someone had posted a link of the paperwork we'll have to fill out in order to cash the dinar. Does someone have that link still?
Thanks to all for the info! This is the first time I've made any sort of investments since my divorce so I'm anxious to see it through (and soon!!)

[Gerardo]

My entire investment is 25k notes. I think people have stated that they will eventually phase out the 25k notes, but they will still be worth something. You can always find people to exchange them for smaller notes. I should do that too.

[Javabear]

I've been reading the forum for several months now and have gotten quite a bit of great information on it. Unfortuantely I've not 'saved' the information so I would like to ask my questions and see if everyone who has the info can answer them here.
First off, I can't remember why it was said not to purchase 25K notes over the others. Was there any basis for this?
Second, I understand we'll have to pay capital gains if we cash out before we've held them a year, but can anyone tell me the % cap gains are and also will you have to pay income tax at the end of the year on your amount cashed in?
And finally, someone had posted a link of the paperwork we'll have to fill out in order to cash the dinar. Does someone have that link still?
Thanks to all for the info! This is the first time I've made any sort of investments since my divorce so I'm anxious to see it through (and soon!!)

First, the rumor was that the 10k and 25k notes would be on hold and not be able to be exchanged right away after a re-val. There is no proof to support this.
Second, if hold your dinar for a year or less, then you are subject to 30% capital gains tax. Anything over a year and it is 15% tax. There is no additional tax. This answer is US specific.
Third, I think it will be the banks who will be filling out the paperwork and they will be well versed in it when the time comes.

[gbarton13]

Second, if hold your dinar for a year or less, then you are subject to 30% capital gains tax. Anything over a year and it is 15% tax.
Short term capital gain tax rates depend on your current income level and is not a flat percent unlike long term. Don't forget state and local short/long term capital gain taxes as well. I know for NJ state taxes, it is about 5.6% for either short or long term capital gains.

[Edmond]

Is the cap gains tax going to be reduced in 06 by a Bush tax break???

[Brittle Kitty]

Is the cap gains tax going to be reduced in 06 by a Bush tax break???

The president ordered a commision to investigate radical alternatives to our current tax system. The results of their investigation was submitted to the president last week. They offered two possibilities. In one, most capital gains would be taxed at 25%, in the other, all capital gains would be taxed at 15%.

I prefered the higher rate plan because it permitted corporations to deduct real estate expenses. This is a better arrangement for me because I am planning on investing in real estate through my LLC.

Both of these plans would make it so that almost every American would only have to file a ONE PAGE tax return. :huge:

[Michwlv]

Is the cap gains tax going to be reduced in 06 by a Bush tax break???


10 to 15 percent is all you will pay on a long term capital gain (asset held over 1 year).

:lmao:

[Brittle Kitty]

10 to 15 percent is all you will pay on a long term capital gain (asset held over 1 year).

:lmao:

What is short term? Do states also have a capital gains tax?

[Javabear]

What is short term? Do states also have a capital gains tax?

Short term as defined by the IRS is a year or less. So to qualify for long term, you must hold for a year and a day.

All states are different, check with yours.

[Brittle Kitty]

Short term as defined by the IRS is a year or less. So to qualify for long term, you must hold for a year and a day.

All states are different, check with yours.

I should have been clearer... I meant to ask what the federal rate is for short term.

Thanks!

[Javabear]

I should have been clearer... I meant to ask what the federal rate is for short term.

Thanks!

last I checked the federal short term capital gains tax rate was 30%

[gbarton13]

I should have been clearer... I meant to ask what the federal rate is for short term.

Thanks!
As I stated above, the federal rate for short terms depends on your current income level and you can find out what kind of taxes you will expect to pay using this calculator (http://www.moneychimp.com/features/capgain.htm).

[gbarton13]

Here is some info from Wikipedia.com...

In the United States, individuals and corporations pay income tax on the net total of all their capital gains just as they do on other sorts of income, but the tax rate is lower for "long-term capital gains", which are gains on assets that had been held for over one year before being sold. The tax rate on long-term gains was reduced in 2003 to 15%, or to 5% for individuals in the lowest two income tax brackets. Short-term capital gains are taxed at a higher rate: the ordinary income tax rate. In 2013 these reduced tax rates will "sunset", or revert back to the rates in effect before 2003, which were generally 20%.

[Javabear]

As I stated above, the federal rate for short terms depends on your current income level and you can find out what kind of taxes you will expect to pay using this calculator (http://www.moneychimp.com/features/capgain.htm).

I like the calculator GB!!

[WilliamMunny]

Hi,...I have question about how the cap gains tax will work...

Several people have mentioned 30% federal capital gains tax..
Is that calculated as any profits above and beyond the price
I paid for the dinar is subject to 30% tax?...

So let's say I paid $100 for some dinar,...come tax time,
that dinar is now worth $1000,...I would need to pay 30% tax on $900 ??
Is that how it works?...

Thanks!
-Wm

[.50cent]

Does anyone know for sure if there is capital gains on currency. I was told there is not. That you will be taxed only on what you show on paper.

