Foreign Currency Investement

[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.

[Gary]

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%.

[Snaggletooth]

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.

[Art]

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

[Gene V]

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%

[Burke]

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.....

[mastertaxguy]

Fin CEN FORM 105

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.

[Gary]

Thanks

for correcting me. It's not a nitpick.