Trefalgar 
Pie Paragon
Council Member
Total Posts: 4160
Location: Atlanta, GA
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| 10/04/2007 10:59 AM |
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http://www.wethepeoplefoundation.org/UPDATE/Update2007-09-30.htm
The subject matter of the article is somewhat arcane. I was so amused though, I just had to post it somewhere :-)
Brief Summary:
Nevada businessman wins defense in criminal trial brought by IRS against them for tax evasion, fraud, etc. -- 161 individual criminal tax charges.
He paid all his employees with gold and silver official US Mint coins. The coins are minted with face values of $1 to $20, but their fair market value is obviously MUCH higher.
Sooooo, the company might for example give you two or three $20 1oz. gold coins a week in pay. The stated value minted on them and declared by the US Gov't is $20 each. That means the company only paid someone $60, but they could then go and sell them in the open market for hundreds or even thousands of dollars of fiat paper curency (what we all use day-to-day to buy stuff and pay bills).
The face value of the coins is too low according to IRS code to require reporting the wages, withholding taxes, and so on any tax forms.
The jury ruled that the Federal Gov't had to abide by the decalred value minted on the coins because they are legal US currency and as stated "legal tender for all debts, public and private."
The jury acquitted the owner of the company of all charges (which was a correct and literal application of the laws as they are written) and the IRS lost. They lost REALLY bad!!!! ROFL wtfpwned!
The whole fiasco looks like a really clever tax and fiat currency protest by the company's owner.
10/10 for financial entertainment value!
-Tref
(btw, fiat currency is money that has no real value beyond what people believe it has. It is not tied to any physical, limited asset like gold. It is what all modern economies use in their fractional reserve central banking systems. Governments just create more or less of it out of nothing -- as in printing more of it whenever they don't have enough. Now days they don't even waste the paper and ink, it's just a few computer keystrokes into a database of ledger accounts at the Federal Reserve). |
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-Special Agent Trefal, CHU (Counter Horde Unit), Rogue Ops
-Lord Marshall of Forum Nonsense |
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seeker
Swords are fun!
Council Member
Total Posts: 3236
Location: Indy, no NV, no Indy, no NV....
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| 10/04/2007 1:39 PM |
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THAT is a thing of beauty. Now, the employees would still find themselves paying tax on the difference between the $20 face-value and the ~$736/oz current sale-value, since it's a profit on an investment (possibly even considered a capial gain). That said, there's no FICA tax on investment income, so the employee doesn't pay 7.85 to cover medicare/social security and the employer doesn't either. Heck, an employee could slowly work it to a point where they held on to each batch of coins long enough to make it a "long term investment", they'd even get to use a lower tax rate!
Now, if only I could persuade my own employer.... |
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Trefalgar
Pie Paragon
Council Member
Total Posts: 4160
Location: Atlanta, GA
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| 10/04/2007 4:34 PM |
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hmmmm. i'm not sure exactly how that would be treated. I guess it could be short-term capital gainst like Seeker suggests. The problem -- what is their basis (or purchase price)? Is it zero? So then entire selling price is taxable gains?
As a side note, the IRS did an armed raid on the guy's business:
"Informally called the Kahre case -- after the primary defendant, local business owner Robert Kahre, who paid workers in gold and silver coins -- the trial lasted four months. It relied heavily on evidence gathered in a controversial armed raid in May 2003 on several of Kahre's local business places. The raid entailed keeping more than 20 workers handcuffed, at gunpoint, in 106-degree heat without shade or water while agents collected records and equipment. "
Years ago when I was doing public accounting we had a client that was raided by the IRS. A disgruntled former employee of theirs lied to the IRS and told them these people were laundering drug money through a small charity they ran. They took dogs from the county pound, paid to have them trained as seeing eye dogs for the blind, and then gave them to blind people for free or nearly for free.
The IRS literally smashed in their door one morning at dawn and rushed into their bedroom at gunpoint with SWAT-style uniforms and automatic weapons. There was a helicopter hovering outside their house and everything. They were tied up and left on the bedroom floor in their underwear while the IRS agents collected business records from their home office and interrogated them.
Well ... the IRS found nothing because it was a total lie. It was obviously very embarassing for the agency, so they started digging and digging to find ANYTHING wrong. They ended up charging one of them with disability fraud (it was a male + male couple if you know what I mean). One guy was on disability for some kind of sickness or past injury, I can't remember exactly. Anyway, he was NOT paid ANY wages by their company while collecting disability. He did sometimes answer the phone in their home office and do some minor paperwork filing every now and then. So the IRS claimed he was working. He went to jail for like 18 months.
It took FOREVER to get the records back from the IRS investigations office to do their tax returns. We couldn't do the tax returns the IRS requries to be filed because the IRS had seized all their business records :-) makes sense huh? LOL /cry |
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-Special Agent Trefal, CHU (Counter Horde Unit), Rogue Ops
-Lord Marshall of Forum Nonsense |
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jeidynzon
Ninja Star Zealot
Guild Officer
Total Posts: 987
Location: Southern California
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| 10/04/2007 7:18 PM |
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Now that was classic. High 5 to that business owner.
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 Jeidynzon-70 Prot Warrior- Leatherworker- Armorsmith
Jeidyn-70 Hunter- alchamist/herbalist/fishing/cooking
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Jureal
Guild Alumni
Total Posts: 2916
Location: Little Rock, Arkansas
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| 10/05/2007 2:27 AM |
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AWESOME! I'm taking note for future small business practices, :)
Hey if it puts more money in my pocket with the *GREAT* economy we've got going right now, I'm not going to argue!
*ROFL All the way to the bank* |
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Trefalgar
Pie Paragon
Council Member
Total Posts: 4160
Location: Atlanta, GA
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| 10/05/2007 10:10 AM |
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I wouldn't exactly call this the next greatest tax shelter. I'm guessing the guy paid more money for his legal defense than he saved dodging payroll taxes.
Still ... it's funny to watch the IRS get pwned because of their own complex rules and the shennanigans of our Federal government monkeying with monetary policy over the years. |
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-Special Agent Trefal, CHU (Counter Horde Unit), Rogue Ops
-Lord Marshall of Forum Nonsense |
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Oryx
AFK
Guild Member
Total Posts: 501
Location: Denver
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| 10/05/2007 10:40 AM |
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| This made my day. Way to stick it to the man! *flex* |
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Aquatic 70 Shaman ~ Haelo 60 Paladin
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Trefalgar
Pie Paragon
Council Member
Total Posts: 4160
Location: Atlanta, GA
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seeker
Swords are fun!
Council Member
Total Posts: 3236
Location: Indy, no NV, no Indy, no NV....
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| 10/06/2007 12:22 PM |
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| Tref? the basis would be the face value of the coins ;) |
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Sabre (70 warrior)
Sceptre (70 warlock)
Thornkiss (70 priest)
Chibi (62 rogue)
and a slew of others, 9 - 53 |
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Trefalgar
Pie Paragon
Council Member
Total Posts: 4160
Location: Atlanta, GA
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| 10/08/2007 9:08 AM |
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Posted By seeker on 10/06/2007 12:22 PM
Tref? the basis would be the face value of the coins ;)
Yup. You're right. I agree. |
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-Special Agent Trefal, CHU (Counter Horde Unit), Rogue Ops
-Lord Marshall of Forum Nonsense |
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