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Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28081
Experience:  Taxes, Immigration, Labor Relations
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I am going to be getting a profit on a forigen investment.

Customer Question

I am going to be getting a profit on a forigen investment. First do I pay income tax on if don't bring into the US? Secondly if it is forigen interest income and its been over a year is it consider long term gains?
Submitted: 8 years ago.
Category: Tax
Expert:  RD replied 8 years ago.

What is the profit from? When you say it is interest income- was this interest income earned over a period of time and now brought into US?


Are you a US Citizen?


Customer: replied 8 years ago.

yes I am a US citizen. Nothing has been brought in not even my investment or cash basis. The investment is in periods of sixty days and then can be reinvested. when does my tax oblagtion start? Does it become income before actually recieve it? Can't I first draw out my investment first tax free?

Expert:  RD replied 8 years ago.

Your tax obligation starts when you earn income on your investment. The fact that you reinvest the income does not defer your tax obligation as you have constructively received the income though you may have reinvested it.


Let me know if you have any question.


Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.

Customer: replied 8 years ago.
Does the IRS have any concern wether a person actually ever recieves the income or just if some says they have earned it?
Customer: replied 8 years ago.
Waiting for a complete answer they only answered part.
Expert:  Lev replied 8 years ago.

The IRS would expect you to pay taxes on the income based on when the income was received or deemed to be received.


For instance -

  • your interest income is treated as having received on the day it was credited on your account regardless it was distributed to you or not.
  • If you received a secured note instead of a monetary payment - you must include the fair market value (usually the discount value) of the note in your income for the year you receive it.
  • if someone received an income as a nominee for you, for tax purposes - that income is deemed as received by you.


Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28081
Experience: Taxes, Immigration, Labor Relations
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