There seems to still be some concerns and questions about the tax owed or not owed on the Iraqi Dinar after the revaluation and cash exchange - We post this for you – our readers for information purposes only – Please seek your own trusted professionals to assist you in your decisions -
Please understand and be clear that it is NOT the responsibility of Dinar Recaps to “interpret” – prove or disprove the information that is posted from the various forums and chat rooms - Perception – Interpretation and Validation of all posts are the sole responsibility of the reader - Recaps Team
Could this be the Golden Egg and the end of attention on what to do post RV with the IRS or more hoopla, you be the judge Today at 6:38 pm
Campdav ADMINISTRATOR – BondLadys Corner
I HIGHLY SUGGEST FOR ANYONE DOUBTING THIS TO MAKE SOME CALLS TO THE LADY MENTIONED IN THIS INFORMATION...
Read More Link On Right
Saturday, February 25, 2012
THERE IS NO TAX ON CONVERSIONS OF DINAR TO US DOLLARS. IRS CLEARLY STATES THIS.
Subject: THERE IS NO TAX ON CONVERSIONS OF DINAR TO US DOLLARS. IRS CLEARLY STATES THIS.
THIS IS CIRCULATING:
A false statement about Dinar taxation was circulated earlier today. The obsolete material was drawn from the Tax Almanac at this LINK
That information was obsolete. The last update to the tax almanac was 2005. It is completely wrong even if you were researching mere capital gains or other currency issues. The Almanac provides big colored boxes warning that you use it at your own risk and that it cannot be relied on legally.
Original IRS code is updated each year but the Almanac is no longer updated. Conversion of Dinar into other currencies does not produce capital gains.
The IRS provided clear information by telephone documented with the Agent’s ID number within the Special Accounts Division.
A prior explanation was published back in early January but it may not have circulated adequately. It is updated below in larger font. (SORRY not in larger font)
Recently we have learned that the US Treasury will siphon $1.00 per Dinar off the top. That way the government will receive real and instant benefit when we convert Dinar to US dollars.
We won’t be aware of it. If we are told the rate is $6.00 (for example) the real rate was actually $7.00. The extra dollar will be silently deposited into the US Treasury. No one should feel that the government is being cheated.
RATIONALE FOR NON TAXATION ON DINAR CONVERSIONS
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 below states this, and it makes sense.
Suppose that you have a Dinar note pre-RV of 1,000 Dinar. You could simply fly to Iraq and spend the Dinar there to buy a flat screen TV that costs 1000 Dinar).
Or, after cashing in here at the (say) $6 dollar rate, you now have $6,000 US dollars. You could now fly to Iraq with your $6,000. At the airport you would convert your $6,000 into Dinar so that you could buy a TV there. At the currency booth they would convert your $6,000 into 1000 Dinar (approx) and you could then buy the TV for 1000 Dinar. The conversion rate will change slightly day by day, of course.
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.
Therefore the IRS states below that no capital gains tax is due when you cash-in Dinar. Read carefully the IRS findings shown below 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.
IRS statements regarding Dinar follow:
I, [xxx,yyy], took the time to call the IRS [Special Accounts Division].
I spoke to a supervisor named Ms. Theresa Klier (Employee# 1000349035).
She informed me that this form 8938 has been in existence since June of this year , following attempts by speculators in recent months to shield themselves from federal tax levies.
This obligation to report income that people derive from foreign currency accounts [bank accounts in other countries that hold non-US currencies] didn’t suddenly become law last week.
[Reporting on your offshore accounts has been an IRS requirement for a long time.]
She said that the IRS is targeting a specific group of individuals who, until now, have been hiding assets with the specific intent of avoiding taxation by the Treasury Department. Per Ms. Klier, the federal government requires individuals to complete Form 8938 only under the following circumstances:
1) If you hold stock issued by a foreign corporation [because stocks eventually may generate capital gains when they are sold and US tax will be due.]
