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Only if you make real money do you have to pay.

Not necessarily true. The IRS may consider it income if it has a market value which Bitcoins do. Whether the asset is tangible or intangible is not relevant. You could receive an intangible asset like a copyright and in some circumstances that could be considered income.

Right now the numbers are small enough that the IRS doesn't much care but technically speaking mining bitcoins IS income and has to be declared on your 1040. Line 21 if nowhere else. In fact you have to declare income from any source, even illegal drug sales which is why Line 21 exists.

Selling stuff that does not relate to your exempt purpose is considered unrelated business income and subject to tax (in the U.S.)

http://www.irs.gov/Charities-&-Non-Profits/Unrelated-Business-Income-Defined

The War on the IRS

(The Bush-Obama administration's castration of the IRS.)

What was one of George W. Bush's first actions after he stole the 2000 presidential election (other than snarfing down a celebratory cheeseburger pizza)?

Bush shut down the "high roller" division in the IRS; that section which garnered the greatest recovered tax revenues by auditing the richest individuals and the richest corporations --- and redirected the IRS against much lower-income working Americans!

Now, this information about several IRS agents targeting the Tea Party and affiliated groups isn't breaking news --- they've been sitting on this for quite some time!

So why the sudden newsy firestorm now?

On the very same day this bullcrap spewed forth, on the IRS web site (please see special links below) an international, joint investigation was announced. Their target: trillions of untaxed dollars sitting in offshore tax havens (i.e., offshore financial centers, etc.). This investigation will be undertaken by the IRS, the UK and Australia, thanks to leaked data from these tax havens.

Now this is the big story which they are misdirecting our attention away from, the one not being covered by the CorporateMedia today!

Instead, we are treated to "breaking news" of the moronic type.

Now, I'm no fan of the IRS, and we all should realize by this time that the tax code was written by the super-rich to benefit the super-rich (one need only read IRS Rule 401(a)(5) which essentially states that structured inequality, that is, screw the workers, is legally acceptable to them to comprehend that), so this is the first real egalitarian action by the IRS in many decades, but the CorporateMedia and the Bush-Obama Administration wishes to kill it!

Support the IRS in their investigation and tell the gov't to ignore this bullcrap!

Special Links:

http://www.online-accounting-degrees.net/tax-havens/

http://www.icij.org/blog/2013/05/authorities-announce-tax-haven-investigation

http://www.irs.gov/uac/Newsroom/IRS,-Australia-and-United-Kingdom-Engaged-in-Cooperative-Effort-to-Combat-Offshore-Tax-Evasion

http://wallstreetonparade.com/2013/05/it%E2%80%99s-high-time-the-irs-investigates-the-funding-of-the-tea-party/

Reading sources:

Treasure Islands, by Nicholas Shaxson

Offshore, by William Brittain-Catlin

However, it is easy enough to understand a reluctance to accept the casual and uncontrolled production of murder weapons.

Roughly 6% of murders are committed with fists and feet. Not only are such weapons produced in an uncontrolled manner, we even give out tax breaks to those that produce them.

This is what passes for journalism?

Australian and British citizens as well as families and associates of long-time despots, Wall Street swindlers, Eastern European and Indonesian billionaires, Russian corporate executives, international arms dealers and a sham-director-fronted company that the European Union has labeled as a cog in Iran’s nuclear-development program.

Way to be fair, objective, and unbiased.

Hold on a second. According to the IRS:

The three nations have each acquired a substantial amount of data revealing extensive use of such entities organized in a number of jurisdictions including Singapore, the British Virgin Islands, Cayman Islands and the Cook Islands. The data contains both the identities of the individual owners of these entities, as well as the advisors who assisted in establishing the entity structure.

It's likely that some folks who fit that description are, in fact, detailed in the data mysteriously "received" by the ICIJ, the US, the UK and Australia. Since you don't have access to the data, you can't really say one way or the other whether or not there were "...Wall Street swindlers, Eastern European and Indonesian billionaires, Russian corporate executives, international arms dealers..."

Why try to discredit the reporting when you have no evidence that it's erroneous? In fact, it sounds pretty plausible to me. That begs the question "What's your angle?" Why do you care? Inquiring minds want to know.

Posting anonymously as I'm moderating on this thread.

