Foreign Currency Investement

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  • Art
    Senior Member
    • Jan 2006
    • 178

    #1

    Foreign Currency Investement

    Client purchased about $20,000 US dollars in foreign currencies in 2012 through Sterling Currency Group. Client took physical possession of the currency. For 2012 nothing was sold or traded. They are still holding the currencies that they bought. What if anything do we have to report for 2012? They do not have any foreign bank accounts. This is a new issue for me, so I really appreciate some guidance here.
  • Gary
    Senior Member
    • Jul 2005
    • 435

    #2
    Collectibles

    Are these gold, silver or platinum coins? If so, they are collectibles and you don't need to do anything until they sell them Capital gains on collectibles is 25%.

    Comment

    • Snaggletooth
      Senior Member
      • Jun 2005
      • 3314

      #3
      Nothing Required

      Art, nothing is required. It is the same as holding a stock and not selling it.

      Interesting that they took physical possession of the currency itself. This means when it is redeemed, there will be a "moneychanging" fee, although they might call it something else. The fee should be added to basis.

      When the currency is traded back in, there will be gain or loss. This would be reported on Sch D just as if the investment had been in stocks or bonds. Not reportable until it is disposed.

      Comment

      • Art
        Senior Member
        • Jan 2006
        • 178

        #4
        Thanks for the replies. I just never had this situation before, it is late in the filing season, and the brain is very weary.

        Comment

        • Gene V
          Senior Member
          • Jun 2005
          • 1057

          #5
          Originally posted by Gary
          Are these gold, silver or platinum coins? If so, they are collectibles and you don't need to do anything until they sell them Capital gains on collectibles is 25%.
          Not to nitpick--make that collectibles is 28%

          Comment

          • Burke
            Senior Member
            • Jan 2008
            • 7068

            #6
            Originally posted by Art
            Client purchased about $20,000 US dollars in foreign currencies in 2012 through Sterling Currency Group. Client took physical possession of the currency. For 2012 nothing was sold or traded. They are still holding the currencies that they bought. What if anything do we have to report for 2012? They do not have any foreign bank accounts. This is a new issue for me, so I really appreciate some guidance here.
            I hope it wasn't Iraqi dinars.....

            Comment

            • mastertaxguy
              Senior Member
              • Mar 2013
              • 408

              #7
              Fin CEN FORM 105

              Originally posted by Art
              Client purchased about $20,000 US dollars in foreign currencies in 2012 through Sterling Currency Group. Client took physical possession of the currency. For 2012 nothing was sold or traded. They are still holding the currencies that they bought. What if anything do we have to report for 2012? They do not have any foreign bank accounts. This is a new issue for me, so I really appreciate some guidance here.
              From where I sit, this transaction requires a FinCEN form 105, which hopefully was completed by the currency group.

              If the TP is using this as some sort of currency offset or transaction to generate a loss, there my be other tax issues.
              Friends double; family triple. Don't buy an audit for yourself. If someone has to go to jail make sure it is the client. Remember it is only taxes, nothing important.

              Comment

              • Gary
                Senior Member
                • Jul 2005
                • 435

                #8
                Thanks

                for correcting me. It's not a nitpick.

                Comment

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