Avoiding short term capital gains

[911turboS]

Lets say the reval happens this month. I have not held this investment for more then a year. So I would be subject to STCG. Could I exchange my dinar with the euro (or other foreign stable currency) and keep it in a foreign currency account until the long term capital gains goes into affect???

[Soliel]

Lets say the reval happens this month. I have not held this investment for more then a year. So I would be subject to STCG. Could I exchange my dinar with the euro (or other foreign stable currency) and keep it in a foreign currency account until the long term capital gains goes into affect???

Yes, held under a year it would be short term capital gains.

Are you in the states? If you are, I believe it won't be any higher than 20%.

As far as your idea of converting to Euros...it maybe genius...but would you have to pay a tax in the country of conversion? Just a guess.

If you swing it, let us know and we will congratulate you on your smarts.

Soliel

[911turboS]

I cant claim credit for the idea, but I am stateside and looking to avoid the additional 20% tax for a total of 35%:mad:

[airforce]

That idea seems pretty darn ingenius. Just as long as there isn't a big broker fee for converting to Euros. Personally, I'm not sure if it's worth the effort because it's highly unlikely that a new currency will hit the world market and tank immediately after, so if the dinar rv's very soon I'll just wait until my year anniversary before doing anything.

[BABYBULL24]

Dont forget if done in a US Bank - they will be filing a SAR ( Suspicious Activity Report) with the IRS for any transaction over 10K.

[pvpeacock]

If I remember correctly, this was discussed a while back. My understanding is that the taxable event is your realization of a gain which is more than simply cashing dinar into USD. If, after the dinar revalued, you bought a car with dinar, you would have "realized" a gain which would make the gain taxable.

[BABYBULL24]

It may be a good idea if done in a foreign country with no taxes but when the foreign banks wire the money to your US bank you may get nailed for tax evasion and they may look if there is money laundering going on. Dont know how up they are on these transactions.

[BABYBULL24]

FYI

The 15% rate is not permanent - it is due to expire 12/31/08. Hopefully we wont have to worry about that.

http://www.phoenixwm.phl.com/html/taxlaw/page1.html

[Adster]

That's in the US. We get screwed by Gordon Brown at 40%. $#%%@#%

But we've been down this road before with other Brits. :rolleye03 :rolleye03

[Soliel]

I cant claim credit for the idea, but I am stateside and looking to avoid the additional 20% tax for a total of 35%:mad:

Someone help me. The 20% would be the TOTAL Tax...not an addition to your income tax.

It's either 20% or your income tax rate, whichever is LOWER.

Soliel

[mfriedl1]

Someone help me. The 20% would be the TOTAL Tax...not an addition to your income tax.

It's either 20% or your income tax rate, whichever is LOWER.

Soliel
I believe its either 25% or 28% for STCG and 15% for LTCG....
But you might pay your Tax bracket for STCG or 15% for LTCG
One of these are correct as far as I know....
you WON'T pay both GC and Income tax, it's an either/or situation....

[911turboS]

I think anyone who has invested in dinar will be in the highest tax bracket when the time comes. So LTCG = 15% STCG = 35 %

[Soliel]

I believe its either 25% or 28% for STCG and 15% for LTCG....
But you might pay your Tax bracket for STCG or 15% for LTCG
One of these are correct as far as I know....
you WON'T pay both GC and Income tax, it's an either/or situation....


I remember I asked him just two months ago (when I was finishing up last year's taxes if you can believe it).

I believe the Capital Gains rate has been cut down a lot. I remember him telling me it for sure would not be more than 20%. But I will ask him again. Of course, I am talking from the states.

Soliel

[mfriedl1]

I think anyone who has invested in dinar will be in the highest tax bracket when the time comes. So LTCG = 15% STCG = 35 %
but I heard that this doeesn't count as income, so if you make....50k a year you'd pay 25% on it....its taxed, but isn't counted as income when determining the tax bracket


You still have to add state CG taxes to that number though....where applicable...

