Thread: Iraq/Dinar News. 09/05 to 01/14/07

Well gang, I've read 5 different articles today about Iraq being in the beginning stages of a civil war. We can only hope that the present government can calm the people down alittle until they get things done and moving. I would think that if they would hurry up and reval the people would settle down and give democracy a chance. I know that the media blows things out of proportion most of the time, but some Iraqi officials are even stating it looks grim. Everybody hold your breath and pray that they can get this done before anything terrible happens.

I saw that too Cigarman...What do you think about Maliki's visit to the U.S. in 4 days? It would be good if they were to announce the reval on Sunday or even Saturday to help the morale over in Iraq.

Originally Posted by flmnco

All great news and good advice, but why not earn some pocket money as we wait. That is what i've been doing for the past week. I had to do something after SI. I have made $470 in the past week and am on schedule for $2000 in 30days.
Not bad for a $34.95 investment. Perhaps better than the Dinar. This involves work real work. I lost in PIPS and SI but this program below makes me money and will make me money as long as I work at it. I will keep myself busy as I wait for the peg. When it comes fine but in the meantime I am happy to be earning cash. Follow the link below and read all about it my friends
flmnco
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You can advertise in the advertise section of rolclub and put your referral links in your signature.Thanks.-neno

Please post your junk in the correct forum. This is the "dinar" section. You just posted this same junk in the Pips section. Quit pushing your stuff in all the sections of Rolclub. We are discussing dinars here.

Originally Posted by tiffany

I just found the following post in my Word Processor...I had copied and pasted from SOMEWHERE...I don't know who posted it and can't remember WHERE it was posted....but I thought I would stick this in here...I KNEW I had some information stuck SOMEWHERE about this craziness!

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Correct U.S. Taxation on Dinar

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I have been a tax accountant for 29 years and also a financial planner. I own a substantial amount of Iraqi Dinar. Here is how it will be taxed the the IRS. This investment is not tax as regular capital gains are taxed. Foreign Currency is considered a "commodity" by the IRS and is taxed thusly: 60% is taxed at long term capital gain rates of 15%. The other 40% is taxed at ordinary income tax rates. This is all spelled out in Section 988 of the IRS Tax Code.

Combined the rates total 23%.

If you had one million Dinar and they were valued at one million dollars. You exchanged them in for the dollars and the amount you owe Uncle Sam is $230,000. You keep the $730,000 of that million dollars.

But, in order to do this, you must make an election at the time you exchange it and fill out the paperwork. Places that exchange currency know how to handle this. Go to Manchesterfx.com to see how it is explained there. If you don't make this election, then you'll be taxed at the highest current rate of 35%.

The one big advantage of this being classified as a "commodity" is that there is no specified holding period, as there is with long term capital gains. You can hold it one day, one week, one month, etc and it's still taxed at the 23%. If you exchange in a very small amount, then that tax rate would be lower, based on your ordinary tax rate.

Hope this clears up all the tax questions on our fortunes to be.

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23% is a WHOLE HECK of a lot better than 33 or 35%!

I have printed this out to take with me to the bank...Unless there is reason for this scenerio NOT to work...which I'm sure someone in here will tell ! lol! I appreciate all of your thoughts...

Saw this too....followed the link to this page....read it....was then even more dizzy...

Taxation
Taxation of Foreign Currency Trading Demystified
Although currency trading has taken place around the world for thousands of years, the taxation thereof for U.S. individuals and investment funds remains a mystery to many. This should not be a surprise since the U.S. has repeatedly changed their tax laws applicable to foreign currency or Forex trading. At the present time, U.S. individuals and investment funds are subject to a maximum federal income tax rate of 23% on their foreign currency trading gains, provided they make timely elections and go through an identification procedure. In the absence of a timely election and proper identification, foreign currency trading gains are subject to a maximum federal income tax rate of 35%. Unfortunately, the making of these elections is not well known in either the Forex trading community or among tax advisors. For example, did you know that an election has to be made by the close of the day on which a trade is made?

This article will outline the tax rules applicable to cash or spot foreign currency trading by individuals and investment funds. It will also discuss how to make the relevant elections in order to attain the lowest applicable tax rates for Forex gains.

General Tax Rules Applicable to Forex Trading
Current Federal IncomeTax Rates

Ordinary Income 35%
60/40 Treatment 23%
Regular Long Term Capital Gains 15%
By way of background, the maximum marginal federal income tax rates applicable in the U.S. are 35% for items of ordinary income and capital gains resulting from the sale of capital assets held 1 year or less (i.e., short term capital gains) and 15% for capital gains from the sale of capital assets held for more than 1 year.

