Man buys $25000 car with $1000 in quarters

[moparal7]

http://www.businessinsider.com/one-very ... ns-2012-10

[brian0918]

Isn't there a substantial capital gains tax that has to be paid for converting those quarters into $25000? If so, who would pay the tax - the guy who originally owned the quarters, or the person who sold them to the coin shop?

[barrytrot]

The title of the url: "one-very-strange-use-for-silver-coins"

Isn't it amazing what people find strange? Using silver as money is now "strange". What should seem strange as using something worthless as money, now that's strange!

[mbailey1234]

I opened up this debate on here a while back and actually called the IRS (I used the name Ray Long )to ask about what makes a coin "legal tender" and if I paid someone in $1 ASE's how much do I send them a W-2 for, etc. etc. but they didn't like where I was going with it (obviously). One lady actually said you don't have to report it if you don't pay them at least $600 (I think was the number). I never did get what I felt was a straight answer from them.

Anyone got any job openings? I only want $1 per hour for my time. I think I could spare about 599 hours next year...

[barrytrot]

In Vegas the casinos tried to reduce tax liability by paying in $1 Morgans when they had a value of several dollars.

The government said they would be taxed at "fair market value" rather than face value.

The same would apply here, I'm sure.

The $600 limit is the limit on the need to 1099 someone for something in general. And again would be based on "fair market value" rather than face value.

[IdahoCopper]

I spent $112 in halves and quarters to buy a used Mercedes last Friday. We'll see how it goes with Idaho DMV later this week.

[brian0918]

I spent $112 in halves and quarters to buy a used Mercedes last Friday. We'll see how it goes with Idaho DMV later this week.

I don't really think the DMV is what you should be worried about, so much as the IRS - maybe not you, but the person who is planning to sell all those coins for fair market value.

[barrytrot]

I spent $112 in halves and quarters to buy a used Mercedes last Friday. We'll see how it goes with Idaho DMV later this week.

My goodness how used was that vehicle? Wheels and a steering wheel? $2,800 for a Mercedes is quite cheap

[John_doe]

good article, with the exception of one part. bernanke would never drop money out of helicopters to average people, he drops it out of helicopters to goldman sachs.

[ZenOps]

It does create a tax problem.

If I accept a pre-81 Canadian nickel as a value of 5 cents (which everyone currently does), if and when it exceeds 23 cents for an extended period of time - does that mean you use the higher value?

If a Canadian nickel hit 20x face or $1, would people still trade it between each other at face value, or would there be some sort of law that would require it to be declared at metal value? Would people just assume free market principles would override "fiat conversion" and that two pounds of copper will always buy a chicken, and an ounce of nickel buy a litre of gasoline?

[scyther]

It does create a tax problem.

If I accept a pre-81 Canadian nickel as a value of 5 cents (which everyone currently does), if and when it exceeds 23 cents for an extended period of time - does that mean you use the higher value?

If a Canadian nickel hit 20x face or $1, would people still trade it between each other at face value, or would there be some sort of law that would require it to be declared at metal value? Would people just assume free market principles would override "fiat conversion" and that two pounds of copper will always buy a chicken, and an ounce of nickel buy a litre of gasoline?

The fact that silver is exremely rare in circulation might have somehing to do with it. If nickel is still circulating, it probably would be counted at face value. Maybe.

[ZenOps]

I dunno.

If you look at gas stations, many have a "cash paper" price and a "credit card price", which is sometimes 20 cents higher. I can imagine it would be not very difficult at all to have a "silver" price, and/or a "nickel" price either loosely based on "cash paper" price or even in ounces.

An electronic US dollar is worth less than a paper dollar without doubt.

Its worth hammering in that each US citizen technically only has $8 worth of nickels (built up over the last 150 years) which may get them two gallons of gas. Also, $9 worth of zinc and copper pennies which would be another two gallons.

[thepennyfund]

Great Article, I've read it, and it makes a lot of sense to me.

[IdahoCopper]

I spent $112 in halves and quarters to buy a used Mercedes last Friday. We'll see how it goes with Idaho DMV later this week.

