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fiatboy
Administrator
912 Posts |
 Posted - 03/22/2008 : 13:12:50
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I found this at You must be logged in to see this link.
On February 21, 2008, IRS tax assistance representative Bob Knierim told the Muckraker Report that if a taxpayer received a $50 American Gold Eagle in exchange for labor / services, the taxpayer would be required to claim market value of the coin rather than the legal tender value of $50. Market value of gold changes daily. The market value of a $50 American Gold Eagle is approximately $920 today. A few weeks ago it was over $1000.
Knierim was wrong.
It should be noted that if a $50 American Gold Eagle is presented to a clerk at a convenience store for the purchase of $20 worth of goods, legal tender laws dictate that the clerk deliver $30 in change, and not change based on the market value of the coin.
In preparation for the American Gold Eagle preys upon the IRS story, the Muckraker Report sent a question via e-mail to the IRS through its online Tax Help resource. After a few days of waiting for a response, an e-mail from the IRS was received in which it indicated that due to the difficultly of the question, the IRS would require additional time to research before providing an answer. Facing a deadline, the Muckraker Report called the Tax Help resource and was able to get Bob Knierim on the record for the previous article. However, on March 8, 2008 the IRS finally was able to provide an e-mail response and answer to this question:
If I received a $50 American Gold Eagle (legal tender) as a wage, would I need to claim $50 on my tax return or the market value? Today, the $50 American Gold Eagle was selling for approximately $980.00.
The IRS wrote:
You will only be reporting your wages of $50. The American Gold Eagle is now your capital asset (collectible), and any gain or loss on the coin will not be reported as income or loss until you dispose of the coin.
While the Muckraker Report disagrees with the IRS claim that the coin ‘now’ becomes a collectible any more than a penny, nickel, dime, or quarter, after all, the American Gold Eagle is a circulating coin and legal tender; the fact that taxpayers are only required to claim $50 as income on it opens up significant opportunities for those who find the federal income tax repugnant, unlawful, and unconstitutional to avoid paying as much, if any federal income tax.
As for the capital gain tax exposure, if the taxpayer makes arrangements to have a portion or all of his or her pay made in American Gold Eagles and holds the coins as long-term savings, for all practical and legal purposes, the taxpayer can avoid paying any tax on that portion of his or her wages.
It also creates the opportunity for those that think the Social Security tax is repugnant, unlawful, and unconstitutional to pay much less if any at all. Social Security tax is pegged at approximately 15% for most middle class wage earners on a payroll. The employer pays approximately 7.5% and 7.5% comes out of the employee paycheck. The percentage is based on gross income. The self-employed are required to pay 15.3% towards Social Security.
If a payroll taxpayer earns $50 thousand annually, the taxpayer is taxed approximately $3750 per year for Social Security. The employer is required to pay the remaining $3750 on behalf of the employee. However, if that same taxpayer had been paid in $50 American Gold Eagles, considering the market value of the coin to be $1000 per piece, for income tax purposes there would be no income tax requirement whatsoever because of the minimal earnings, and little if any Social Security tax burden.
An annual salary of $50 thousand equates to $2.5 thousand if paid in $50 American Gold Eagles, if the market value is $1000 for each coin. Imagine the withholding savings!
Clearly, the opportunities to legally avoid federal tax – social and income, socialists and big federal government supporters call these opportunities tax loopholes, versus being criminally charged with tax evasion, are abundant simply by receiving and holding American Gold Eagles. This approach just might be a legal way for Americans firmly grounded in the U.S. Constitution’s original intent to no longer fund creeping fascism, tyranny, and imperialism at the fraudulent, corporate federal level.
There are potential downsides to be considered. Employers will have the issue of minimum wage laws to overcome. Both employers and the self-employed will have the risk of the value of gold plummeted because of Federal Reserve manipulation of the stock market, money supply, and interest rates, in additional to bailouts and constant gross intrusions upon free market fluctuations – all the more reason to immediately abolish the Federal Reserve System, allow the banks that should fail, to fail, and build anew, a monetary system based upon gold or silver.
Few employers will wrap their minds around the benefits of the American Gold Eagle. However, for the self-employed with patriotic workers and patriotic customers, the opportunity to exchange labor / services for American Gold Eagles now exists with a clear tax burden reducing benefit to consider. For the right Americans in the right situations, this appears to be a tax-reducing breakthrough that is not an illegal tax scheme.
