Can I get tax protection on foreign currency revaluation? 1 Answers as of September 23, 2011I hold Iraqi Dinar currency notes. Right now it’s value is very low but it is expected to increase dramatically at some time in the near future. Is it possible, and legal, to place that foreign currency into a trust, or other entity, structured so that tax will only have to be paid on earnings, rather than on the full revalued amount at the time of changing the IQD into USD?
Bricker & Eckler | Chad Dennis Hansen
The revaluation itself may have no tax consequences; it is the conversion into U.S. dollars that triggers ordinary income. There may be some strategies around that consequence, but placing the currency in an entity would not necessarily change the timing or character of a currency conversion. The key is whether you can convert the Dinar into an asset other than U.S. currency to avoid the tax trigger of a currency conversion.
Answer Applies to: Ohio