A correction. I should have quoted the 501(c)(4) rules ...

http://www.irs.gov/Charities-&-Non-Profits/Other-Non-Profits/Social-Welfare-Organizations
"The promotion of social welfare does not include direct or indirect participation or intervention in political campaigns on behalf of or in opposition to any candidate for public office. However, a section 501(c)(4) social welfare organization may engage in some political activities, so long as that is not its primary activity. However, any expenditure it makes for political activities may be subject to tax under section 527(f)."

Some of the organizations in question may really qualify for tax-exempt status under current law, but any such organization with clear political ties should expect to be scrutinized, and the IRS has the authority to do so. If an organization doesn't want that, then they can just pay their taxes like the rest of us.

The IRS is entirely within their right to highly scrutinize requests for tax-exempt status. They just need to do so without political (or racial, gender, etc) bias. The tax rules against political groups getting 501(c)(3) status are already in place ...

http://www.irs.gov/Charities-&-Non-Profits/Charitable-Organizations/Exemption-Requirements-Section-501(c)(3)-Organizations
"it may not be an action organization, i.e., it may not attempt to influence legislation as a substantial part of its activities and it may not participate in any campaign activity for or against political candidates"

The IRS just needs to to their job and enforce it-- FOR EVERYONE.

You didn't read the article. By definition, the IRS couldn't have gone after their political rivals because political groups are not allowed to have non-profit status. That's the entire cause of this kerfuffle. The law forbids non-profits from having a political goal.

Except, that's simply not correct. A political organization is even a specifically mentioned type of non-profit on the IRS's web site (usually referred to as a "527" organization): http://www.irs.gov/Charities-&-Non-Profits/Political-Organizations.

The activities that qualify for the exemption are:

The exempt function of a political organization is influencing or attempting to influence the selection, nomination, election or appointment of an individual to a federal, state, or local public office or office in a political organization. The election of Presidential or Vice-Presidential electors is also part of the exempt function of a political organization. Activities that directly or indirectly relate to or support an exempt function are exempt function activities.

Mike, you can engage in political activity and still be a 501c3 or 4, but it can't be your primary activity.

If only those two were the only ways of being tax exempt. A political organization can be tax exempt if its primary activity is a tax exempt activity. Here:

The exempt function of a political organization is influencing or attempting to influence the selection, nomination, election or appointment of an individual to a federal, state, or local public office or office in a political organization. The election of Presidential or Vice-Presidential electors is also part of the exempt function of a political organization. Activities that directly or indirectly relate to or support an exempt function are exempt function activities.

I'd say the Tea Party meets that requirement.

An efficiently run one.

Ponzi schemes are by nature efficient. All you have to do is take people's money and pay out fake dividends until the bubble pops. It's not that hard. How is the SSA more efficient at it than private enterprise?

Yes, those jackbooted thugs are more efficient than the private sector thugs. You are apparently agreeing that they are more efficient, then arguing about why. If so, you are very disagreeable in your agreement.

I guess they're efficient at that one thing. "Effective," might be a better word. But that's not the only thing they do. In fact, according to the IRS's own website, they reorganized themselves in 1998 to be more like a private enterprise. So even if the IRS is a bastion of government efficiency, as you claim, it is because they are aping the private sector. That's not much of an endorsement of the efficiency of government operations.

2. Transfer your IP assets (patents, copyrights, trademarks) to this corporation.

If the IRS believes you are selling assets to an external entity at well below market value, then you will owe taxes based on what the IRS believes the market value to be.

Simple solution used by many companies: Locate your R&D labs and creative workers outside the USA, so there is no transfer of IP from IRS jurisdiction. American corporate tax policy has been designed to collect almost zero revenue, while simultaneously discouraging the creation of jobs for Americans, thus resulting in less revenue from payroll and personal income tax as well. Is it any wonder that we are broke?

If you have IP licensing revenue from the US you will pay (at least) US withholding taxes on it, even if the corporation that owns it is not US - see IRS form 1042s (search for 'royalties').

The real problem is that (unlike the 'golden age' of the 1960s) many successful corporations whose holding company is registered in the US now make the great majority of their revenue overseas, yet many Americans still expect them to have the majority of their employees and tax payments in the US.