On a final note, capital gains may be taxed at 5, 15, 25 or 28 percent, or a combination of rates. The taxpayer's income level generally determines which capital gains rate is owed. If paid in $50 American Gold Eagles, a $50 thousand salary, based on the market value of the coins being $1000, equates to an income level of $2500 annually. Consequently, the capital gains tax would, in most circumstances, be an amount much less than the combined federal income tax and social security withholding.
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"Bart, it's not about how many stocks you have, it's about how much copper wire you can get out of the building." --- Homer Simpson |
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Delawhere Jack
1000+ Penny Miser Member
USA
1680 Posts |
Posted - 03/23/2008 : 17:03:22
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Awsome! I just forwarded the article to my companies Exec. Dir. and accountant. I'll let you know if I have any luck |
"Educate and inform the whole mass of the people... They are the only sure reliance for the preservation of our liberty." Thomas Jefferson
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knibloe
1000+ Penny Miser Member
USA
1066 Posts |
Posted - 03/23/2008 : 21:22:10
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| Talk about a tax free IRA, this would be awesome. Also, If I wanted to pass them along as an inheritance, I would never pay taxes. How abut this, I "earn" a $50 gold eagle. I donate it to charity, and get a $1000 write off? |
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JSutter
Penny Pincher Member
214 Posts |
Posted - 04/05/2008 : 21:31:39
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Actually if you were paid in gold eagles and dropped them into a Roth IRA and paid tax on the $50 then you wouldn't have to pay any more tax on them when you were eligible to withdraw from your IRA.  |
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starwarsgeek171
Penny Hoarding Member
USA
651 Posts |
Posted - 04/06/2008 : 08:55:34
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| We need some really good lawyers to pursue this in detail. Make the government spell it out. |
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JSutter
Penny Pincher Member
214 Posts |
Posted - 04/06/2008 : 18:44:15
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I gave some more thought to this today and came to the conclusion that it would only work for contractors or "contractors" or someone who made an exorbitant hourly wage due to minimum wage legislation. Say you or I make $20 an hour and we get our employer to agree to pay us one SAE per hour worked. Since they have a face value of $1 if we accept them and claim that as our wage then the employer may be opened up to fines for violating the minimum wage laws and I think the government would aggressively pursue that under these circumstances.
The guy out in Nevada that was paying his "contractors" with the coins must have been having them bid for the jobs then picking the lowball bids [Figure a $50,000 job would be bid at $2500 [50*$50 eagles equals $50,000 market value but only $2500 coin face value]
This brought me to another thought though. If the contractors bid the job at $2500 and go buy supplies with FRN's at Home Depot and spend more than $2500 FRN's for supplies on a job but accept Eagles of $2500 face value to do the job could they then legally declare a loss on the project and write it off?
This dual currency stuff is very confusing, no wonder the guy with a Doctorate in tax law the government brought in as a witness said he had no idea how to handle this situation. |
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knibloe
1000+ Penny Miser Member
USA
1066 Posts |
Posted - 04/06/2008 : 19:06:46
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| It wouldn't have to be just for contactors. I wouldn't mind getting my commission and bonus $ in gold. |
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JSutter
Penny Pincher Member
214 Posts |
Posted - 04/07/2008 : 19:05:24
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That would work but as far as getting your hourly wages in gold or silver it'd be hard to do. Minimum wage is getting ready to go to $6.55 so let's assume after taxes you're getting $5 an hour in silver coins. The cheapest way you could do that would be to get 10 40% Kennedy halves and those are worth about $26.00 in FRN right now. So anyone making less than $26.00 per hour after taxes would open their employers up to being fined for minimum wage violations if they were paid in silver.
As far as tipped employees who have to claim their tips you could give a waitress a 90% half as a $6-7 tip and she'd only have to claim it as .50
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NotABigDeal
1000+ Penny Miser Member
USA
3890 Posts |
Posted - 04/08/2008 : 06:26:34
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I'll accept my bonus and pay in a gold and silver mix if feasible....
Deal |
Live free or die.
Plain and simple.
"If you love wealth more than liberty, the tranquility of servitude better than the animating contest of freedom, depart from us in peace. We ask not your council or your arms. Crouch down and lick the hand that feeds you. May your chains rest lightly upon you and may posterity forget that you were our countrymen."
- Samuel Adams |
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penny4mythoughts
Penny Sorter Member
USA
82 Posts |
Posted - 04/09/2008 : 12:52:59
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| New thought/question. What about a retail business? I read that a gas station somewhere is accepting pre-1964 quarters for a gallon of gas. In that scenario, can the gas station owner state that he/she only received payment of .25 and the cost of the gasoline, to the station, was 3.00+ FRN? And if this worked, virtually any business could accept silver coinage for payment, or (math regarding min. wage above taken into account) pay their employees with silver or gold. Hmmm. |
Los Angeles is the place I call home... |
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mickeyman
Penny Pincher Member
Canada
243 Posts |
Posted - 04/09/2008 : 21:05:24
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There are some problems for the Company. For instance, if you are only taxed at the $50 level for the gold eagle, the Company will only be able to write off $50 as an employment expense. But chances are that it cost the Company more than $50 for the coin.