In addition to these basic rules, currency traders potentially subject to two special provisions of the Internal Revenue Code. One is Section 1256 which generally applies to regulated futures contracts and provides that no matter what a taxpayer’s holding period for a futures position is, 60% of any gain recognized is treated as long term capital gain and 40% of any gain recognized is treated as short term capital gain. This is sometimes known as the 60/40 rule. As a result of application of the 60/40 rule to futures contracts, a blended 23% federal income tax rate applies to any gains. This is one of the principal advantages of trading futures over stocks. While short term stock trading will produce short term capital gains taxable at a 35% federal income tax rate; trading in futures will produce income subject to a 23% federal income tax rate regardless of how long or short the futures contract is held.

In addition to Section 1256, Section 988 of the Internal Revenue Code contains special rules governing the tax treatment of currency gains and losses. In general, Section 988 provides that gains and losses from currency trades are treated as ordinary income (and taxable at a maximum 35% federal income tax rate). There is an exception to this rule, however. Section 988 provides an exception for currency positions which are identified by election as excluded from Section 988 ordinary income treatment. If proper identification and an election is made, gains and losses from currency trading will be treated as capital gains and losses. Moreover, to the extent that the currency pair traded is traded on a U.S. futures exchange, the spot contract is subject to the special 60/40 treatment under Section 1256, which results in a 23% tax rate on gains (regardless of holding period). This important since most cash or spot currency contracts settle in two days, but are typically terminated and rolled over daily (thus preventing a long term holding period from ever developing).

Section 988 Election Procedures
A capital gains election applies on a transaction-by-transaction basis. In order to make the election with respect to a particular transaction, the taxpayer must clearly identify each Forex transaction on its books and records on the date it is entered into. While no specific language or account is necessary to identify the transaction, the method of identification must be consistently applied and must clearly identify the pertinent transaction as subject to the election. According to the IRS’ regulations, the IRS may invalidate any purported election that does not comply with this requirement.

In addition, a taxpayer making the election must attach a statement to the taxpayer’s tax return to verify the election. The verification statement attached to a tax return must set forth the following: (a) a description and the date of each election made by the taxpayer during the taxpayer's taxable year; (b) a statement that each election made during the taxable year was made before the close of the date the transaction was entered into; (c) a description of any contract for which an election was in effect and the date such contract expired or was otherwise sold or exchanged during the taxable year; (d) a statement that the contract was never part of a straddle; and (e) a statement that all transactions subject to the election are included on the statement attached to the taxpayer's income tax return. In addition to any penalty that may otherwise apply, the IRS may invalidate any or all elections made during the taxable year if the taxpayer fails to verify each election, unless the failure was due to reasonable cause or bona fide mistake.

In lieu of identifying each trade in books and records as not subject to Section 988 and attaching a verification statement to each year’s tax return, the tax regulations provide if the taxpayer receives an independent verification of the election from his or her trading firm, the taxpayer will be presumed to have satisfied the identification and verification requirements.

A taxpayer receives independent verification of the election if (a) the taxpayer establishes a separate account(s) with an unrelated broker(s) or dealer(s) through which all transactions to be independently verified are conducted and reported; (b) only transactions entered into on or after the date the taxpayer establishes such account may be recorded in the account, (c) transactions subject to the election are entered into such account on the date such transactions are entered into and (d) the broker or dealer provides the taxpayer a statement detailing the transactions conducted through such account and includes on such statement the following: “Each transaction identified in this account is subject to the election set forth in section 988(a)(1)(B).� Where this alternative method of identification and verification can be arranged, this obviously provides a much simplified manner to handle these matters. At Manchesterfx, we will provide this verification to you for your Forex trades which you execute with us; please fill out and return a Section 988 Election Out Form to make this election with us. We are not aware of any other U.S. based Forex Brokers which offer this simplified election option.

In making these elections, it must be recognized that capital losses of individuals in excess of $3,000 a year can generally only be deducted against capital gains. Hence, if an election out of Section 988 ordinary treatment is made and losses are incurred, then the taxpayer will be disadvantaged to the extent he or she does not have adequate capital gains from other sources to use the capital losses. Unused capital losses carry-forward to future years. Thus, the election has its own risks since ordinary deductions can be used to offset ordinary income from other sources (i.e., interest, salary, fees, rents, etc...) otherwise taxable at a 35% rate whereas capital losses may end up offsetting long term capital gains otherwise taxable at a 15% rate.

