Question about payment over 10K in gold bullion

[golderboulder]

Lets say you have 20K worth of silver that you wanted to sell to a refinery. If you ask for the 20K payment in gold bullion bars, is that considered a cash payment or a payment that would have to be reported on a 8300 form? Is payment in gold bullion bars the same as payment in cash?

 

[Smack]

If your set up as a business then your 20k in silver is stock, so if you traded for gold you would have less material but the same amount in stock and can't be claimed as income but can be claimed as an expense if purchased in the current tax year.

 

[golderboulder]

Thanks for the answer but I don't think thats the answer I was looking for. If someone is paid in gold bullion bars worth $20,000.00, is an IRS from 8300 needed or not? Is 20k in bullion bars considered a "cash payment"?

 

[MMFJ]

In looking for an 'authoritative' answer, I found....
http://www.treasury.gov/resource-center/faqs/currency/pages/legal-tender.aspx

While it is not a direct answer, it is interesting.

Other resources are certainly as vague on the subject
http://en.wikipedia.org/wiki/Legal_tender
as well they should be, since "legal" can vary from state to state, and "tender" is also a topic unto itself.

More directly to the point, it seems (in your 'underlying question') you are looking for a way around 'the system'. You, of course, are not the first one with such an idea, and the hundreds of thousands that came before with such a 'scheme' have already been viewed and analyzed by 'big brother' - or, they have found other methods, once they reformed the question.

What you are asking to do is be "paid" in gold (by your use of the word 'payment') - which is not a legal tender in the US (though is now legal in some states - which are separate from the federal law [if you do not understand this, you should do some research....]).

While you perhaps could 'exchange' the silver for gold (as you are asking for a similar value amount, with no profit or loss), it would be considered a BARTER transaction, which is governed by different laws (much like if you had asked the question "Can I be paid 12 chickens for my 1 horse?" or something.....). Again, research barter laws in your state, as well as federal laws. One of my relatives does an extensive barter business - I've seen "cash" transactions from them on very few occasions over the last 25+ years, so it is certainly possible.

Note that such a transaction (i.e., barter) would also have to be standard policy for the other person/business, which also must keep track of such barter transactions. Most large businesses in the US (i.e., the 'refinery' you asked about) do not make such transactions (primarily, from what I have seen, it is because the 'bean counters' don't know how to handle them), however, they would make two transactions for you (converting everything to legal tender in between). There was a 'Pawn Stars' episode where a man wanted to sell his car for gold (couldn't find the video online, but a search for "pawn stars man sells car for gold video" brought many links....) - they bought the car for cash, made the man touch the cash (transaction complete), then sold him gold for the value. The nice part about buying gold in Nevada is that if you buy bullion, there is (currently) no tax, so you do get a lot more gold for the cash.

Smack also gave you a good, 'creative' answer, though, in this instance, the transaction would be treated as securities, which are legal tender, treated under another set of laws, and could potentially create a taxable event (this is a term you should understand as well) - ask your accountant about "taxable events".

What I believe you are looking for is a way to eliminate and/or avoid these - lots of creative ways, but you have to be careful, understand the laws and rules and also (and very importantly) "live the life" when you choose to go that route (this goes into great depth, even so far as to how you word your statements/questions ==> when you use "payment" and "bullion" in the same sentence, that's a red flag for any auditor!).

So, like most of the theoretical questions on this forum, there is no direct answer to your question. However, there are ways to create what you are looking for (from what I believe to be your 'underlying question'), you just need to be more direct in what you are asking.

Most likely, once you have 20K in silver you are looking to sell, you will have studied such options more thoroughly and will have a decent understanding of the ways, laws and methods and be ready to discuss these options more directly.

 

[NobleMetalWorks]

Thanks for the answer but I don't think thats the answer I was looking for. If someone is paid in gold bullion bars worth $20,000.00, is an IRS from 8300 needed or not? Is 20k in bullion bars considered a "cash payment"?

What you are talking about is called "Bartering" where the exchange can be goods, or services.

Check this link for more information:

http://www.irs.gov/taxtopics/tc420.html

Basically it works like this. Any trade or barter has to be reported to the IRS, if for example you trade your silver for gold, and the price of gold goes down you can claim a loss on your taxes dependent upon the monetary value at the time of the trade, compared to the value when you file your taxes. If you are filing quarterly, then your next quarterly taxes the gold would then be considered an asset, and not gain and whatever taxes that might be valued against your business assets would apply.