My goodness how used was that vehicle? Wheels and a steering wheel? $2,800 for a Mercedes is quite cheap

Its a 1987 MB 190D. Its a bit of a fixer-upper. It has the 5 cylinder 2.5 liter turbodiesel that will go over 400,000 miles. I just finished driving it home. I bought it at the airport for Tri-Cities, Tenn. Then drove it 200 miles to my buddy in Tiger, GA. That was to make sure it didn't crap out in the first 100 miles.

From Tiger I drove to Princeton, Ill., about 13 hours at 80 mph. The next day I drove on I-80 to Sidney, Neb. That was another 13 hours or so at 80 mph.

Today I finished the trip to Twin Falls, Ida. in 10 hours at 85 mph. Total test drive was around 2400 miles at an average road speed exceeding 75 mph.

I checked my figures, it cost $118, not $112.

The odo failed, the tach and cruise control failed, the gas gauge stayed full for one tank, causing me to run out of fuel in Omaha. The heater did not work, the left front blinker lens fell off somewhere, the heater fan screams from bad bearings. But the engine and tranny worked perfectly, giving 30 mpg at high speed. Driving it around town, after a few tweaks, it will give nearly 40 mpg.

[rsk1963]

I spent $112 in halves and quarters to buy a used Mercedes last Friday. We'll see how it goes with Idaho DMV later this week.

My goodness how used was that vehicle? Wheels and a steering wheel? $2,800 for a Mercedes is quite cheap

Its a 1987 MB 190D. Its a bit of a fixer-upper. It has the 5 cylinder 2.5 liter turbodiesel that will go over 400,000 miles. I just finished driving it home. I bought it at the airport for Tri-Cities, Tenn. Then drove it 200 miles to my buddy in Tiger, GA. That was to make sure it didn't crap out in the first 100 miles.

From Tiger I drove to Princeton, Ill., about 13 hours at 80 mph. The next day I drove on I-80 to Sidney, Neb. That was another 13 hours or so at 80 mph.

Today I finished the trip to Twin Falls, Ida. in 10 hours at 85 mph. Total test drive was around 2400 miles at an average road speed exceeding 75 mph.

I checked my figures, it cost $118, not $112.

The odo failed, the tach and cruise control failed, the gas gauge stayed full for one tank, causing me to run out of fuel in Omaha. The heater did not work, the left front blinker lens fell off somewhere, the heater fan screams from bad bearings. But the engine and tranny worked perfectly, giving 30 mpg at high speed. Driving it around town, after a few tweaks, it will give nearly 40 mpg.

You thought about converting into a biodiesel? had a friend do that with an 83 turbo (i believe), makes his own fuel pays 1.25 or so a gal.

[Sheikh_yer_Bu'Tay]

This is a terrific article! I agree with the author wholeheartedly. US coin still in circulation (90% coin) should NOT be taxed at fair market value. That is a direct contradiction to the US Constitution. Of course, I am not going to run to the IRS and get into a pissin' match about it! They win, every time.

This is a real quandary for coin lovers. Gold and Silver hounds have already lost that battle with the IRS. Guess what? Copper penny "bullion" hoarders will be next.

[IdahoCopper]

You thought about converting into a biodiesel? had a friend do that with an 83 turbo (i believe), makes his own fuel pays 1.25 or so a gal.

I've considered that and looked into it. Sometimes the injector pump seals are not up to resisting 100% biodiesel. You learn that about your car when the expensive-to-rebuild injector pump leaks and fails.

Once you start making biodiesel, your pickup route for getting the used cooking oil needs to be maintained, or your sources will find someone else to take away their used fry-oil.

And it takes time to make it, time that can be used for other things, like long vacations.

I'll stick with petro for now.

[IdahoCopper]

I registered the car with Idaho DMV today. They accepted my purchase price of $118.00 and only charged me $7.08 sales tax on that amount.

[brian0918]

So what is that, a savings of $159? Nice!

But now who is responsible for capital gains tax, if anyone?

[Lemon Thrower]

as for the original article, what the guy is doing is basically trading $1000 FV of silver coins to the dealer for the car. the "clever" part is that he doesn't sell the coins, he has the dealer sell the coins.

but what is clear is that he is realizing $24,000 differential in value by trading the coins for the car. While this may not be a sale under a narrow definition of that term, it is the realization of of $24,000 in taxable income according to how the IRS interprets Section 61 of the Internal Revenue Code. So in my view its really not all that "clever."

i buy pms so i can sleep at night; cheating the IRS frustrates my goal of being able to sleep at night.