Lastly, in the case of qualified investment funds meeting certain requirements, they can elect to not be subject to Section 988 ordinary income treatment and instead have the 60/40 rule apply by making a single election (without the need to identify transactions as excluded on a daily basis and attach the verification statement to each year’s tax return). For purposes of this subparagraph, the term "qualified fund" means any partnership if (a) at all times during the taxable year (and during each preceding taxable year to which an election applied), such partnership has at least 20 partners and no single partner owns more than 20 percent of the interests in the capital or profits of the partnership, (b) the principal activity of such partnership for such taxable year (and each such preceding taxable year) consists of buying and selling options, futures, or forwards with respect to commodities, (c) at least 90 percent of the gross income of the partnership for the taxable year (and for each such preceding taxable year) consisted of income or gains interest, dividends, gain from the sale or disposition of capital assets held for the production of interest or dividends, and income and gains from commodities or futures, forwards and options with respect to commodities; (d) no more than a de minimis amount of the gross income of the partnership for the taxable year (and each such preceding taxable year) was derived from buying and selling commodities, and (e) a qualifying fund election applies to the taxable year. An qualifying fund election for any taxable year shall be made on or before the 1st day of such taxable year). Any such election shall apply to the taxable year for which made and all succeeding taxable years unless revoked with the consent of the IRS.

Lest there be any doubt regarding the need to precisely comply with these complicated election and identification rules, the IRS has on audit denied a taxpayers' 60/40 capital gain treatment where these rules have not been complied with. Specifically, in IRS Field Service Advice 199947006 and Field Service Advice 200025020, the IRS pointed out the taxpayer's failure to make the proper election and identification necessary for 60/40 capital gains treatment (and denied the lower tax rates). More recently, the IRS issued Notice 2003-51 regarding a foreign currency option transaction which appeared to confirm that foreign currency spot contracts are subject to the Section 988 and Section 1256 taxation rules discussed herein.

Note that trading of foreign currency futures contracts (on U.S. futures exchanges) are automatically subject to Section 1256 60/40 treatment without the need to make any identifications or elections in respect thereto. Aside from the security offered by having the exchange clearinghouse as the counterparty, this automatic 60/40 treatment offers an advantage to trading forex futures contracts over spot forex futures contracts. If you are interested in trading forex futures contracts, we are happy to offer them through our MFGFutures division. For more information on the federal income tax treatment of holding and trading futures contracts, click here.

Forex Taxation for Corporations
One of the reasons that this topic has not received much consideration over the years may be because corporations are taxable at a maximum 35% federal income tax rate on both their ordinary income and capital gains, regardless of holding periods. Because trading by individuals and investment funds (who are sensitive to the rate differentials between ordinary income and capital gains) has only intensified in recent years, it appears that this area has largely been ignored by tax advisors and taxpayers alike.

Forex Rollover Interest Taxation
Since rollover interest represents interest earned (where long the higher yielding currency) or interest expense (where short the higher yielding currency), these amounts are treated as ordinary interest income or expense and must be accounted for separately from currency trading gains and losses. Note that investment interest expense (for individuals who are not engaged in a trade or business of trading) is subject to severe limits on deductibility under Section 163 of the Internal Revenue Code. However, to the extent that interest is not separately debited or credited, but is embedded in a lower or higher spot contract price in the rollover contract, it is unclear whether interest income or expense is recognized. This latter situation is similar to the manner in which interest is accounted for on foreign currency futures where interest income or expense is factored into the price of the futures contract (and not separately accounted for or taxed).

IRS Reporting of Forex Gains and Losses
In the event that a 60/40 election is made, all Forex gains and losses need to be reported by a trader or investor on IRS Form 6781 with a notation that the gains and losses are reported as a result of an election under Treasury Regulation 1.988-3. Any rollover interest income must be separately reported on Schedule B. In some cases, the FCM through which a trader deals will not issue an IRS Form 1099 separately detailing the interest income earned. In that case, the trader will need to compute this amount on his or her own.

Forex Tax for Non-U.S. Persons.
A non-U.S. trader generally will not be subject to U.S. federal income tax with respect to gain recognized upon the sale or other disposition of currency pairs, unless: (1) the Non-U.S. person is an individual and is present in the United States for 183 days or more during the taxable year of the sale or other disposition, and the gain is treated as being from United States sources; or (2) the gain is effectively connected with the conduct by the Non-U.S. person of a trade or business in the United States. A non-U.S. trader is a person who is not a U.S. citizen and is not a U.S. resident. Section 7701 of the Internal Revenue Code defines who is and is not a U.S. citizen and resident. It is presently unclear whether a non-U.S. person's share of any rollover interest income earned by a Non-U.S. trader will be subject to U.S. federal income tax or income tax withholding. Many types of "portfolio interest" income are presently exempt from U.S. federal income tax and income tax withholding and rollover interest may qualify as exempt portfolio interest provided that the account owner delivers an IRS Form W-8BEN to the foreign currency dealer in accordance with IRS rules and regulations.

