I could look this up on line, but thought I would refer to the Banjo Hangout experts
I recently talked to a friend of mine and he told me that he had been contacted by a Korean businessman (art collector), who lives in the US, about the possibility of my friend selling him an expensive art object (not a painting). The Korean gentleman's agent who was the intermediary asked my friend what the price was. He said $5,000 to which she responded ....."that is way too cheap". He then told her $5,000 face value in US $50 gold pieces (which contain one ounce of gold which at the time was $1500 an ounce). That would have been worth $150,000 in US dollars.
Certainly that is legal, but what are the tax consequences. Since the coins are US currency with a face value of $50, do you pay taxes on the $5,000 face value ....... or ........ do you pay taxes on the full $150,000 less the original price the owner paid for the art item (basis) ....... or do you out the coins in a bank vault, or your safe, and only pay taxes when the coins, one at a time or multiple coins are sold for US dollars? Ultimately the deal did not go through, but it brought up an interesting question.
Pretty sure the govt. put the kabosh on such shenanigans a long time ago, so no you can't *legally* avoid tax that way. Same with barter; the fair market value would have to be determined to assess the tax.
The market value of the coins, ie $150,000. It would be the same if you “sold” the item for a rare, collectible penny that has a market value of $150,000. You cannot claim you only sold the item for 1 cent. You sold it for a 1 cent coin worth $150,000. The tax implications as to when and under what circumstance you report the capital gain is what a tax expert will know.
Bill ....250 ...... I know there is no way around having to pay taxes on it and not suggesting there is a loop hole... I guess the real question is when it would be taxable, the moment you made the trade or when the gold was converted to cash. I'm guessing that the answer is probably when the exchange is made.
What about if you traded a widget worth $1000 for a widget worth $10,000 ...... no cash involved. I would think that the taxes would be due when the $10,000 widget sold (minus the $1000 basis) and not when the trade was made ..... almost like not paying tax on stock gains until the stock is sold.
