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Author Topic: New CFTC Rules --- Foreign Brokers for Americans  (Read 28350 times)

Offline fxcica

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Re: New CFTC Rules --- Foreign Brokers for Americans
« Reply #30 on: September 10, 2010, 12:07:33 AM »
I also have a GoMarkets account and am very pleased with it. So it's good that GoMarkets apparently won't comply with any U.S. pressure to kick out U.S. residents/citizens (so far).

And, I will report and pay the required U.S. income taxes on my FX profits. So my main concern really is what happens if I get audited by IRS in the future and IRS determines that an overseas broker (not registered with CFTC) is the source of my reported FX profits.

fxcica

Offline aicohn

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Re: New CFTC Rules --- Foreign Brokers for Americans
« Reply #31 on: September 10, 2010, 04:20:45 AM »
Quote
So my main concern really is what happens if I get audited by IRS in the future and IRS determines that an overseas broker (not registered with CFTC) is the source of my reported FX profits.

In general, the IRS doesn't care how you make money, only that you report & pay taxes on it. They're only too happy to take your money. You can put "prostitute", "loan shark", or "drug dealer" down under occupation and they really don't care. They are programmed to receive.  Where it may get dicey is if you have a loss for the year, take it as an IRC 988 loss and a simple loss (without limitation) against *other* income.  That's perfectly standard & legit, but I don't know if/whether the fact it happened overseas in a broker the CFTC hasn't sanctioned may deligitimize that tax treatment, or even if it didn't whether they might try to say it isn't legitimate & force the issue.  If they did, you might have to go to tax court to get the treatment you deserve & I have absolutely no idea how that would play out before a judge given how the loss happened.  Best to get with a tax advisor on that one, preferably one who regularly deals with trader taxation issues, and with tax lawyers nearby to get an opinion, because you may need someone to fight for you.

A.
« Last Edit: September 10, 2010, 04:38:08 AM by aicohn »

Offline Chip4Pips

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Re: New CFTC Rules --- Foreign Brokers for Americans
« Reply #32 on: September 10, 2010, 05:42:28 AM »
I went to the trouble and expense of setting up an entity to house my trading, in order to avail myself of the ability to have "trader" status for income tax purposes here in the U.S. All my foreign accounts are now entity ones, and it still isn't clear to me how things are going to play out, as some entities are exempt from the rules, and others are not.

As an aside, I used to be with Go, but they will not open entity accounts for Americans, so I had to move my funds. Now I am left wondering if the attempt to gain more favorable tax treatment for my trading profits via the entity may have screwed up the rest of my trading. Oy vey.... Maybe, I'll end up ditching the entity.... What a fiasco these idiots have created, all to ostensibly protect "the little guy", which we all know is b.s.
« Last Edit: September 10, 2010, 05:44:05 AM by Chip4Pips »

Offline FXDave

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Re: New CFTC Rules --- Foreign Brokers for Americans
« Reply #33 on: September 10, 2010, 06:31:14 AM »
I went to the trouble and expense of setting up an entity to house my trading, in order to avail myself of the ability to have "trader" status for income tax purposes here in the U.S. All my foreign accounts are now entity ones, and it still isn't clear to me how things are going to play out, as some entities are exempt from the rules, and others are not.

As an aside, I used to be with Go, but they will not open entity accounts for Americans, so I had to move my funds. Now I am left wondering if the attempt to gain more favorable tax treatment for my trading profits via the entity may have screwed up the rest of my trading. Oy vey.... Maybe, I'll end up ditching the entity.... What a fiasco these idiots have created, all to ostensibly protect "the little guy", which we all know is b.s.

Chip,

You did not screw anything up at all. I have an "entity" as well for one of my accounts. What you did was take the best action that was available to you at that time. Now all of us "Americans" are left to adjust and overcome the unjust treatment by our own government which has chosen to assert control over what we can and can not do with our own money.

If you read the legislation this is only the BEGINNING..... Time to RAGE against the machine!

If you don't vote you don't count... Stand up or be ran over!

Peace...

FXDave

« Last Edit: September 10, 2010, 06:35:44 AM by FXDave »
"Absurdum est ut alios regat, qui seipsum regere nescit."

Offline aicohn

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Re: New CFTC Rules --- Foreign Brokers for Americans
« Reply #34 on: September 10, 2010, 09:19:09 AM »
Yeah, well I rolled over my 401K into a Roth IRA thinking I'd have a nice tax-free income from my trading activity in my old age.  Like you, I did what seemed best at the time.  Now they're on the cusp of forcing me to repatriate that account to a US one & I'll likely just eat the penalty & pull the money out to get it at a broker I can stand.  It's that or put up with FIFO, no-hedging and 50:1.

I could sit here & cry over it, but I'm now hearing rumblings (congressional hearings, proposed legislation) out of Washington about forcing people to put a portion of their IRA/401K holdings into treasury bills "for safety".  So, I suspect that sooner or later, pulling the money out & ditching the whole thing is where I'll get to anyway.  These jokers need somebody to buy T-bills now that China and Japan are wising up and realizing the end-game will be reduction of the debt by inflating it away in the mother of all quantitative easing & in real terms they'll get back a fraction of what they put in if they get anything at all.   I'm wondering how long it'll be before they simply take everybody's retirement account a la Argentina.  2 years?  5?  The US is becoming a banana republic.  Same $hit different day.  Those who are responsible & plan for things take it in the rear.

The way these jokers keep changing the rules, you can't plan anymore.  It's the same reason corporations won't hire and are sitting on wads of cash.  Same reasons banks won't lend & people won't borrow.  No reason to work when they simply take what you earn and "spread it around".  System is breaking down.  Every day I find one more reason to move & renounce US citizenship.
« Last Edit: September 10, 2010, 09:38:01 AM by aicohn »

Offline aicohn

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Re: New CFTC Rules --- Foreign Brokers for Americans
« Reply #35 on: September 10, 2010, 09:29:11 AM »
Quote
If you don't vote you don't count... Stand up or be ran over!

No, it's get run over or get run over.  More than half the population pays no taxes and doesn't work.  They live off of those who do.  And they think what's going on in america is terrific.  If you were a child for life, sucking off mommy's teat, you'd think it's terrific too.  Either join them or get run over.

Offline FXDave

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Re: New CFTC Rules --- Foreign Brokers for Americans
« Reply #36 on: September 10, 2010, 08:46:20 PM »
Quote
If you don't vote you don't count... Stand up or be ran over!

No, it's get run over or get run over.  More than half the population pays no taxes and doesn't work.  They live off of those who do.  And they think what's going on in america is terrific.  If you were a child for life, sucking off mommy's teat, you'd think it's terrific too.  Either join them or get run over.

aicohn,

I completely understand. Many of us have the same feelings.

The choice is yours to make....

For me capitulation has been and never will be an option. I will never allow a standing government (foreign or domestic) to run over me without a fight. I might be knocked down and end up with a bloody nose but at least at the end of the day I know I stood against tyranny and oppression.


Peace....

FXDave
« Last Edit: September 11, 2010, 03:41:08 AM by FXDave »
"Absurdum est ut alios regat, qui seipsum regere nescit."

Offline FXDave

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Re: New CFTC Rules --- Foreign Brokers for Americans
« Reply #37 on: September 10, 2010, 08:50:20 PM »
In general, the IRS doesn't care how you make money, only that you report & pay taxes on it. They're only too happy to take your money.... Where it may get dicey is if you have a loss for the year, take it as an IRC 988 loss and a simple loss (without limitation) against *other* income....

So I may actually consider not bothering to report any overseas FX losses (with an unregistered broker) on my income tax return. And do my best to generate actual FX profits and keep losses to a minimum (and of course, report/pay taxes on profits).

This also assumes there will be no US restriction on my ability to wire funds from my US bank to an overseas broker's bank.

You should seek the advice of a professional tax consultant. Taking tax advice in an open public forum is probably your worst option.


Peace....

FXDave

"Absurdum est ut alios regat, qui seipsum regere nescit."

Offline fxcica

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Re: New CFTC Rules --- Foreign Brokers for Americans
« Reply #38 on: September 10, 2010, 10:33:47 PM »
Thanks to FXDave for his advice--I'm consulting with a professional tax lawyer on this, not worth discussing further here.

Offline robl45

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Re: New CFTC Rules --- Foreign Brokers for Americans
« Reply #39 on: September 12, 2010, 06:38:13 PM »
absolutely right, the IRS has a do not tell policy, they just want money,  they dont care how you make it.  BTW, drug dealers cannot deduct cost of goods sold.   :D

Quote
So my main concern really is what happens if I get audited by IRS in the future and IRS determines that an overseas broker (not registered with CFTC) is the source of my reported FX profits.