Hope that helps a little.

Scott

 

[Jimmy]

You are required to report ALL income regardless of source.

 

[srlaulis]

Uncle Sam doesn't care what form it is in.

 

[Jimmy]

You are better off reporting it anyhow. If for what ever reason it gets siezed, then you have proof of ownership. If it is a straight trade then you state that on your return. No tax owed. Tax is owed on profit. Not income.
But check with a tax professional first. Things change every day.

 

[remerson]

Who is the Moneychanger? Read this @rtical .Its a very interesting one for thought. - Franklin Sanders, The Moneychanger
The-MoneyChanger.com

 

[niteliteone]

If the transaction, including "Barter", is completed within the USA any amount over $999.99 ""Must"" be reported to the IRS by the business conducting the transaction. Under rules of the "Patriot Act". Serious crime if not reported.
This IS part of the new Obamacare law as well. The original amount was set at $600.00 but was raised to $10,000 to comply with the Patriot Act while awaiting the Obamacare legislation to be enacted. Then it will return to the $600 level.
If you are going to do it hurry. The lower limit will come back some time this year

 

[MMFJ]

Who is the Moneychanger? Read this @rtical .Its a very interesting one for thought. - Franklin Sanders, The Moneychanger
The-MoneyChanger.com

I like his commentary - pretty funny guy (with a lot of good info)

 

[Alentia]

Technically if you got paid in Gold Eagles or Maple Leafs at a face value of $50, lets say in quantity of 16 coins, being legal tender, the total payment should be considered as $800.

 

[Lou]

Yeah, technically. It also doesn't work that way or everyone would be doing it. I heard of people trying it, but I think they ended up not too well.

EDIT:
Guess not...
http://www.lewrockwell.com/2011/12/kevin-brekke/legal-tender-gold-face-value-or-intrinsicvalue/

 

[FrugalRefiner]

Lou,

Unless I've misinterpreted the link you provided, it seems you were right in the first place. While the article seems to support the face value argument at first, it later reports:

On September 17, 2007, and to the disbelief of the IRS and DOJ, the case ended with zero convictions. In post-trial statements from jurors, many said that the government had failed to prove that the defendants had acted to intentionally violate tax laws.

But the champagne fizz and euphoria did not last long. In May 2009, Kahre once again stood before a jury of his peers in a second trial. Three months later, on August 14, 2009, Kahre and three other defendants were found guilty of several felony tax crimes, including conspiracy to defraud the IRS and tax evasion.

Without pursuing a weekend of reading, it seems Kahre was one of those for whom it ended up not too well.

Dave

 

[chlaurite]

Simple answer: Don't let yourself get that much on hand at a time. Sell it in much smaller lots over time, rather than in quantities that not only trigger a 1099 but possibly a CTR to boot.

You could also look for someone to privately trade it with, which you technically should report, but I'd call it a safe bet that anyone trading you unmarked gold for unmarked silver most likely won't rat you out to the tax man. :lol:

Now, if you somehow recover that much a week, well, I don't know what to tell you, other than don't screw up a good thing by playing games with the IRS.

 

[Lou]

Simplest answer: pay your taxes. Pay now or pay later.

 

[chlaurite]

Simplest answer: pay your taxes. Pay now or pay later.

I took the intent of the question not as a way to dodge taxes, but whether trading one non-financial instrument for another would count as income for tax purposes.

In the US, that most likely has "yes" as the answer, even though he would have exactly the same total value after the trade as before.

That said, since PMs have their own special (usually obnoxious, but not in this case) classification for tax purposes, he would (in theory) at least not get screwed into paying taxes twice on the silver/gold in question - The barter transaction would trigger a need to report the value of the silver as income, but that would then qualify as his basis cost for the gold he received in exchange. He would then only need to pay further taxes on the increase in value of that gold (even if he exchanged it for US cash) after that point.

That said, good luck explaining that to an IRS auditor unused to dealing in anything other than dollars and cents, of which he will have technically paid zero towards the gold.

 

[Alentia]

I think the initial question was about reporting form. Technically getting away with Buffalos or Eagles should be non problematic from legal perspective and transaction should not be reported unless there is special provision in Patriot Act.

It is when the coin is sold, claimed to be at face value, let say for $1400, than taxes from capital gains are due from $1,3500 to the IRS.