I think the IRS position is wrong and even unconstitutional based on how the founders defined a "dollar," but i'm not willing to fight the IRS over it.

[IdahoCopper]

I avoid discussion of the income tax and the IRS. I think it is a private matter between the individual and the government.

[Engineer]

as for the original article, what the guy is doing is basically trading $1000 FV of silver coins to the dealer for the car. the "clever" part is that he doesn't sell the coins, he has the dealer sell the coins.

but what is clear is that he is realizing $24,000 differential in value by trading the coins for the car. While this may not be a sale under a narrow definition of that term, it is the realization of of $24,000 in taxable income according to how the IRS interprets Section 61 of the Internal Revenue Code. So in my view its really not all that "clever."

i buy pms so i can sleep at night; cheating the IRS frustrates my goal of being able to sleep at night.

I think the IRS position is wrong and even unconstitutional based on how the founders defined a "dollar," but i'm not willing to fight the IRS over it.

Great post and many good points.

One point to note, however, is you wouldn't necessarily need to use the full retail "ask" price to determine your tax liability. It would pay to negotiate the lowest cash price possible to lower your capital gain exposure.

[Sheikh_yer_Bu'Tay]

as for the original article, what the guy is doing is basically trading $1000 FV of silver coins to the dealer for the car. the "clever" part is that he doesn't sell the coins, he has the dealer sell the coins.

but what is clear is that he is realizing $24,000 differential in value by trading the coins for the car. While this may not be a sale under a narrow definition of that term, it is the realization of of $24,000 in taxable income according to how the IRS interprets Section 61 of the Internal Revenue Code. So in my view its really not all that "clever."

i buy pms so i can sleep at night; cheating the IRS frustrates my goal of being able to sleep at night.

I think the IRS position is wrong and even unconstitutional based on how the founders defined a "dollar," but i'm not willing to fight the IRS over it.

I know I am a little slow, so help me out. Given the extreme price fluctuation of 90% silver coin in the past 12 years, it's true "value" is very subjective. If the IRS now sees 90% as a commodity, not money, then wasn't the exchange of 90% silver for the car a zero sum gain? Value for value was exchanged. How is that taxable?

I don't know the IRS rules for bartering. If 90% is a commodity and the car is a commodity, too. This is a barter exchange, is it not?

[Engineer]

I don't know the IRS rules for bartering. If 90% is a commodity and the car is a commodity, too. This is a barter exchange, is it not?

The IRS would consider 90% to be "collectible" coins, and therefore subject to a high capital gains tax. In my mind, and yours, both are commodities, but nobody has ever accused the IRS of being fair.

If you wealth isn't tied up in depreciating assets or rigged markets, they'll make you pay.

[Lemon Thrower]

as for the original article, what the guy is doing is basically trading $1000 FV of silver coins to the dealer for the car. the "clever" part is that he doesn't sell the coins, he has the dealer sell the coins.

but what is clear is that he is realizing $24,000 differential in value by trading the coins for the car. While this may not be a sale under a narrow definition of that term, it is the realization of of $24,000 in taxable income according to how the IRS interprets Section 61 of the Internal Revenue Code. So in my view its really not all that "clever."

i buy pms so i can sleep at night; cheating the IRS frustrates my goal of being able to sleep at night.

I think the IRS position is wrong and even unconstitutional based on how the founders defined a "dollar," but i'm not willing to fight the IRS over it.

I know I am a little slow, so help me out. Given the extreme price fluctuation of 90% silver coin in the past 12 years, it's true "value" is very subjective. If the IRS now sees 90% as a commodity, not money, then wasn't the exchange of 90% silver for the car a zero sum gain? Value for value was exchanged. How is that taxable?

I don't know the IRS rules for bartering. If 90% is a commodity and the car is a commodity, too. This is a barter exchange, is it not?

you get a $25,000 car for $1000 in coin; IRS would say you have taxable income of $24,000. the only thing that is debatable is the the value of the car, but on the facts above its difficult to argue that it is more than a few hundred bucks different than $25,000.