Indiana proposal: use gold

[killer2021]

Originally Posted by Woof

There's a tax advantage for a small business to pay employees in gold coins rather than in FRNs, so this might be meant as a way to save small businesses from going under in this economy.

Each one ounce American Eagle has a face value of $50, but is worth about $850 at this time.

An employer can pay his employee a salary of $50 per week, I suppose, and the employee would be legally getting only $50 but would be able to trade it in for $850 - I'm not sure what advantages an employer would have, because I don't know what taxes businesse have to pay. Income taxes for the employees would be negligable or absent. This has actually held up in federal court, but few know about it.

As an accounting major I can easily say you must present the intrinsic value of the items received as compensation. Paying someone 50$ in gold isn't going to work, They'll need to report 850$.

[Woof]

The intrinsic value of an FRN is probably a fraction of a cent, the cost of the paper and ink.

[Woof]

This doesn't go the way I remembered it, but it's interesting nonetheless.

Good As Gold

STORY BY MIKE ZIGLER, PHOTOS BY CODY BOOR

In a 106-degree May afternoon in 2003, government agents raided several establishments belonging to Southern Nevada businessman Robert “Bobby” Kahre. With guns drawn, officials held more than 20 handcuffed workers in the sun without water as agents collected records and other materials.

Kahre hadn’t committed a crime. He had upset the Internal Revenue Service by paying his workers based on the face value of gold and silver coins, versus the market value in the Federal Reserve system (the value of the coins in U.S. paper dollars). Even though the coins were in circulation, displayed a face value, and were regulated by Congress, the IRS’s confusing and endless tax code did not determine how to handle these gold and silver coins if used for payroll. The tax code only references dollars. It does not distinguish between coined money and paper money.

Kahre didn’t opt for the precious metal bullion system without first doing his homework. He consulted monetary experts, engaged in extensive research, and even met with congressmen. Kahre’s conclusion was simple: While the currency in the precious-metal system was greater in value than the currency in the other system, as money and a medium of exchange, the law knows no difference between the face value of both currencies.

(cut ....)

Based partially on cases that pre-dated the 1985 Gold Bullion Coin Act, the judge in the case did not allow defense attorneys to argue that Kahre was justified to pay workers based on the face value of the coins. Based on case law, the court concluded that income had to be calculated based on the FRN fair market value, rather than upon the face value.

(cut ....)

“The judge applied those old court cases, but we were still able to make the argument that Alex was not criminally liable because he believed in good faith in the use of the face value of the gold and silver coins for tax purposes,” Hansen said. “Loglia’s 100-page legal paper was great evidence for the jury of his good faith belief.”

(full article is at Joel Hansen, Robert Kahre, Alex Loglia and the IRS (http://www.liberty-watch.com/volume03/issue08/coverstory.php - broken link) )

[Woof]

Oh, looks like there was another trial in 2007 where Kahre's mom and others were aquitted of similar IRS charges!

ReviewJournal.com - News - Four-month trial ends with no convictions

Sep. 20, 2007
Copyright © Las Vegas Review-Journal

Four-month trial ends with no convictions

Federal income tax evasion case involved nine defendants

By JOAN WHITELY
REVIEW-JOURNAL
A criminal tax case alleging income tax evasion and conspiracy dissolved in federal court this week, when a jury returned zero convictions on 161 charges faced by nine defendants.
Monday's verdict "sends a strong message," said defense attorney Lisa Rasmussen, who represented Joel Axberg, a tile layer.


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.
"Yeah, that's a pretty major victory," said defense lawyer William Cohan. "If you go 0 for 160 (in baseball), they'd send you down to the minor leagues."
.... (article continued at ReviewJournal.com - News - Four-month trial ends with no convictions )