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If I exchange a foreign currency to US dollars for over $25,000.00. Will I be responsible for any taxes?

Springfield, MO |

I exchanged US dollars for this foreign currency when it was real low. now it's exchange rates is much higher.

Attorney Answers 3


Yes, you are. Please talk to an international attorney for this. Best

This reply is offered for educational purpose only. You should seek the advice of an attorney. The response given is not intended to create, nor does it create an ongoing duty to respond to questions. The response does not form an attorney-client relationship, nor is it intended to be anything other than an educated opinion of the author. It should not be relied upon as legal advice. The response given is based upon the limited facts provided by the undisclosed individual asking the question. To the extent additional or different facts exist, the response might possibly change. Attorney is licensed to practice law only in the State of New York. Responses are based solely on New York Law unless stated otherwise. Pursuant to Internal Revenue Service guidance, be advised that any federal tax advice contained in this written or electronic communication is not intended or written to be used and it cannot be used by any person or entity for the purpose of (i) avoiding any tax penalties that may be imposed by the Internal Revenue Service or any other U.S. Federal taxing authority or agency or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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A gain on a currency exchange is taxable like the gain on the sale of any other asset.

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The short answer is yes.

You bought the currency when the exchange rates were low (meaning you got a lot of foreign currency for $25,000). Now the rates have changed, so you would get more than $25,000 if you converted the foreign currency back to dollars.

This means you would have a gain and would have to pay taxes on the gain (once it happens, assuming you are a cash basis taxpayer).

Speak to your accountant.

I am admitted to practice in Connecticut and limit my responses to CT law.

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