ZH: One Very Strange Use For Silver Coins

Clawhammer said:
Just say thatguy wanted to buy my house (lets just assume it was an appreciating asset :P ).. that has been valued for rates purposes at $X...which would attract a sales tax of $15,000.

Why can't I discount the house to $1...and accept a balance of payment in ..ohh...I dunnoh a few kilos of gold?
All the Govt is interested in is the Sales Tax component in $ terms.

thatguy still pays the $15,000 sales tax the govt (somehow) is entitled to.... no one misses out.

thatguy's metal never gets changed into fiat...what's wrong with that?
Click to expand...

youd only want to do that with an investment house as your primary residence does not attract CGT

I dont know how it would work here if it was a investment property where CGT was due, try it and let us know :D

I would also be interested in knowig if you coulg purchase a 1kg gold coin as a business as an investment / asset and then depreciate / write off the loss down to the face value of the coin to avoid some tax liability.
 
I think the real crux of the issue is the laws of the locality of the transaction take place.

For many years when I lived in the state of Pennsylvania, it was common practice and perfectly legal to sell a used car for a $1 to avoid paying 6% sales tax on the transaction, especially older cars that had a market value of less than $5,000. I traded more than a few vehicles for a dollar plus some other commodity. The tax only applied to the value of money used in the transaction. I am sure it has changed in recent times.

Not sure of the legalities of the transaction of the article, but I am guessing it was actually legal because someone knew a few loopholes that only Senators and Congressmen are supposed to know about.
 
This post reminds me about this tax case when I was researching a similar topic,

Paid in sovereigns
The gold sovereign is still legal tender for 1. Although you can legally pay a debt of 1 with a gold sovereign, you would be daft to do so as they are worth much more. However this triggered an idea in the mind of Mr Chandler. He was a director of St James Plates Ltd, which made plates for the printing industry and is still in business.
He employed Philip Jenkins at a wage of between 29.50 and 65.02 a week in 1976/77. They agreed that they would reduce his wage to between 1 and 4 a week but pay him in gold sovereigns. Because his wages were so much lower, they fell below the tax threshold, so no tax was paid. Jenkins then sold the sovereigns and got an amount that equalled his normal wages.
It was argued that the sale of the sovereigns was not taxable as it was a capital gain and not income, and so qualified for another allowance for capital gains tax. Inland Revenue said that the tax was due on the real value of the sovereigns and not their legal tender value.
The High Court agreed. Under tax law, the profits of employment are taxable as wages. This included profits from selling gold coins in which the wages have been paid.
So the case was dismissed with costs. Mr Jenkins had to pay a statutory fee to the court. He gave them a sovereign.
Jenkins v Horn. Ch D [1970] 52 TC 591.
 
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