Do a search on this subject and you’ll find it’s been covered a gazillion times with lots of answers.
Here’s the skinny as I researched it: There are three places in the tax code that mention foreign currency.
- Regards taxation on businesses that do imports and exports
- Deals with taxing the currency trader
- The one you mentioned which when you dig into it regards currency when you’ve been on a trip, as in out of the country.
So far, anyone who has really looked into this has not found anything in the tax code that applies to this situation. That includes a friend who is both a Dinarian and a retired IRS Audit Agent.
Also another friend who owns Dinar, just yesterday called the IRS and asked, What is the tax liability for gains on a currency exchange? They told her there was no one there who could answer her question!
In addition, if you go read the tax code, capital gains applies to capital assets and currency does not meet the definition of a capital asset.
I think it was David M., one of TNT site Administrators who said this: (if it’s not you David, I apologize but
errored on the side of giving credit)
“At your Dinar cash-in time, (after the RV) you will be merely converting one currency to another – Dinar converts into US dollars. Assuming the RV has occurred, the dollars you get when you convert them have the same value as the Dinar. You won’t get any more or less than exactly the newly assigned value of the Dinar.
When you convert Dinar to US dollars, 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.”
Here is a post I found somewhere that explains it also:
“Notice though in IRS Pub 525 it says “a gain on a personal foreign currency transaction”. It does not say Capital Gain (BIG difference between the ‘C’ and the ‘c’).
The qualifier of whether it is a Capital gain is not how much money was made on the transaction, but rather what the initiating instrument was.The transaction must have originated with an investment in a Capital Asset; real estate, stocks, bonds and the like.
http://en.wikipedia….ki/Capital_gain
Currency is not considered Capital nor an asset. Proceeds from “a gain on a personal foreign currency transaction” may be considered personal income and taxed as such if you are a taxpayer who files, but does not qualify for any Capital Gains tax, which is entirely different than claiming it as a capital gain.
As a rule when considering tax implications it does not matter how much was made, but the origin of the transaction and the rules governing those types of Investment.
A purchase of foreign currency by an individual is not an Investment because it is not an asset, not Capital, and not a Qualified Fund of which all or part of the gain realized was the result of foreign currency trading.
Purchase of foreign currency by the general public is pure speculation. Just like the lotto. You might get lucky – you might not. Just because you bought into the ‘Dinar hype’ and stocked up on box-loads of the pretty pink paper does not make it an Investment. You have invested in your future, but not in an Investment.
Even if the CBI revalues their currency tomorrow and you have the opportunity to EXCHANGE it for USD and make a profit it is still not an Investment and does not qualify as an asset or Capital exchange.
But to me, this is all moot, as I am pretty sure we will find out what the IRS has in store for us after RV, and I think it will not be what we think our tax requirements are now.”
AND . . .
“[Peter Lawyer comment] Spent almost 3 hours with IRS today and here in a nutshell what they told me, coming from their Law Dept on Currency. Currency is not considered an investment.
It is NOT a Capital Gain because it is not the sale of anything. Currency Exchange is treated as an exchange and not the sale of an asset. You would have to pay taxes on currency if purchased through an exchange such as the For ex, but currency is not treated like a bond, stock etc. the only way you could be taxed on currency is if congress passes a NEW LAW to collect taxes on this event.
This was told to me by an IRS Law Dept Lawyer. I would like someone out there to show me proof or where in the IRS Tax Code where Currency is considered a capital gain. The IRS sure in hell could not show me or tell me that it was.
Where is everyone getting this information that currency is a capital gain? I think this is made up just like a lot of the other information on these blogs.”
As Tony, RayRen and Doforself says,
Park 50% of your blessing until we find out and find an EXCELLENT
Tax Attorney/CPA Expert.
Then 10% God,
20% Investments and
20% Operational Capitol .