The only way it might work is if as a worker you gave the Company a break on your salary, since you are saving on taxes. |
Not all who wander are lost. |
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wolvesdad
1000+ Penny Miser Member
USA
2164 Posts |
Posted - 04/11/2008 : 14:56:27
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Fascinating and confusing!! THe good thing is, it IS SO CONFUSING. So you may have a good chance of being exhonerated in court if you were ever prosecuted for it(Which you shouldn't be prosecuted....it isn't our faut that the dollar amounts on the coins are so much underinflated from the market value!)
I do like the idea, but see that practically, it will likely only be done in rare situations! |
"May your percentages ever increase!" |
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horgad
1000+ Penny Miser Member
USA
1641 Posts |
Posted - 04/11/2008 : 15:27:50
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quote:
Originally posted by mickeyman
There are some problems for the Company. For instance, if you are only taxed at the $50 level for the gold eagle, the Company will only be able to write off $50 as an employment expense. But chances are that it cost the Company more than $50 for the coin.
The only way it might work is if as a worker you gave the Company a break on your salary, since you are saving on taxes.
If a company pays $1000 for something worth $50 and gives the $50 to an employee to pay his salary, they still get to write off the whole $1000. So I don't see a problem from the companies perspective. The expense just gets filed a little differently since now $950 is a investment loss and only $50 is wages. |
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horgad
1000+ Penny Miser Member
USA
1641 Posts |
Posted - 04/11/2008 : 15:35:13
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quote:
Originally posted by penny4mythoughts
New thought/question. What about a retail business? I read that a gas station somewhere is accepting pre-1964 quarters for a gallon of gas. In that scenario, can the gas station owner state that he/she only received payment of .25 and the cost of the gasoline, to the station, was 3.00+ FRN? And if this worked, virtually any business could accept silver coinage for payment, or (math regarding min. wage above taken into account) pay their employees with silver or gold. Hmmm.
I think that it could possibly work, but the business would have to be careful on what they did with the silver. Probably the safest thing for a business to to with the silver would be to pay their employees with it or maybe pay themselves with it. If the business converted the silver coins to fiat, I think they would be stuck with the tax on the "profit".
You could seriously undercut the rest of the gas stations if you priced gas in silver coins and the taxes on gas were based on a percentage of the cost, but I think most of the tax is per gallon...not sure on that though. |
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Delawhere Jack
1000+ Penny Miser Member
USA
1680 Posts |
Posted - 04/11/2008 : 17:45:17
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quote:
Originally posted by horgad
You could seriously undercut the rest of the gas stations if you priced gas in silver coins and the taxes on gas were based on a percentage of the cost, but I think most of the tax is per gallon...not sure on that though.
Tax on gasoline is per gallon, and while people accuse the oil companies of price gouging, Exxon grosses about 8 cents a gallon, while state and fed taxes combined run about 40-60 cents/gallon |
"Educate and inform the whole mass of the people... They are the only sure reliance for the preservation of our liberty." Thomas Jefferson
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Edited by - Delawhere Jack on 04/12/2008 08:15:28 |
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JSutter
Penny Pincher Member
214 Posts |
Posted - 04/16/2008 : 23:22:35
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| This could be used as a loophole on sales taxes too. Say you go down to the locally owned carlot and buy a car for $5000 and get the owner to take 5 1 ounce gold eagles. You could legally claim you only paid $250 for the car. Here in KY with the 6% sales tax that would save you $285 in taxes. Imagine get a buddy who is selling his $100,000 house to take 100 1 ounce gold eagles. You report you paid $5000 for the house instead of $100,000 and save $5700 in taxes |
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n/a
deleted
2 Posts |
Posted - 04/21/2008 : 23:30:11
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I spoke to an accountant who said that, indeed, you would only have to pay taxes on the face value.
The only issue is when you cash them in. Since the IRS considers them collectibles, they are taxed at 28%.
So, the next question to the IRS is:
If use a gold eagle as payment to another do I have to claim a gain, if the recipient says the eagle is sufficient payment for his services and does not treat it as $950 on his income taxes but $50.
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IRS reverses stance on Gold Eagle
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