2) If you earn capital or have accrued interest from profits earned through a foreign business partnership
3) If you hold notes, bonds, debentures or other debt instruments issued by a foreign entity
[ because notes and bonds produce capital gain sooner or later – for which you will owe US tax.]
4) If you’ve earned interest in a foreign trust or a foreign estate [tax on interest will be due – even in a US bank account.]
5) If you hold options or other derivative instruments with respect to any of the forgoing examples or with respect to any currency or commodity that’s entered into with a foreign counter-party or issuer.
[For example Forex Traders who use a computer to buy and sell currencies, are not converting [Francs] from one currency to another. Forex traders can buy 1000 Swiss Francs (a real purchase) and then sell them back ten minutes later, hoping to have made a profit. Tax will be due on that profit.
In contrast, Dinar holders aren’t selling anything when they convert Dinar to US dollars. The US dollars will be exactly equal to the value of the Dinar – assuming the RV has been announced.]
***I made a point of asking [IRS Klier] if currency secured through a licensed currency trader [like Dinar ******] would bring a private citizen under the purview of the laws that Form 8938 is designed to enforce and she said “NO”.
Other than the conditions referenced above, Dinar holders are only obliged to turn in Form 8938 if they purchased the currency directly from a foreign agent or a foreign bank or agent operating outside of our borders***
Anyone can call and get verification as was stated above.
Only in the event that Congress creates a retroactive tax bill, there is currently no tax on currency conversions. If a capital gains tax happens to be announced later, it would not be fully due until April of 2013, but quarterly payments would be demanded throughout the year, and late penalties for missing the quarterly payments are very real.
Some frightened people may choose to simply pay a flat 15% to the IRS as a safe action. (go ahead)
Why would they do that? Because of the fearful rumors listed here:
- many banks can and do close for reasons of illiquidity or bankruptcy, and
- the FDIC did not recover client funds when MF Global bank went down in December 2011, and
- martial law may possibly be declared in 2012, and
- the dollar is going down in value (faster and faster), and
- high tax increases are coming as healthcare hollows out middle-class savings, and
- the price of gasoline may double, eating away at savings needed for inflated property tax and/or rent fees, and
- ATM machines would stop working if a dreaded bank holiday is ordered, and
- gas pumps cannot accept credit cards when banks fail (requiring US dollar cash only), and
- banks or government edicts may ration your access to your funds (as in France), and
- wealthy people may be forced to pay much extra tax so that it can be distributed to pay the free health care that illegal aliens are to be given, and
- government committees will have direct access to all bank accounts to withdraw whatever they think you are able to pay to support welfare programs - the wealthy (us) should pay more, we hear, and
- A new gold or metals-backed US currency of unknown value may replace current greenback dollars soon, and
- The US dollar may soon be devalued by 40% leaving little with which to pay future taxes,
so the fearful may consider paying extra now.
If 2012 goes smoothly, any excess paid into the IRS will come back to you in 2013. It would be sitting there in your IRS account as a credit against future taxes in future years if you pay it now before the value of the dollar falls further.
Seek verification in writing that the five points above are trustworthy.
Two separate people on two separate occasions obtained the points above. Blue brackets above are my clarifying inserts.
Please try to understand:
When you converted US dollars into Dinar (at purchase time) you paid exactly how many dollars the Dinar was worth at that time. And,
When you someday convert your Dinar back into US dollars, you will receive dollars exactly equal to what the Dinar is then worth.
Either currency could have bought a car in Iraq – before the RV or after the RV.
Whether you are holding US dollars in your hand or Dinar, today’s value tables determine that you should have more of one than the other so that they are exactly equal in value – both in Iraq and the US – both before and after the RV.
Obsolete tax material from 2005 was at this link:
Full Link: http://www.taxalmanac.org/index.php/Internal_Revenue_Code:Sec._988._Treatment_of_certain_foreign_currency_transactions