Client thinks he is going to get rich when he sells his Dinar back to Iraq. Does that get reported on Form 6781?
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OUCH - my 80 yr old mother "bought" some Dinars - she went out and started looking at BIG items she needed and would buy with her "windfall"! Grrrrr -
No Options
Iraq has no incentive to value their currency high. It makes their debt much more expensive. A devalue is likely to occur so they can buy it back cheap, then they can raise the rates. Or, Iraq will just refuse to buy it all back leaving people holding worthless paper.Comment
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He won't have anything to report, so there's no need worrying too much about what form to put it on.
The first time I heard about this was from the wife of a former pastor who had moved to another church. Some church members were going to pay off the building debt with the profits they made on the Dinars. (I told them to plan to keep making the loan payments when they drew up their budget. Should have also told them they will get a better return investing in dinners than in dinars). Seems that the scammers were targeting churches at that time for some strange reason.
Here's an article from 2009, but I know the scam has been going around longer than that - at least back to 2006 or 2007. It seems to get recycled about every 18-24 months. Maybe anyone planning to get into the act now should ask where the profits are for those who got into it back then...
Given all the financial upheaval in Europe, how long will it be before there will be a "Euro-scam" on the scene (maye there already is one...)Last edited by JohnH; 11-30-2011, 02:56 PM."The only function of economic forecasting is to make astrology look respectful" - John Kenneth GalbraithComment
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I am now dealing with an estate of a client which is probably bankrupt, since the relative that had POA managed to deplete all of the TP's assets in this scheme (plus drag another sibling into it as well.) Neither will talk to the executor at this point.Comment
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Every time you see something that causes you to ask "How foolish can some people be?" or else "How crooked can some scammers be?", another client comes along with a story that makes you reasses & calibrate downward. Seems like there's no limit, is there?"The only function of economic forecasting is to make astrology look respectful" - John Kenneth GalbraithComment
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"He won't have anything to report, so there's no need worrying too much about what form to put it on."
Won't they report the capital loss on Sch "D" after the currency is demonitized?In other words, a democratic government is the only one in which those who vote for a tax can escape the obligation to pay it.
Alexis de TocquevilleComment
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First thing this morning on of these comes in
What entity should I hold these in?
I want to gift some money to my kids from this. Do I do it now or after it revalues?
Yi-yi-yi-yiyi !!Comment
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Yes, you are correct. I should have been more precise, but like most everyone caught up in these scams, I was focused only on the profits."The only function of economic forecasting is to make astrology look respectful" - John Kenneth GalbraithComment
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I assume you told him to skip the entity becasue he will want to claim the losses when (not if) they come."The only function of economic forecasting is to make astrology look respectful" - John Kenneth GalbraithComment
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Soooo...... there can be a taxable loss taken on the tax return involving this situation? Or others of this ilk?Last edited by Burke; 12-01-2011, 02:40 PM.Comment
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I don't think currency is a capital asset - it would be ordinary income or loss.
Unless it is associated with a trade or business would it be considered a personal loss not deductible?Comment
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Well I know gains on currency trades are subject to max 28% rate -- not 15% -- but isn't it still a capital asset? And is considered an investment? I have them on 1099's all the time. Does anyone involved in this particular situation actually obtain possession of such currency like you would have in a brokerage account? As to a loss, after all, they allowed the Bernie Madoff thing........Comment
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I looked at a couple of web sites which sell dinars, and it appears that they actually send the notes to the buyers. Some of the comments are interesting - people drooling over how much money they're going to make and thinking of how they're going to split it among their kids, etc. I guess the hook is the fact that you get so many of them per dollar. When someone can spend $1,000 and get 1 million of something else, they get lost in the numbers and just assume it has to go up in value. Ratios can be confusing.
They probably wouldn't understand if you explained they could get a million toothpicks for $1,000 - they just see an official-looking note with lots of fancy printing and it has instant credibility with them.
Reading the comments, I'm reminded of Larsen E. Whipsnade:
" As my dear old grandfather Litvak said (just before they sprung the trap), he said 'You can't cheat an honest man. Never give a sucker an even break or smarten up a chump'. "Last edited by JohnH; 12-01-2011, 04:09 PM."The only function of economic forecasting is to make astrology look respectful" - John Kenneth GalbraithComment
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