Conclusion
The taxation of trading spot currency contracts is unique and not intuitive to most traders. While complex, with a modicum of understanding of the rules, substantial tax advantages can be obtained.

* * * * * * * * * * * * * * * * * *

INTERNAL REVENUE SERVICE REGULATIONS REQUIRE THAT CERTAIN TYPES OF WRITTEN ADVICE INCLUDE A DISCLAIMER. TO THE EXTENT THE PRECEDING DISCUSSION CONTAINS WRITTEN ADVICE RELATING TO A FEDERAL TAX ISSUE, THE WRITTEN ADVICE IS NOT INTENDED OR WRITTEN TO BE USED, AND IT CANNOT BE USED BY THE RECIPIENT OR ANY OTHER TAXPAYER, FOR THE PURPOSES OF AVOIDING FEDERAL TAX PENALTIES, AND WAS NOT WRITTEN TO SUPPORT THE PROMOTION OR MARKETING OF THE TRANSACTION OR MATTERS DISCUSSED HEREIN.

I think that if Maliki can get parliment to pass the law tomorrow or Sunday then he can go ahead and announce their intensions or maybe even a reval. I'm sure the Iraqi government knows it's going to take a reval to save their government(atleast I think they would). I think a nice reval would go along ways in settling tensions in their country.

Originally Posted by tiffany

I just found the following post in my Word Processor...I had copied and pasted from SOMEWHERE...I don't know who posted it and can't remember WHERE it was posted....but I thought I would stick this in here...I KNEW I had some information stuck SOMEWHERE about this craziness!

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Correct U.S. Taxation on Dinar

--------------------------------------------------------------------------------

I have been a tax accountant for 29 years and also a financial planner. I own a substantial amount of Iraqi Dinar. Here is how it will be taxed the the IRS. This investment is not tax as regular capital gains are taxed. Foreign Currency is considered a "commodity" by the IRS and is taxed thusly: 60% is taxed at long term capital gain rates of 15%. The other 40% is taxed at ordinary income tax rates. This is all spelled out in Section 988 of the IRS Tax Code.

Combined the rates total 23%.

If you had one million Dinar and they were valued at one million dollars. You exchanged them in for the dollars and the amount you owe Uncle Sam is $230,000. You keep the $730,000 of that million dollars.

But, in order to do this, you must make an election at the time you exchange it and fill out the paperwork. Places that exchange currency know how to handle this. Go to Manchesterfx.com to see how it is explained there. If you don't make this election, then you'll be taxed at the highest current rate of 35%.

The one big advantage of this being classified as a "commodity" is that there is no specified holding period, as there is with long term capital gains. You can hold it one day, one week, one month, etc and it's still taxed at the 23%. If you exchange in a very small amount, then that tax rate would be lower, based on your ordinary tax rate.

Hope this clears up all the tax questions on our fortunes to be.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

23% is a WHOLE HECK of a lot better than 33 or 35%!

I have printed this out to take with me to the bank...Unless there is reason for this scenerio NOT to work...which I'm sure someone in here will tell ! lol! I appreciate all of your thoughts...

Hi Tiff!
I remember this post...and also that somebody said there was a follow up in the original forum where she had corrected herself...that the dinars is NOT a commodity...Sorry!
It was in this thread...but where!?!
/K

Awwww NUTS Karin!

I don't know if this has been posted yet. If so, sorry.
An Economic Trade Agreement between Iraq and America

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20 July 2006 (Baghdad: Al Sabah newspaper)
On Monday, Iraq and the USA signed a dual agreement in Baghdad calling for the activation of economic and trade accords between the two countries. A press spokesman at the Ministry of Trade explained in a statement to Al Sabah that the Minister of Trade, Dr. Abudul Falah AL Soudani, and the American Minister for Foreign Trade, visiting Iraq this week, signed the agreement

in the World Trade Organization as well as other economic organizations. This agreement he said will mark the return of Iraq's economy to the world stage, adding that Iraq's economic variables in manpower and raw materials are far stronger than in most countries throughout the world



http://www.iraqupdates.com/p_articles.php/article/9485

hey Tiff, you do the research on the taxes here in the good old USA, and i'll sell the cars---I mean din----ars LOL just be sure to let us know what the taxes will be OK. BOB PEG PEG PEG PEG GO PEG GO!

jojolanc i sent you the info in a PM. BOB