Capital gains or not

[Ronbo]

Whether these are classified as capital gains, would that affect when the taxes would have to be paid on a cash in, or would the taxes be due the end of the year just like regular taxes?

[mfriedl1]

Whether these are classified as capital gains, would that affect when the taxes would have to be paid on a cash in, or would the taxes be due the end of the year just like regular taxes?
I am under the impression that it will be at the end of the year with the rest of your taxes. I'd be nice if they took it right away, but the bank you go to exchange has nothing to do with you paying your taxes on the profit of your exchange. Except that they report the the IRS that you make a large exchange when it is greater then $10,000.

I'm someone out there knows better, please correct me.

[Beach]

I'm not positive about this, but I think you'd pay quarterly estimated taxes on it at the time or near the time of cashing it in. If you wait until the end of the year there may be some penalty involved.

[mfriedl1]

I'm not positive about this, but I think you'd pay quarterly estimated taxes on it at the time or near the time of cashing it in. If you wait until the end of the year there may be some penalty involved.
Good point.

Best thing to do is talk to your Tax acocuntant!!

They will tell you what to do.

[v1rotv2]

U.S. income tax tax is paid on a quarterly basis. If you cashed in your dinar say on feb 2nd you have until the end of march to pay the tax due on the amount you realized as a gain. If the gain was a short term gain (less than 1 year) it would be at the tax rate for that amount, if you held the dinar for more than 1 year it would be long term and be 15%. If you wait the entire year you would face fines for underpayment of your taxes.

[ItsJustMe]

U.S. income tax tax is paid on a quarterly basis. If you cashed in your dinar say on feb 2nd you have until the end of march to pay the tax due on the amount you realized as a gain. If the gain was a short term gain (less than 1 year) it would be at the tax rate for that amount, if you held the dinar for more than 1 year it would be long term and be 15%. If you wait the entire year you would face fines for underpayment of your taxes.

Your quarterly taxes for any given year must equal 100% of the taxes you paid for the previous year (or 110% if you make over $150,000). That means that if you sell a captial asset in January for a $1 million profit, you are not required to pay the taxes on it until April 15th of the following year so long as you pay in 100% of your prior year tax.

For example: My wife and I make $100,000 from our business and we paid $20,000 in taxes in 2005. In 2006, I am required to make 4 estimated payments of $5,000 each. If I have a $1,000,000 capital gain next month, that doesn't change my estimated payments. I will simply owe another $150,000 ($1 million x 15% capital gain) on April 15th of 2007.

The same goes even if I have a job and pay my taxes through withholdings. So long as you pay the same tax this year as you paid last year, the IRS considers you "safe" from penalty regardless of how much you make this year...

[Michelleirs]

The IRS states that "If your adjusted gross income was more than $150,000 ($75,000 if you are married filing a separate return), you will have to deposit the smaller of 90% of your expected tax for 2006 or 110% of the tax shown on your 2005 return to avoid an estimated tax payment." So, to me that means that if you cash in dinars and make let's say $1 mil, you will need to make quarterly payments (depending on when you cash in of course, if you cash in in November, you will just make one large payment at that time.) that will equal the percentage amount above to avoid an underpayment penalty. This is where a good tax lawyer or CPA will come in very handy. Just my 2 cents!!:wave:

[ItsJustMe]

The IRS states that "If your adjusted gross income was more than $150,000 ($75,000 if you are married filing a separate return), you will have to deposit the smaller of 90% of your expected tax for 2006 or 110% of the tax shown on your 2005 return to avoid an estimated tax payment." So, to me that means that if you cash in dinars and make let's say $1 mil, you will need to make quarterly payments (depending on when you cash in of course, if you cash in in November, you will just make one large payment at that time.) that will equal the percentage amount above to avoid an underpayment penalty. This is where a good tax lawyer or CPA will come in very handy. Just my 2 cents!!:wave:

Michelleirs, I AM a CPA. You are not reading that correctly. It says that "you will have to deposit the smaller of 90% of your expected tax for 2006 or 110% of the tax shown on your 2005 return to avoid an estimated tax penalty."

