I have received a number of inquiries recently regarding the taxation of gains associated with the disposition of Iraqi dinars. Some of the inquiries have related to the formation of an offshore structure (such as an offshore trust, foundation, corporation, etc.) to hold the Iraqi dinars.
If you are a U.S. citizen or a U.S. resident, the short answer to the question of whether you should set up such a structure is “no.” The long answer is the same - “No, you should not set up an offshore structure to hold your Iraqi dinars.”
Make sure that you speak with a qualified U.S. tax advisor before setting up or being associated with any non-U.S. entity, corporation, partnership, structure, trust, foundation, etc. The penalties for simply failing to disclose to the I.R.S. various offshore transactions can be huge.
The amount of U.S. tax imposed on the sale of an asset can increase when held through an offshore structure. A qualified U.S. tax advisor can help you understand what disclosure rules and potential penalties may apply, as well as the risks, costs, and benefits of setting up an offshore structure.