Hypothetically, if one was to profit $2 million on foreign exchange currency, what kinda taxes would they be expected to pay on it. Can some of the taxes be legally avoided and if so, how? And how long would it take to get your money after the state and government gets done with it?
Sat Jun 21, 2014 1:48 am
Publius Preferred Member
Cash: $ 31.00
Joined: 12 Oct 2012
Tax treatment when trading in foreign currency depends on the type of investment. Generally, over the counter trades are treated at ordinary income and you owe income tax on gains at the end of the year like any other income. The amount of tax paid depends on your tax bracket, though if you realize a 2MM gain in one year, you will be in the 39.6% bracket for the majority of it. You can also trade in forex futures/options which give a more favorable tax treament (60% capital gains/40% ordinary income). Here is a link to a comparison of the two types of trades:
I am not sure what you mean when you ask how long it would take to get your money. If you perform a trade and realize a profit, you have your money. You owe the taxes afterward. The amount you owe depends on your tax bracket and your tax treatment as outlined above.
The wording of this makes me wonder if this is tied to some of the get-rich-quick things going around about the iraqi dinar and vietnamese dong. Without weighing in heavily on this, keep in mind that if a story sounds too good to be true, it invariably is -- especially when money is involved.
Sun Jun 22, 2014 12:59 am
gleeg60 New Poster
Cash: $ 0.45
Joined: 21 Jun 2014
There's no "method to my madness". A buddy of mine and I were discussing the different procedures of the taxing of such things like hitting the lottery, inheritance and the conversation got into hitting it big in the stock market and foreign monies. He was telling me that if you hit big in the foreign money exchange, that the government would take most of it and it would take years to get what was left. So I thought I would post on here to get some other opinions on this matter. What he was saying just didn't sound right