tax when ?question

[just-john]

OK have a question say you win 1 or anynumber American Eagle Gold Coin say 1 o/z's , Gold is something like $940.00 per O/Z but the coin says $50.00

and you have won it. So I would thing that it's considered $50.00 since it says $50.00 Dollars on the coin and I didn't spend any thing on it.So my way of twisted thinking goes like this recieved/won 100 one O/Z gold us eagle gold coins stated value $50 ea total $5000.00 . Now if I were to sell them 100 ea @ $940.00ea

= $94,000.00

So what this dum guy wants to know from the smart people on the board could you say you won $5000.00 when you got the coins and figure that into your taxes and not pay the larger ammount untill you sold the Gold at the Spot price

The poker player in me want's to know

[jtryka]

I believe there is a court case right now in Las Vegas involving a contractor that did something similar, paying his employees in gold and they claimed the face value on taxes, but I think he might be going to jail now.

[Schatzy]

I think you would report it at fair market value.

[Schatzy]

What is "Fair Market Value?"

Fair Market Value is defined as: "The fair market value is the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts. The fair market value of a particular item of property includible in the decedent's gross estate is not to be determined by a forced sale price. Nor is the fair market value of an item of property to be determined by the sale price of the item in a market other than that in which such item is most commonly sold to the public, taking into account the location of the item wherever appropriate." Regulation §20.2031-1.

[truthteller]

When you win a prize such as this, usually you will get a 1099 form in the mail from the agency that offered the prize. Pay the tax based on the 1099.

 

 

TRUTH

[World Colonial]

I believe there is a court case right now in Las Vegas involving a contractor that did something similar, paying his employees in gold and they claimed the face value on taxes, but I think he might be going to jail now.

 

I am not a tax practioner but I do have a master's in tax and according to what I know, what you state is correct.

 

There was a court case I ran across in the CCH or Prentice-Hall research guide that covered this same subject. (This was in 1988 and the case was probably sometime between 1980 and 1985.) The buyer attempted to pay for something (I believe a home) using 90% US silver coins without claiming the difference between their cost and the current market value as taxable income and they lost. The IRS took the position that this was effectively a sale, that the coins had been sold at market value and that the proceeds were used for the purchase.

 

The logic the goverment uses in these instances is a double standard. Legally, the coins are only worth face value and I absolutely guarantee you that if anyone tried to pay their income taxes in pre-1965 silver coins (assuming for the moment that they would even be accepted), they would only be accepted for face value. Yet in a private transaction, the coins are worth market value.

[World Colonial]

I believe there is a court case right now in Las Vegas involving a contractor that did something similar, paying his employees in gold and they claimed the face value on taxes, but I think he might be going to jail now.

 

I am not a tax practioner but I do have a master's in tax and according to what I know, what you state is correct.

 

There was a court case I ran across in the CCH or Prentice-Hall research guide that covered this same subject. (This was in 1988 and the case was probably sometime between 1980 and 1985.) The buyer attempted to pay for something (I believe a home) using 90% US silver coins without claiming the difference between their cost and the current market value as taxable income and they lost. The IRS took the position that this was effectively a sale, that the coins had been sold at market value and that the proceeds were used for the purchase.

 

The logic the goverment uses in these instances is a double standard. Legally, the coins are only worth face value and I absolutely guarantee you that if anyone tried to pay their income taxes in pre-1965 silver coins (assuming for the moment that they would even be accepted), they would only be accepted for face value. Yet in a private transaction, the coins are worth market value.

[jtryka]

I believe there is a court case right now in Las Vegas involving a contractor that did something similar, paying his employees in gold and they claimed the face value on taxes, but I think he might be going to jail now.

 

I am not a tax practioner but I do have a master's in tax and according to what I know, what you state is correct.

 

There was a court case I ran across in the CCH or Prentice-Hall research guide that covered this same subject. (This was in 1988 and the case was probably sometime between 1980 and 1985.) The buyer attempted to pay for something (I believe a home) using 90% US silver coins without claiming the difference between their cost and the current market value as taxable income and they lost. The IRS took the position that this was effectively a sale, that the coins had been sold at market value and that the proceeds were used for the purchase.

 

The logic the goverment uses in these instances is a double standard. Legally, the coins are only worth face value and I absolutely guarantee you that if anyone tried to pay their income taxes in pre-1965 silver coins (assuming for the moment that they would even be accepted), they would only be accepted for face value. Yet in a private transaction, the coins are worth market value.

 

Exactly, there are different sets of rules for the IRS and the Plebians...we really need another revolution...

[just-john]

this all started over a poker game and more than a few beers. Didn't think it would work.I played once with the IRS and don't want to do that again

Thanks for the advise.

[World Colonial]

To me, the biggest rip off in the tax code is that there is no correlation between what is paid for versus the value received. That concept was tried and rejected in the judicial system decades ago but I consider it absurd because I see no difference whatsoever between this and any other economic transaction. And as far as I am concerned, to say that there is one is an example of idealistic illussions of incurable romanticism.

 

For those who do not take the position that I do, there are some principles in the tax code that make sense, but then that is only before most of the tax code is applied. For example, what one taxpayer receives is income to the recipient and an expense to the payer. There are common sense exceptions such as loan proceeds and gifts but then there is the other 99% of the tax code that does not apply to most people.

 

For the taxpayer that does not own substantial property (assets or net worth), most of the tax code does not apply. In other words, this is true for most people, especially since at least 40% do not pay a dime in federal income tax to begin with. (Most of these people are tax CONSUMERS through completely bogus provisions such as the "income income credit" which is simply another welfare program in disguise.).

 

From what I know, the net effect of the tax code is to reduce the effective tax rates for those with substantial property to far less than the published rates. Many (possibly most) find that an insult. Me, I expect it and think it should happen and have absolutely no problem with it. I expect it because in a system where anyone tries to use the government to fleece their "neighbor", its inevitable that when everyone does not have an equal "voice" that those with less influence who are trying to shaft those with more will get the short end of the proverbial stick.