interest tax question

Reply #19

AlecWest — Sun, 17 Aug 2008 17:27:49 GMT

1) I think most people would agree that long-established global banks like Deutsche Bank would fare much better as secure places to invest when compared to The Brothers in Costa Rica.

2) True. Safe deposit boxes are not guaranteed. But many people put many valuable things in them. And I think the track records of an overwhelming number of banks would attest to them as being safe places to put things ... even currency. However, as the old saying goes, you should never put all your eggs in one... [ More ]

Reply #18

psykomo — Sun, 17 Aug 2008 03:38:24 GMT

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LOL...................W... [ More ]

Reply #17

justxploring — Sat, 16 Aug 2008 16:43:23 GMT

TC - maybe I was misunderstood here, but all I was saying is it's not worth it. If I were very wealthy, I would do my best to invest my money wisely and avoid taxes (not evade) whenever possible. I would just do it legally. The rich have plenty of legal loopholes. Do I believe the Federal Reserve the IRS are corrupt and should be abolished? Sure! I'm just not that much of a revolutionary any more.

Anytime someone tells me about a way to get rich and avoid paying income tax, I have to think o... [ More ]

Reply #16

truecritic — Sat, 16 Aug 2008 06:16:18 GMT

Quote: I hope I'd be too busy enjoying life and helping others to bother with lawyers and Grand Jury hearings, etc.

The thing is....the IRS might come looking for you and have nothing to do with you challenging their wrath. You don't think Martha Stewart tried to get into trouble

Reply #15

justxploring — Sat, 16 Aug 2008 05:49:24 GMT

I just want to correct a typing error I made in my last comment:

A safe deposit box is also not insured and, in the likely (unlikely) event its contents are destroyed or stolen, you will lose your money.

Reply #14

Idesire$ — Sat, 16 Aug 2008 03:41:32 GMT

Very , Very interesting subject....................................Hummmmmmmmmmmmmmm

Reply #13

justxploring — Sat, 16 Aug 2008 03:29:10 GMT

This was a thread about income tax and if it is taxable as income, and we've gone way, way off on another subject.

A lot of people enjoy challenging the IRS, but if I won millions, I hope I'd be too busy enjoying life and helping others to bother with lawyers and Grand Jury hearings, etc.

Regarding bearer bonds, keep in mind that the reason they were outlawed was because they're not registered bonds and cannot be traced. A safe deposit box is also not insured and, in the likely event its c... [ More ]

Reply #12

AlecWest — Sat, 16 Aug 2008 02:20:07 GMT

Actually, getting back to my earlier post, if the IRS went to court without proof that I had taxable interest income from bearer bonds, it would never make it to an actual trial. Such a case would be killed at the Grand Jury level. They couldn't just say, Well, we really find his situation suspicious, or we're certain he's making taxable interest income. They'd have to say to a Grand Jury, Mr. West was in possession bonds numbered 1X494BB21494 - 1x494BB21621, each valued at $20,000, and each dra... [ More ]

Reply #11

JAP69 — Sat, 16 Aug 2008 00:55:16 GMT

Besides, I'm certain that living off the principal would make a few IRS people gnash their teeth ... knowing they couldn't do anything about it. I'd take some pleasure in that knowledge, hehehe.

I would enjoy that pleasure too.

Reply #10

AlecWest — Sat, 16 Aug 2008 00:44:12 GMT

P.S. Incidentally, if I did win a big jackpot, the thought of living off the principal really appeals to me. Until the day comes when Congress institutes a wealth tax, the IRS can only hassle such a jackpot winner over income subsequent to winning. And of course, money sitting in a safe deposit box earns no income (grin) ... a modern-day and secure way to put money under the mattress.

