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Gifting Iraqi Dinars To Your Children - Is Proof Needed For The Gift?
Gifting Iraqi Dinar To Your Children - Proof Necessary?
I have a number of Hubs and Blog posts talking about the Iraqi Dinar so from time to time I'll get questions asked of me via comments or e-mail about the Iraqi Dinar. I recently received an e-mail from a reader asking about gifting Iraqi Dinars to her children for Christmas and if she would need a gift letter as proof to the IRS later on down the road regarding taxes paid on gains.
I am no tax expert, I am no financial expert, however here is my opinion based on common sense and the limited knowledge I have about tax codes and currency investing and what I think about the matter. Below you will read the question and I'll respond to it.
I gave my children iraqi dinars for christmas along with a gift letter indicating the value of the dinars as of December 25, 2011. If further proof required?
The value that the dinars are worth now is what the actual gift is valued at, at the time the gift was given. Did you pay a million dollars for the Dinar? No? Then you are not gifting a million dollars. You are gifting the amount the Dinar is valued at, at the time of the gift. One caveat to this I am unsure of is whether the value of the gift is what you paid for it which I imagine was about $1100, or whether the value of the gift was the actual value of the currency at the time which is probably more like $840. I don't believe it matters however since either of those amounts is WAY under the gift limits of $13,000.If there is any appreciation your children would pay taxes on any gain from increase in value from a cost basis at which they received the gift.
You are making assumptions about increase in value in the future, when there are no guarantees. Not only are there no gurantees but in my opinion it's actually very unlikely if not impossible for that to happen. Go up in value slightly, or even slowly over time maybe. But an overnight pop where the value of the $1100 worth of Dinar you bought goes up to 3 Million...ya highly unlikely, most likely impossible.The current facts are you provided a gift to your children. Based on that fact, you don't have to pay gift tax if the current value is less than $13,000 US per child or gift, and your kids have no current obligation since gifts aren't taxable.
If in the future, if the value of your gift increases in value; and your kids decide to cash the Dinar in; your kids would have to pay taxes on the change in value from the fair market value of the gift at the time of the gift vs the current value when they cash in.
I just wanted to take a minute to address this question. As I stated I'm not an expert on the topic but this is just common sense and my opinion. Hope this helps the reader as well as others and gives you something to think about.
As for the part of your question asking about a gift lette r. I don't know what the IRS requires as proof for gifts but if you would like to do a gift letter to your children get it notarized, this absolutely proves the date in which you gifted the Dinars. Just writing a letter and having you and your child sign it means nothing as you could do that years after the fact. Having it notarized certifies the date of the letter and the date of the gift. You may even want to include in the letter the current CBI rate of the Iraqi Dinar on the date of the gift as well.