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Old 10-26-2015, 02:35 PM
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Paying on foreign investment

I have a friend in Serbia who's business invests with FX, precious metals, etc. I sent him a sum of $ and they're growing it. At year end, they will take a management fee. What can I expect in terms of taxes in this situation? Is this purely capital gains? Do I pay on current balances even if the account is not in my name? So many questions...

Thanks so much in advance!



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Old 10-27-2015, 06:40 AM
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I have a friend in Serbia who's business invests with FX, precious metals, etc. I sent him a sum of $ and they're growing it. At year end, they will take a management fee. What can I expect in terms of taxes in this situation?====>As a US resident, you need to report your US source and world wide income to the IRS/ your state; The IRS taxes capital gains from the sale of precious metals at either a short-term or long-term rate depending upon the amount of time you have held onto your investment. Capital assets are investments such as stocks, mutual funds, bonds, real estate, precious metals, coins, fine art, and other collectibles.Capital gains are taxed differently depending on whether your investment is considered long-term or short-term. How long you have held an investment is called the holding period.The long-term holding period is more than 1 year. LTCGs are taxed at LTCGs rates, which is usually less than ordinary tax rates. The LTCGs tax rate is either 0% if your tax rate is lower than 25% , 15%, if your tax rate is higher than 25% but lower than39.6%, or 20%,if your taxs rate is higher than 35% depending on your marginal tax bracket.Long-term investments in collectibles,i.e., collectibles or precious metals/gems are taxed at a flat 28%

You may claim taxes paid on your capital gain to the foreign taxing authority(ies) on your US return by filing form 1116 or claiming tax deduction on Sch A of 1040 line 8 or 1040 line 47.


Is this purely capital gains? Do I pay on current balances even if the account is not in my name? So many questions...====>Correct; I guess not on the current balances;you ‘d only owe tax if the price from the sale of these investments exceeds the original price you paid



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Old 10-27-2015, 07:20 AM
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First of all, thank you so much for your response, Wnhough!

I guess the confusing part is that I don't actually have the account in my name. I'm just sending $ to company who invests. They could be buying/selling shoes for all I know (I do know it's FX, metals, etc). They also take 25% management fee and with that they pay all of the taxes in Serbia.

Another question I had was if I don't take anything back (yet), do I owe taxes or do I only owe when I take it out?



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Old 10-27-2015, 10:26 AM
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Quote:
Originally Posted by lifz View Post

#1;I guess the confusing part is that I don't actually have the account in my name. I'm just sending $ to company who invests. They could be buying/selling shoes for all I know (I do know it's FX, metals, etc). They also take 25% management fee and with that they pay all of the taxes in Serbia.

#2;Another question I had was if I don't take anything back (yet), do I owe taxes or do I only owe when I take it out?
#1;I know what you mean ; however, it doesn’t matter if you don't actually have the account in your name , you still need to pay tax to irs/your state aslongas you sold an asset, at a profit and get the money UNLESS you give them the gain as gifts. In this case, you need to file form 709 ONLY if the total value of all gifts made to the same person exceeds $14K for 2015. I f the amt is less than $14K for the same person, then no need go file form 709.

#2;As said, in principle, aslongas you SELL/DISPOSE OF the assets at a profit overseas , and receive the money( the capital gains) then you need to report the taxable gain on your US return whether or not you bring the money back into US.



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