1. Set up a shell corporation in a tax haven (e.g. The Cayman Islands).
2. Transfer your IP assets (patents, copyrights, trademarks) to this corporation.
3. Pay a license fee to this corporation for the use of that IP. Make sure the amount of the fee matches your profits.
4. Pay no income tax, because you have no profit.
5. Borrow the money back from the shell corp. Loans are not considered income and are not taxable.
6. Life a nice life while going deeper and deeper into debt to yourself .
7. Eventually you die, and all the debts are cancelled.

Of course, this is not tax evasion because it is perfectly legal.

This is not true. See IRS Form 5471. The rules are exceptionally complex, even by the standards of US tax law, but in general a US person cannot control a foreign investment corporation (such as your Cayman shell corp) and not pay tax on its income, because its income is US income (income from licensing the IP in the US). Loans from a controlled company back into the US to the controller can be considered distributions of income in some circumstances, such as these.

Note - what Google et al are doing in its Irish/Bermuda company is accumulating foreign (non-US) income from intellectual property. This is different.

oops.

http://triblive.com/x/pittsburghtrib/news/pittsburgh/s_720838.html

http://www.irs.gov/irm/part5/irm_05-017-013.html

One of the advantages of being a non-profit organization is that you can (and they cheerfully will) do things that cost way more than they recoup just to set an example.

oops.

http://triblive.com/x/pittsburghtrib/news/pittsburgh/s_720838.html

http://www.irs.gov/irm/part5/irm_05-017-013.html

Employment relationship? Are you fucking stupid?

No, but I think you might be.

Since when is taxation based on employment only?

We are talking about whether or not the meals Google provides to its employees for free constitute taxable income for those employees. This tax, known as "income tax," is levied against the paycheck of employees by the government.

If a child has a net gain by trading his dessert cup, that's GAIN and therefore technically taxable.

Under which tax regulation, pray tell? It's *irrelevant* to the discussion of income taxes occurring here. But I'm quite interested to see this IRS publication which governs the profitable exchange of pudding cups and snack packs. I imagine it's fairly short, and an entertaining read.

And since when do software engineers opt to take their salary in the form of food? Meals are a fringe benefit designed to keep employees happy.

And as such, they are considered taxable income!:

Meals provided to improve general morale or goodwill, or to attract prospective employees, are not provided for a substantial noncompensatory reason and are taxable. Reg.1. 119-1(a)(2)

I'm so glad we agree on this - fringe benefits like the meals Google provides to keep employees happy are considered taxable income, and employees need to pay taxes on them. These "non-monetary" benefits are absolutely income - if they're not, then as I said before, there's nothing stopping CEOs from taking their "compensation" in the form of non-monetary benefits like jets, cars, boats, and hookers. And then they'll pay even less taxes, because none of their income will be considered taxable by the same logic that says Google's employee meals program isn't taxable income.

no, quite relevant. We are talking about taxable compensation. Google isn't "giving you" the property they own that constitutes a parking space. They are allowing you to park your vehicle on their property as long as you're an employee. The service has monetary value, but it is not compensation for your work any more than "providing electricity to power your computer" is compensation for your work. It is a precondition of you being able to work, and it is provided for work purposes by your employer.

Wrong again. It's not a product, but it is a service. Services have value, and can be taxed.

If, for instance, you know how to do plumbing work, and your neighbor knows how to do electrical repairs, you can mutually agree to exchange services: you installing a new toilet in his house and him replacing some light fixtures in your house. However (of course no one actually does this), this exchange of services is subject to taxation, and legally you are required to determine the "fair market value" of your respective services, and count them as income on your taxes. No, no one really does this, but it is the law, just like paying "use taxes" for internet purchases, another thing almost no one actually does.

So your company providing you parking is similar to your neighbor doing electrical work for you; it's not "free", it's an exchange of services. Your company is giving you "free" parking as a perk, rather than paying you extra, and you paying $5/day to park at a privately-owned parking lot across the street.

Parking is not a "precondition of you being able to work". You don't need parking to go to work. You can take a bus, or you can park at a privately-owned parking lot, or you can take a cab, or you can have a chauffeur drive you there. Just because it's commonly expected by many people to have "free" parking in many places in the US doesn't mean you actually need it. In fact, there's plenty of places where there is no free parking for employees: ask anyone who works in Manhattan.