Remember the recent failure of IndyMac Bank? Depositors with accounts exceeding FDIC limits really took a hi... [ More ]

Reply #9

AlecWest — Sat, 16 Aug 2008 00:11:20 GMT

I don't think there'd be too much of a chance of going to Federal prison for tax evasion. The first thing the IRS would have to do is prove that the bearer bonds are in your possession. Then, since you've already paid taxes on the jackpot income, they'd have to prove that those bonds had earned interest taxable under the law. If the IRS tried to take you to court without proof that you'd earned taxable income from bearer bonds ... or even HAD bearer bonds in your possession, your attorney would... [ More ]

Reply #8

justxploring — Fri, 15 Aug 2008 23:52:04 GMT

I don't like paying taxes, but I think I'd hate Federal prison even more! BTW, I sold cars in 1996 and we had to watch a film about money laundering. It was funny, because the test asked a question like If someone walks up to you with $50,000 cash in a briefcase makes you an offer, what do you do? (a) Get the manager (b) ask him where he got the money (c) ask how much your take is

Although (a) is obviously the correct answer, I definitely wouldn't have done that since the manager probably wo... [ More ]

Reply #7

AlecWest — Fri, 15 Aug 2008 23:22:59 GMT

Justxploring,

Ahhh ... it went up to $10k. First, let me say that my bearer bond post was made with at least part of my tongue in cheek.

On getting money out of the country, that's easy. Yes, wire-transfers can be traced. But activities after the transfer are a lot harder to trace. Since bearer bonds are not listed in any name, buying them ends the ability to track the money. Even the purchase record is linked only to the number assigned to the bond - not the person buying it. If the IRS a... [ More ]

Reply #6

Jeffg330 — Fri, 15 Aug 2008 22:45:38 GMT

Could you just buy the bonds at the Canadian branch instead of flying to Germany? I've driven across the border several times without so much as a glance.

Reply #5

justxploring — Fri, 15 Aug 2008 22:18:10 GMT

buying/selling bearer bonds in the US is illegal

So is tax evasion.

Just remember not to make any single deposit of $5,000 or more in a U.S. bank since transactions over that amount are reported to the IRS and might make them curious (grin)

It's form 8300 and the amount is $10,000 or more. It's unlikely the IRS would investigate someone who deposits a small amount of money like $5,000 or even $10,000 unless they have a good reason. They don't have the manpower. By the way, this form... [ More ]

Reply #4

AlecWest — Fri, 15 Aug 2008 21:04:07 GMT

Or, you could take a trip to Germany. Put the money in bearer bonds issued by Deutsche Bank, guaranteed by the government up to the value of the bond. They draw interest, too. And the neat thing about them is they're numbered securities that cannot be tracked to you by name or any domestic identifying number. Then, be very very quiet ... cashing in the bonds only when you need to by visiting their office in Canada (buying/selling bearer bonds in the US is illegal).

Eureka! No tax at all (grin... [ More ]

Reply #3

justxploring — Fri, 15 Aug 2008 05:54:20 GMT

Do you work file taxes? If you do, look at form 1040 (or whichever form you use) where it says INCOME. First line will always be Wages/Salary (from W-2s) Second line is Taxable Interest. You will receive a 1099 statement from each bank in which you have an interest bearing account.

Reply #2

savagegoose — Fri, 15 Aug 2008 05:16:19 GMT

if the profit comes in cash its income, if it comes in increased value of the asset its capital gains. if its decreased value of the asset its capital loss.

wow imagine if we could claim capital loss on falling value of the dollar, no one would owe taxe any more.

also if its a company earning the interest you caim it at company tax rates, and an individual at personal income tax rates. usually company tax rates are a lot lower than personal , here in australia , its 15% differenc... [ More ]

Reply #1

mjwinsmith — Fri, 15 Aug 2008 00:59:28 GMT

Interest earned on Bank CD's is considered INTEREST and tax as Inerest Income (fully taxable) no capital gaines since this is not a capital asset like stocks and bonds.

interest tax question

Jeffg330 — Fri, 15 Aug 2008 00:52:28 GMT

Hi, i'm new to this forum so please forgive me if this topic has already been discussed. This is assuming one was lucky enough to hit for multi-millions and chose the lump sum. If they wanted to simply put say 5 million in safe investments like bank accounts and CD's would the tax on the interest earned be considered capitol gaines (which i believe to be roughly 18%) or regular income which would be taxed at a much higher rate? Just curious just in case i win!

TY