jim bell <jimbell@pacifier.com> writes:
FWIW, I think that there is no capital-gains-type tax on currency conversions. In other words, if I take dollars and buy yen today, and the
I bounced this off a CPA, who said she would be very suprised if this is really the case: in general the IRS considers increases in wealth to be taxable, and unless there's a specific exclusion for currency transactions that she doesn't know about, she suspects this is not the case. As a conceptual counterexample she points out that you are responsible for any profit you make from selling your car for more than you pay for it (but, as you might expect, you don't get to take a loss if you sell it for less).
interconvert rate changes and I convert back and make a "profit," that is not considered income. If that's the case, then ecash has an excellent precedent behind it to avoid any taxes on interest, especially if that interest is, in effect, paid by increasing the inherent value of the currency.
My tame CPA also volunteered the information that the IRS is very interested and concerned about how they're going to capture transaction information for electronic transactions, and they do think it's in their bailiwick... she's read some articles on it. Jim Gillogly 17 Astron S.R. 1996, 19:52