[Lux]

Does anyone know for sure if there is capital gains on currency. I was told there is not. That you will be taxed only on what you show on paper.

Yes, IRS views it in the same light as "securities, property and other assets".

Read Michelleirs' posts. she works for the IRS and gave some very good advice on this thread.

http://www.investorsiraq.com/iraqi-dinar/11203-how-avoid-all-taxes.html

[thmgroup]

What is short term? Do states also have a capital gains tax?

It's my understanding that you can "write off" your state capital gains taxes if you itemize your federal income tax return. See the article below...

http://72.14.207.104/search?q=cache:OqlAywMhU84J:www.itepnet.org/pb13capg.pdf+federal+capital+gains+tax+reduction+s tate&hl=en

Because state income taxes can be written off on federal tax forms by those taxpayers who itemize their federal income taxes, and because the ability to write off state income taxes is most valuable for the wealthy Americans who realize most capital gains income, any reduction in state capital gains taxes will be partially offset by an increase in federal income tax liability

So even those with a high State Capital Gains rate, will pay about the same net amount of tax as those will little or no state CG tax. Therefore we're all capped at the rates GBarton so eloquently mentioned above.

[thmgroup]

So let's say I paid $100 for some dinar,...come tax time,
that dinar is now worth $1000,...I would need to pay 30% tax on $900 ??
Is that how it works?...

Thanks!
-Wm

Only if you cash it in and realize the $900 capital gain. If it's simply "worth" $900 more than you paid for it, you don't pay the tax, because you haven't actually reaized that profit yet.

[cloaked]

would somebody explain this to me pleeeeease...

regarding the calculator:

1) i plug in how much i spent on dinars (but how do i prove when i first obtained them as to prove i have held them 1 year?)

2) if i am in say, the 25% tax bracket and i have held my dinars 1 years and proven so, and if my dinars are now worth 1,000,000 for example... wouldn't that immediately bump me out of the 25% tax bracket? i hope i am making sense... what i am trying to say is: how can i possibly be in the 25% tax bracket when i realize my dinars worth of 1mm??? if is not the case, when does my tax bracket change? a year from when i realized them?

oy my brain hurts :confused:

[Coldstone]

If I say invest 21000 dollars for 25,000,000 dinar and it RV at .1 and I have 2.5 million. Now the tax acording to the calculator is 28% for under a year and 15% after a year. Now is the time started from the initial investment of 21000 or from when I cash in? Should I keep the receipts? And say I bought 5 million here and 5 million there....would I have to wait for the different times I purchased for a year? Help me clear this up....thanks..COLDSTONE

[thmgroup]

if i am in say, the 25% tax bracket and i have held my dinars 1 years and proven so, and if my dinars are now worth 1,000,000 for example... wouldn't that immediately bump me out of the 25% tax bracket? i hope i am making sense... what i am trying to say is: how can i possibly be in the 25% tax bracket when i realize my dinars worth of 1mm??? if is not the case, when does my tax bracket change? a year from when i realized them?


The key word here is income tax bracket (how much did you earn from your job, interest, etc.). Your realized gain from a dinar investment is not considered income. The exception would be if you say deposited your realized gain in a bank account. The interest income would affect your income tax bracket. For example, your $1000 dinar investment is worth $1,000,000 if you cash out on Jan 1, 2006. You deposit the $1,000,000 into a bank account on Jan 1, 2006 which pays 4% annually. For simplicity's sake, lets say your deposit yields a return of $40,000 (4% of $1M) by Dec 31, 2006. When you file your 2006 tax return, the $40,000 interest income is added to your other income which determines your tax bracket.

If you held the dinar for at least 366 days, your capital gains is considered long term and subject to long term CG taxes (probably the upper rate of 15%). You would need to pay 15% on $999,999,000 (your realized gain = amount less your initial investment of $1,000). Hope this helps.

[cloaked]

The key word here is income tax bracket (how much did you earn from your job, interest, etc.). Your realized gain from a dinar investment is not considered income. The exception would be if you say deposited your realized gain in a bank account. The interest income would affect your income tax bracket. For example, your $1000 dinar investment is worth $1,000,000 if you cash out on Jan 1, 2006. You deposit the $1,000,000 into a bank account on Jan 1, 2006 which pays 4% annually. For simplicity's sake, lets say your deposit yields a return of $40,000 (4% of $1M) by Dec 31, 2006. When you file your 2006 tax return, the $40,000 interest income is added to your other income which determines your tax bracket.

If you held the dinar for at least 366 days, your capital gains is considered long term and subject to long term CG taxes (probably the upper rate of 15%). You would need to pay 15% on $999,999,000 (your realized gain = amount less your initial investment of $1,000). Hope this helps.

yes it does! and tyvm. congrats on figuring out my mumbo jumbo!!! ... now that i know how the income bracket works, i can add that to my knowledge of reinvesting to offset those capital gains.. ie. real estate? i'm currently learning about this in my real estate course. slowly but surely... thanks again
:happy64: