If my pet hamster buys foreign currency with U.S. currency,

[Jamin2112]

then buys back the U.S. currency when it has depreciated against the currency he bought, and conducts all these transactions with paper currency, has he safely avoided having to report this gain as income?

 

[Enigman]

"How does the defendant plead?"
"Not guilty, your honor. My hamster did it."

OTOH:
http://en.wikipedia.org/wiki/Foreign_exchange_market#Hedge_funds_as_speculators

 

[DennisN]

"How does the defendant plead?"
"OTOH:
http://en.wikipedia.org/wiki/Foreign_exchange_market#Hedge_funds_as_speculators

Maybe it's just me, but for this purpose I would rather use a hedgehog instead of a hamster.

 

[MarcusAgrippa]

Maybe it's just me, but for this purpose I would rather use a hedgehog instead of a hamster.

Wouldn't that be classified as hedging? Except that it doesn't have a future.

 

[B0b-A]

"How does the defendant plead?"
"Not guilty, your honor. My hamster did it."

There's a [star nosed] mole in your organization ...

http://www.pbs.org/wnet/nature/files/2011/10/002902-starnosedanat-final1.jpg

 

[Enigman]

There's a [star nosed] mole in your organization ...

http://www.pbs.org/wnet/nature/files/2011/10/002902-starnosedanat-final1.jpg

He probably killed the hamster and took his place. Add identity theft to the charges.

 

[Nugatory]

then buys back the U.S. currency when it has depreciated against the currency he bought, and conducts all these transactions with paper currency, has he safely avoided having to report this gain as income?

It will depend on the laws where you and your hamster live. Under American law, taxes are due on any income that results from the activity of your hamster.

 

[CWatters]

In some countries a one off transaction like that would be treated as a capital gain rather than income.

 

[rootone]

Your hamster's financial transactions may well be of interest to tax inspectors,
but they would certainly be a lot more interesting to biologists.