tax question on capital gain of foreign currency exchange?
Posted on Jul 28, 2010 under Foreign Currency Exchange |I own some Iraqi dinar notes. I have had them for 6 months. If they should increase in value and I cash them in for a considerable profit will the gain be a capital gain tax or regular income tax? I bought them for cash and will get cash on the selling them. What would be the percent of capital gain tax owed?
Your capital gains tax rate depends on your overall tax rate. The reduced rate is scheduled to expire at the end of 2010. Without knowing MOST of your tax details, there is not answer to your question. That said, don’t be surprised when you DON’T make much, if any, profit.
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July 21st, 2010 at 9:52 am
You show it as other income on line 21 of the 1040. The tax is at ordinary rates.
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July 21st, 2010 at 9:56 am
Their value has gone down in the last 6 months, so that’s not going to be much of an issue. The bigger issue is whether you could take a loss on them. How much value are we talking about here? A few hundred dollars? If it’s something like that, I wouldn’t worry too much about reporting the transaction–it would be like cashing in the euros or pounds after a foreign trip. If it’s a huge amount, you can enter the value before and after when you’re itemizing on your return on Schedule A and B. A loss might offset some income you’ve made, or profit on other investments.
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July 21st, 2010 at 11:04 am
Your capital gains tax rate depends on your overall tax rate. The reduced rate is scheduled to expire at the end of 2010. Without knowing MOST of your tax details, there is not answer to your question. That said, don’t be surprised when you DON’T make much, if any, profit.
References :