There's an outfit in the mountains of NC and Tenn (and for all I know, other places) that is promoting what are known as Liberty Dollars. You can obtain Liberty Dollars from the company in exchange for US Currency or you can obtain them by giving your goods or services to people who hold them. A Liberty Dollar can be either a relatively pure silver coin or possibly ingot or a piece of paper that can be at any time exchanged for the silver. I'm not sure if the outfit deals in gold. It will surprise no one that the rate of exchange of US Currency for Liberty Dollars fluctuates with and is slightly higher than the price of silver bullion. The company is trying to get people to prefer Liberty Dollars to US dollars and I believe that they claim that they are out to put the US Mint either back on the silver and gold standard or out of business. I had a strong sense that the man who was explaining all this to a crowd of people when I encountered him is slightly deranged. I did notice that neither he in his speaking nor any of his literature explained how you report Liberty Dollars for tax purposes, When I asked that question, he seemed startled for a moment but resumed his spiel. I would still like to know. The only thing I would know to do would be to record the dollar equivalent on the date of the transaction. However, would I use the price of silver bullion or their rate? I don't know whether they will trade Liberty Dollars for US Dollars. - does that matter? Also, if the company goes out of business and leaves someone holding paper Liberty Dollars, does that person have a bad debt?
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Until they go out of business
I'd be inclined to treat the transactions just like any other barter transaction for tax purposes.
Here's a link to some info on the subject, which may or may not be totally reliable:
Last edited by JohnH; 05-17-2007, 05:59 AM."The only function of economic forecasting is to make astrology look respectful" - John Kenneth Galbraith -
Blame it on digital cameras
Since no one uses film anymore, they have to find something to do with all that silver.
From the U.S. Mint website ---
The National Organization for the Repeal of the Federal Reserve Act and the Internal Revenue Code (NORFED) is producing and marketing gold and silver medallions that NORFED calls "Liberty Dollars." The United States Mint and the United States Department of Justice have received inquiries regarding the legality of these so-called "Liberty Dollar" medallions. The United States Mint urges consumers who are considering the purchase or use of these items to be aware that they are not genuine United States Mint bullion coins and they are not legal tender. These medallions are privately produced products and are not backed by, nor affiliated in any way with, the United States Government. Moreover, prosecutors with the Department of Justice have determined that the use of these gold and silver NORFED "Liberty Dollar" medallions as circulating money is a Federal crime.
Consumers may find advertisements for these medallions confusing and should take note of several issues related to them.
First, the advertisements refer to the product as "real money" and "currency." These medallions might look like real money because they—
Bear the inscriptions, "Liberty," "Dollars," "Trust in God" (similar to "In God We Trust"), and "USA" (similar to "United States of America"), and an inscription purporting to denote the year of production; and
Depict images that are similar to United States coins, such as the torch on the reverses of the current dime coin, 1986 Statute of Liberty commemorative silver dollar and 1993 Bill of Rights commemorative half-dollar, and the Liberty Head designs on the obverses of United States gold coins from the mid-1800s to the early 1900s.
However, despite their misleading appearance, NORFED "Liberty Dollar" medallions are not genuine United States Mint coins and they are not legal tender.
Second, the advertisements confusingly refer to NORFED "Liberty Dollar" medallions as "legal" and "constitutional." However, under the Constitution ( Article I, section 8, clause 5 ), Congress has the exclusive power to coin money of the United States and to regulate its value. By statute ( 31 U.S.C. § 5112(a) ), Congress specifies the coins that the Secretary of the Treasury is authorized to mint and issue and requires the Secretary to carry out these duties at the United States Mint (31 U.S.C. § 5131). Accordingly, the United States Mint is the only entity in the United States with the lawful authority to mint and issue legal tender United States coins.
Under 18 U.S.C. § 486, it is a Federal crime to utter or pass, or attempt to utter or pass, any coins of gold or silver intended for use as current money except as authorized by law. According to the NORFED website, "Liberty merchants" are encouraged to accept NORFED "Liberty Dollar" medallions and offer them as change in sales transactions of merchandise or services. Further, NORFED tells "Liberty associates" that they can earn money by obtaining NORFED "Liberty Dollar" medallions at a discount and then can "spend [them] into circulation." Therefore, NORFED’s "Liberty Dollar" medallions are specifically intended to be used as current money in order to limit reliance on, and to compete with the circulating coinage of the United States. Consequently, prosecutors with the United States Department of Justice have concluded that the use of NORFED’s "Liberty Dollar" medallions violates 18 U.S.C. § 486.
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I will tell you what! If I ever have a client try to pay me with this mularkey I will promptly put my size 12 boot where the sun has not shined in a very long time!
And that's all I have to say about that!
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No need to worry
Just do what all the people already using barter exchanges do - inflate your prices."The only function of economic forecasting is to make astrology look respectful" - John Kenneth GalbraithComment
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To answer the tax question, since “Liberty Dollars” are not legal tender, then they are treated like any other capital asset. Gain or loss on exchanging “Liberty Dollars” for any other goods or services is based on your cost basis in the “Liberty Dollars” compared to the FMV of the goods or services you received. If you accept “Liberty Dollars” in exchange for your own personal services, the exchange is a barter exchange with the FMV of the services performed being taxable as income received, which in turn becomes the new cost basis of the “Liberty Dollars” you received in exchange for such services.Comment
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Wonder how the IRS rates ones tax return for audit when they see the sale of "Liberty Dollars" on 1040 Sch-D? I'll bet it doesn't take much to justify an IRS audit.Originally posted by Bees Knees View PostComment
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If
I were to accept Liberty Dollars I would hoard them against the unlikely but possible breakdown of the US monetary system and Federal Government.
If I were to trade Liberty Dollars for goods or services while the US Monetary System and Federal Government were operational I think I would call them silver bullion.
By the way, according to a New York Times article from last October, the Southern Poverty Law Center considers the outfit that produces Liberty Dollars to be right-wing hate monger types. I have asked the SPLC for comment but have not heard back from them.Comment
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I saw an advertisement from the company that
promotes the Liberty dollar looking for contributions to their legal defense fund. They wanted the contributions in federal reserve notes.In other words, a democratic government is the only one in which those who vote for a tax can escape the obligation to pay it.
Alexis de TocquevilleComment
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Dilemma
If the US Monetary System & Federal government break down, Liberty Dollars won't matter. Neither will gold, silver, copper, platimum, etc.
The only metal that will be a valid medium of exchange will be lead."The only function of economic forecasting is to make astrology look respectful" - John Kenneth GalbraithComment
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In case you hadn't noticed . . .
The U.S. monetary system and federal government is already substantially incapacitated.Comment
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So
I assume you are implying that it may outlive its reserves..."The only function of economic forecasting is to make astrology look respectful" - John Kenneth GalbraithComment
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