In general, the IRS doesn't care how you make money, only that you report & pay taxes on it. They're only too happy to take your money. You can put "prostitute", "loan shark", or "drug dealer" down under occupation and they really don't care. They are programmed to receive.  Where it may get dicey is if you have a loss for the year, take it as an IRC 988 loss and a simple loss (without limitation) against *other* income.  That's perfectly standard & legit, but I don't know if/whether the fact it happened overseas in a broker the CFTC hasn't sanctioned may deligitimize that tax treatment, or even if it didn't whether they might try to say it isn't legitimate & force the issue.  If they did, you might have to go to tax court to get the treatment you deserve & I have absolutely no idea how that would play out before a judge given how the loss happened.  Best to get with a tax advisor on that one, preferably one who regularly deals with trader taxation issues, and with tax lawyers nearby to get an opinion, because you may need someone to fight for you.

A.

Offline robl45

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Re: New CFTC Rules --- Foreign Brokers for Americans
« Reply #40 on: September 12, 2010, 06:48:25 PM »
so back to the topic at hand, aside from go markets, are other brokers still taking americans?  dukas copy, fxopen ecn etc?

Offline robl

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Re: New CFTC Rules --- Foreign Brokers for Americans
« Reply #41 on: September 13, 2010, 03:08:46 AM »
so back to the topic at hand, aside from go markets, are other brokers still taking americans?  dukas copy, fxopen ecn etc?


Yes


Robert

Offline aicohn

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Re: New CFTC Rules --- Foreign Brokers for Americans
« Reply #42 on: September 13, 2010, 05:57:35 AM »
Quote
so back to the topic at hand, aside from go markets, are other brokers still taking americans?  dukas copy, fxopen ecn etc?

Don't know about the others you mention, but I did get to an online chat with MIG (now MIG Bank) where I still have a tiny account & asked them how things would change with the new CFTC rules.  Their answer was "not at all".   Now, they're at 100:1 max, but they don't have the other obnoxious policies (no hedge, FIFO, ...).  So that would be a second option for me.

In general, it would seem foreign brokers without US offices are laughing at the CFTC and its extraterritorial jurisdiction claims.  They seem quite happy to keep US customers, and though I've not specifically asked, I think they'd open new accounts for US citizens as well.

I think for those with foreign accounts the CFTC rule change is really a big nothing-burger, and US citizens who want to move abroad as a result of this should have little difficulty.  If anything, I would guess these rules hurt the Gain Capitals and FXCMs of this world who moved accounts to foreign affiliates to skirt the rules.  Clients now forced to repatriate money back into the US may not accept that arrangement.  I don't know whether clients who stayed in the US at a regulated broker would be so quick to move out of the country on the basis of the leverage change alone.  Myself, the leverage change alone isn't the issue.  Rather it's the FIFO, hedging, and just the fact I couldn't find a broker where I felt my money was safe in the US (segregated account or some sort of guaranty).  I don't think they even CAN offer segregated accounts!  I know IBFX was disciplined by the NFA for claiming funds were segregated.  Also, some regulated US brokers are cheats (e.g., Alpari).


A.
« Last Edit: September 13, 2010, 06:11:49 AM by aicohn »

Offline hazelj80

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Re: New CFTC Rules --- Foreign Brokers for Americans
« Reply #43 on: September 20, 2010, 04:33:00 AM »
this problem is easily solved when you start trade with a bank and under an LLC.  then they can't touch you.  end of subject.  get yourself to that point and the worries are over.  Im on that path

Offline Tony4x

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Re: New CFTC Rules --- Foreign Brokers for Americans
« Reply #44 on: September 28, 2010, 09:13:33 PM »
this problem is easily solved when you start trade with a bank and under an LLC.  then they can't touch you.  end of subject.  get yourself to that point and the worries are over.  Im on that path

I think the CFTC requirements for Brokers will become more problematic for US citizens than we now realize. Those wishing to trade higher leverage, hedging. with no FIFO and trying to find an offshore solution to avoid the new regs I fear may be setting ourselves up.  Foreign commercial banks unaffiliated with any U.S.-based FCM may have a 360 day extension from registering as a U.S. financial institution. The rumor is they may only have 360 days from the date Dodd-Frank Fin Reg was enacted (July 21) so if we go through the trouble of setting up foreign accounts, as US citizens we may be facing the problem again down the road. (Dodd-Frank really have it in for us!)
Here's an interesting article from Forbes on the subject: (Please forgive if against the rules)
http://blogs.forbes.com/greatspeculations/2010/09/24/offshore-forex-trading-is-heading-back-to-u-s-shores/


 

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