Loren Gatch of the University of Central Oklahoma submitted the following thoughts on last week's item about a scheme to use coins to avoid paying taxes. -Editor Your piece about Robert Kahre, the Las Vegas businessman prosecuted for tax evasion, reminded me an earlier case, whose details are as follows:
Warren C. Cordner, President and sole shareholder of the California Federal Life Insurance Co., purchased some 100,000 Swiss francs as an investment in March 1974. A year later he exchanged the since-appreciated francs for 175 U.S. Double Eagle gold coins at their current market value. In April 1975 the corporation declared a dividend to its sole shareholder, payable in the Double Eagles. The corporation reported to the IRS a distribution of merely $3,500—the face value of the Double Eagles. Moreover, the corporation claimed as a capital loss on the March 1975 exchange the difference between the face value of the Swiss francs and that of the Double Eagles! Talk about chutzpah…
Not surprisingly, the IRS took Cordner to court for underpayment of taxes. Key to Cordner’s subterfuge was his insistence that, as long as Double Eagles remain legal tender, then they are “money” for the purposes of calculating gains and losses under the tax code. The judge would have none of this: “regardless of whether technically the Double Eagle gold coins might be legal tender they are not circulating tender, or ‘money,’ within the meaning of [the law]…rather, these gold coins are ‘property (other than money)’ to be valued at their fair market value”.
[The citation is: California Federal Life Insurance Company v. Commissioner of Internal Revenue, 76 T.C. 107 (1981)]
The moral: Kahre should have done a little research on Lexis-Nexis before he tried the same trick!
Ah, the fruits of research. But smart alecks are having too much fun thinking they're smarter than everyone else to be bothered to research the facts. -Editor
To read the earlier E-Sylum article, see: LAS VEGAS BUSINESSMAN FACING JAIL FOR GOLD COIN TAX SCHEME (www.coinbooks.org/esylum_v12n23a22.html)
Wayne Homren, Editor
The Numismatic Bibliomania Society is a non-profit organization
promoting numismatic literature. See our web site at coinbooks.org.
To submit items for publication in The E-Sylum, write to the Editor
at this address: firstname.lastname@example.org
To subscribe go to: https://my.binhost.com/lists/listinfo/esylum
Copyright © 1998 - 2020 The Numismatic Bibliomania Society (NBS)
All Rights Reserved.
NBS Home Page
Contact the NBS webmaster