Bulletin: Cypherpunks say no taxes owed by moneychangers!
At 1:23 AM 4/8/96, jim bell wrote:
At 12:53 PM 4/7/96 PDT, Jim Gillogly wrote:
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).
That assumes that there is "profit" from exchanging currencies. On any given transaction, there is never any "profit." The only thing that might be called a profit is a difference in exchange rates, and that really isn't an increase in wealth at any point. Ask that CPA to look it up.
There are people and companies who make a nice business in currency exchange, ranging from the large companies one finds in international airline terminals and banks to the smaller, "Mom and Pop" moneychangers one finds in barrios and other such places. These moneychangers attempt to make a "profit" on each exchange (else they'd hardly stay in business). It will probably come as a surprise to them that, according to both a CPA and Jim Bell, no taxes are owed on their businesses, as "no wealth was created." Don't believe everything you read on this list, folks. --Tim May Boycott "Big Brother Inside" software! We got computers, we're tapping phone lines, we know that that ain't allowed. ---------:---------:---------:---------:---------:---------:---------:---- Timothy C. May | Crypto Anarchy: encryption, digital money, tcmay@got.net 408-728-0152 | anonymous networks, digital pseudonyms, zero W.A.S.T.E.: Corralitos, CA | knowledge, reputations, information markets, Higher Power: 2^756839 - 1 | black markets, collapse of governments. "National borders aren't even speed bumps on the information superhighway."
Timothy C. May wrote:
That assumes that there is "profit" from exchanging currencies. On any given transaction, there is never any "profit." The only thing that might be called a profit is a difference in exchange rates, and that really isn't an increase in wealth at any point. Ask that CPA to look it up.
There are people and companies who make a nice business in currency exchange, ranging from the large companies one finds in international airline terminals and banks to the smaller, "Mom and Pop" moneychangers one finds in barrios and other such places.
These moneychangers attempt to make a "profit" on each exchange (else they'd hardly stay in business).
It will probably come as a surprise to them that, according to both a CPA and Jim Bell, no taxes are owed on their businesses, as "no wealth was created."
This sounds like the kind of thing that the mysterious "Alternative Minimum Tax" was designed for. One area that I *know* it applies to is incentive stock options offered to employees of a company. If you have such things (like, let's say you were hired to clean the monitors at Netscape last January, and they gave you a thousand options because your limp and stutter were so cute), and you exercise the options but don't immediately sell the stock, then your taxable income is figured based on the "paper" gain you made by transforming your $0.10/share options into $100/share stock. You get to deduct the taxes you pay now when you decide to sell your stock and realize actual gain, but AMT is real and it can bite (particularly if you're unwise enough to exercise while you're in the post-IPO lockout period and that period overlaps April 15th). ______c_____________________________________________________________________ Mike M Nally * Tiv^H^H^H IBM * Austin TX * pain is inevitable m5@tivoli.com * m101@io.com * <URL:http://www.io.com/~m101> * suffering is optional
participants (2)
-
Mike McNally -
tcmay＠got.net