If you made $150,000 and owed $40,000 in taxes in 2005 and due to a large capital gain this year, you know you will owe $400,000 in taxes in 2006, then here is what you have to pay in during 2006:

The smaller of:

110% of $40,000, or

90% of $400,000.

Before I stopped practicing, I'm pretty certain that all of my clients took the first option. ;)

If you make $1 million selling dinar in November, you will owe $150,000 to the IRS on April 15th of 2007. If you make $1 million selling dinar tomorrow, you will ower $150,000 to the IRS on April 15th of 2007. Trust me on this one....

[lonelyintexas]

Michelleirs, I AM a CPA. You are not reading that correctly. It says that "you will have to deposit the smaller of 90% of your expected tax for 2006 or 110% of the tax shown on your 2005 return to avoid an estimated tax penalty."

If you made $150,000 and owed $40,000 in taxes in 2005 and due to a large capital gain this year, you know you will owe $400,000 in taxes in 2006, then here is what you have to pay in during 2006:

The smaller of:

110% of $40,000, or

90% of $400,000.

Before I stopped practicing, I'm pretty certain that all of my clients took the first option. ;)

If you make $1 million selling dinar in November, you will owe $150,000 to the IRS on April 15th of 2007. If you make $1 million selling dinar tomorrow, you will ower $150,000 to the IRS on April 15th of 2007. Trust me on this one....

The statement you make at the bottom of your last post......Are you referring to a 15% capital gain for over a year in your example.
Since you are talking about 1,000,000.00 and the tax is 150,000.00
LIT:wave:

[ItsJustMe]

The statement you make at the bottom of your last post......Are you referring to a 15% capital gain for over a year in your example.
Since you are talking about 1,000,000.00 and the tax is 150,000.00
LIT:wave:

Yes, I'm taling the 15% capital gain rate on long term gains.

Due to the difference in the tax rates, you would be foolish to cash out ANY investment gain before one year unless you were either desperate for money or you thought the value of that investment was going to fall drastically in the near future...

[sogrman]

How many times have we heard liberals exhorting America to act like the rest of the world?

Never mind that their ideas are anything but progressive, particularly if by "progressive" we mean the achievement of actual progress. Hyper-progressive France, for instance, has had double-digit unemployment for most of the past quarter century, even with a 35-hour work week; its youth unemployment rate stands at 23 percent, its Muslim-heavy suburbs are 50 percent unemployed, and those relative few who do get to work pay a combined tax rate of 68 percent. They are little more than (very self-satisfied) serfs.

http://www.gopusa.com/commentary/guest/2006/rdm1.shtml

[Alphamystic]

"...a two-year extension of the reduced 15 percent tax rate for capital gains and dividends, currently set to expire at the end of 2008."

http://news.yahoo.com/s/ap/20060509/ap_on_go_co/congress_taxes;_ylt=Aqbe7VHEMIHhWRQiTTkwqMEDW7oF;_ ylu=X3oDMTBhZDJjOXUyBHNlYwNtdm5ld3M-

[ladygolddinar]

Michelleirs, I AM a CPA. You are not reading that correctly. It says that "you will have to deposit the smaller of 90% of your expected tax for 2006 or 110% of the tax shown on your 2005 return to avoid an estimated tax penalty."

If you made $150,000 and owed $40,000 in taxes in 2005 and due to a large capital gain this year, you know you will owe $400,000 in taxes in 2006, then here is what you have to pay in during 2006:

The smaller of:

110% of $40,000, or

90% of $400,000.

Before I stopped practicing, I'm pretty certain that all of my clients took the first option. ;)

If you make $1 million selling dinar in November, you will owe $150,000 to the IRS on April 15th of 2007. If you make $1 million selling dinar tomorrow, you will ower $150,000 to the IRS on April 15th of 2007. Trust me on this one....
Do we have to pay the AMT Tax along with the CG Tax or just one of the taxes along with any state tax? Could you also explain how the taxes work. Thank you