[911turboS]

Check this out for capital gains http://www.moneychimp.com/features/capgain.htm

[mfriedl1]

Check this out for capital gains http://www.moneychimp.com/features/capgain.htm
It says 15% for LT
and your income tax bracket for ST

(both plus state taxes)

[psychojerm]

short term capital gains are taxed at your income tax rate.

the dinar however, is not an investment per the government. It's a personal foreign currency transaction. Regardless of the size or type of the transaction, if you make 200 dollars or more on the exchange you are legally required to pay capital gains tax. There's no wording in the law on personal foreign currency transactions that refer to short or long term gains, but rather just capital gains. Be prepared to pay taxes on your gains at your income tax rate regardless of how long you have held them.

I can't prove that the long term won't apply, but it can't be disproven either. And the fact that according to the IRS this isn't an investment as you're not dealing with a market, but rather just a personal currency exchange the wording is very loose. The way the law reads it's perfectly feasible for them to charge "short term" gains on any personal currency transaction, no matter how long you've held it. Long term capital gains applies to what is recognized as an investment by the government. This is not one of those things.

[buck74]

Better to pay your taxes, remember those taxes go to support the war in Iraq.

[911turboS]

So if I give the dinar to someone whos income is $7,000 and in the 10% tax bracket. They would only pay 10% regardless if they were exchanging $100,000.00 or $10,000,000.00. The person who makes $150,000.00 and is taxed @ 28% is getting screwed. I was under the assumption that if you exchanged $1,000,000.00 your income would be considered $1,000,000.00 and be bumped up to the maximum tax bracket of 35%?????

[destin2succeed]

Some banking terminology you should all be aware of. If the US gov. has the following info from your currency transaction then they can link that to you taxes. FINCEN - Financial Center Crimes Enforcement Network is part of the US Treasurey Dept. They require by law all financial institutions in the US to fill out forms on all Cash transactions over $10000. FINCEN form 104 CTR(Currency Transaction Report) these will be filled out when you convert your dinar to dollars at a US bank. FINCEN Form SAR (Suspicious Activity Report) is form filled out by the bank teller without your knowledge on cash transactions $5000. or more that they feel is suspicous. So Treasury Dept is going to know when and how much you cash in your dinars for. With that being said I dont know for sure how the short or long capital gains will be applied.:confused:

[hilljack13]

It was best said by psychojerm, If you convert more than $200 it is then to be reported as a capital gain...Read pub 550 (i believe) and you must file a schedule D with your tax return. The wording is very loose...on schedule D there arent any instructions on currency exchanges, just the date you bought and the date you sold. Two sections, one for short term and one for long term. I would suggest that you go to the IRS web site and print out Schedule D and the instructions and "play" with the numbers you think you will get at the R/V.

[Twstdmtl]

*Sorry I posted this in the wrong thread earlier*

Hello all!

I am new to this forum but not new to foreign exchange.

To avoid CG gains in the U.S. try the following:

Purchase foreign currency through Fifth Third Bank (not an advertisement but in my opinion Fifth Third is the best bank for foreign currency transactions) in increments less than 10K USD to avoid the Suspicious Activity Report to the IRS. Fifth Third Bank charges a FLAT fee of 20 USD on the both sides of the transaction, 20 to buy or 20 to sell. It does not matter if you buy/sell 100 USD or 100,000 USD! When selling the foreign currency sell in increments of less than 10K USD and pay the 20 USD flat fee. I think that 20 USD per transaction is better than the CG % you would pay otherwise.

If your Fifth Third branch claims to not be able to broker this transaction remind them that this is the post liberation currency (IQD) not the currency that has Saddam Hussein's portrait (ID). If they still have a problem call their International/Foreign Exchange desk at (513) 579-5249 and have them clarify their policy to the branch office.

The only downfall that I have experienced is the fact that it has taken me up to two weeks to receive currency. This is a small price to pay, to not have to pay delivery charges. This may not be the case for you but I live very close to Fifth Third's headquarters in Cincinnati OH. Your delivery window may be broader.


*This is not financial or tax advise. I am an athlete not a role model :)

[bloptaptap]

would it be possible to fly from the states when the dinar gets pegs say at a decent rate fly to like swizterland and covert what ever there pay what ever taxes and just open a bank account over there and have a atm card or wire a certain amount every month?

[DinarDummy]

"The House voted Thursday to make sure investors hang onto lowered tax rates for capital gains and dividends for an extra two years."

http://apnews.myway.com/article/20051208/D8EC9HAO0.html

"It's unclear whether these bills can be reconciled with different versions passed in the Senate in the short time that lawmakers have the rest of this year."