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So if you and your employer came to an arrangement where you got paid in gold coin instead of Federal Reserve Notes what is your tax burden?
For example you do the equivalent of a $1000 work/week. At the end of the week your employer hands you a US $20 gold coin from the US Mint. (Shown below) This coin is $20 legal tender but the materials that make it up include 1 oz of 24 carat gold which is currently worth ~$1150 in federal reserve notes. Ignore the numismatic coin.
So if you and your employer came to an arrangement where you got paid in gold coin instead of Federal Reserve Notes what is your tax burden?
For example you do the equivalent of a $1000 work/week. At the end of the week your employer hands you a US $20 gold coin from the US Mint. (Shown below) This coin is $20 legal tender but the materials that make it up include 1 oz of 24 carat gold which is currently worth ~$1150 in federal reserve notes. Ignore the numismatic coin.
Is your tax burden $20 or is it $1150?
Your tax burden is the value of gold in the coin not the face value. There is also the difficulty of using gold as "coin of the realm" for buying anything. Gold is not "legal tender" under U.S. law. Sure people will take it but what's the sense of paying a debt with a gold coin and only getting face value for it?
Your tax burden is the value of gold in the coin not the face value. There is also the difficulty of using gold as "coin of the realm" for buying anything. Gold is not "legal tender" under U.S. law. Sure people will take it but what's the sense of paying a debt with a gold coin and only getting face value for it?
Traderx is correct.
The "sense" is the method allows the transfer of value without creating a tax liability.
IRS lost a big case (total loss on something like 161 claims) on this already.
It has (obviously) gotten little Corporate News coverage.
My best guess would be that the tax liability would be zero until the person with the gold sold the coin in order to have currency to pay for stuff. He would then be taxed according to whatever currency he brought in from each sale. If he were able to somehow miraculously cover all his expenses with the gold or was otherwise independently wealthy, he could probably get under the radar as far as taxes go.
My feeling is that the IRS, if it were to do an audit of the person's finances and assets, would try to treat this as a barter arrangement. If the pay were 1 oz of gold per week, the likelihood of an audit would be pretty minimal. 5 oz or more week might invite more suspicion.
My question was not about gold. My question was about gold coins issued by the US Mint. On this point you are incorrect. Gold coins from the US Mint are 100% legal tender. Ronald Reagan signed the bill into law that made them as such in 1986. Gold of course isn't. Neither is paper, silver, copper, etc. But the minute it is formed into currency it is.
It's not exactly a clear answer. The argument can be made that your income is always the face value of the currency, not the material it is made of. It's an interesting paradox given the history of our money.
My question was not about gold. My question was about gold coins issued by the US Mint. On this point you are incorrect. Gold coins from the US Mint are 100% legal tender. Ronald Reagan signed the bill into law that made them as such in 1986. Gold of course isn't. Neither is paper, silver, copper, etc. But the minute it is formed into currency it is.
Quote:
Originally Posted by lumbollo
It's not exactly a clear answer. The argument can be made that your income is always the face value of the currency, not the material it is made of. It's an interesting paradox given the history of our money.
That Las vegas case sounds completely different to me.
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