And these often can be exempted under the "de minimis" fringe benefit exceptions. You should review the EMPLOYEE's tax guide to fringe benefits: http://www.irs.gov/pub/irs-tege/fringe_benefit_fslg.pdf [irs.gov]
They explain pretty clearly what conditions allow you to exclude meals and other fringe benefits from your taxable income.

You're correct about this, but what I'm arguing about is the IRS's rules themselves: I think the IRS is picking and choosing what it allows employers to give to employees as perks, and it's wrong and micromanagerial. Now obviously, we need to have some kind of limits in place so that, for instance, the company doesn't buy the CEO a megayacht and allow him to avoid taxation this way, but this can be solved with a simple (perhaps yearly) dollar limit, rather than a ridiculous list of rules spelling out exactly what is and isn't allowed. If a company wants to give out free weekly massages to employees to help them work better, or free lunches, or whatever, it shouldn't have to account for this exhaustively to the IRS. It's just extra wasted paperwork and overhead.

Irrelevant.

no, quite relevant. We are talking about taxable compensation. Google isn't "giving you" the property they own that constitutes a parking space. They are allowing you to park your vehicle on their property as long as you're an employee. The service has monetary value, but it is not compensation for your work any more than "providing electricity to power your computer" is compensation for your work. It is a precondition of you being able to work, and it is provided for work purposes by your employer.

There's tons of tech companies where sodas and other drinks are available for free.

And these often can be exempted under the "de minimis" fringe benefit exceptions. You should review the EMPLOYEE's tax guide to fringe benefits: http://www.irs.gov/pub/irs-tege/fringe_benefit_fslg.pdf

They explain pretty clearly what conditions allow you to exclude meals and other fringe benefits from your taxable income.

Say the professor prefers tea & fills his teapot from his university's tap. Does he have an individual meter so that his usage is not coming out of the pocket of the rest of the faculty or the students? If a corporate lunch is an untaxed benefit shouldn't he have one for his tea? Shouldn't he also have one for the toilets he uses? How is his use of these common resources any different from free lunches -- or is it just a matter of time until this becomes the norm as well??

The IRS (taxing authority for Google's main campus) has a taxable fringe benefit guide that covers this type of thing. If the benefit, in your example the tap water for tea, is of minimal fair market value, then it's not taxable. Donuts at a department meeting, a company picnic for lunch one day, your boss buying a few workers pizza late one evening when they are putting in overtime to finish a project, etc.

If the business furnishes the meal for the EMPLOYER'S convenience, then the cost of the FMV of the meal doesn't get included as part of wages. Examples of this from the above document would be a ferry's worker's meal as they can't just pull the ferry over to let the workers have their lunch break. Or a firefighter who has to be on call and can't step away for a meal. While Google could probably claim that some of their workers are critical in nature and can't leave the premises should an emergency arise, I don't think you could argue that ALL employees fit that category.

Actually, w.r.t. parking, http://www.irs.gov/pub/irs-tege/fringe_benefit_fslg.pdf says that:
"Qualified parking is parking provided to employees on or near the business work premises, or
parking on or near a location from which employees commute to work by commuter highway
vehicle, mass transit, or vanpool. IRC 132(f)(5)(C)
The maximum nontaxable value is $240 per month in 2012. PL 111-312; IRC 132(f)(2(B); IR 2011-
104 "

IANAL; but the IRS is at least sane enough to allow coffee, snacks and donuts under de minimis. After having looked over this a bit further after my earlier comment, I see the dispute coming from this paragraph:

Meals you furnish to promote goodwill, boost morale, or attract prospective employees are not considered furnished for your convenience. However, you may be able to exclude their value as discussed under De Minimis Meals , earlier.

OTOH, the definition of "for your convenience" includes some scenarios that are likely to occur at Google facilities, such as sysadmins on call for server outages. That's probably not 50% of the employees there though, so you need to find a way to claim that at least half the people sitting at the tables are doing so under the definition of "for your convenience". That phrase is where the vagueness is coming from, and the lawyers are going to make their pay on that I bet.

I'm assuming that "for your convenience" and "goodwill" are not mutually exclusive. If goodwill taints all the meals, then they're screwed.

FWIW, I think these companies should keep giving away the meals even if they have to tax them. The IRS shouldn't be doing quiet backroom deals either. This rule should be clarified under the current law, and if we don't like the answer we should change the law.

http://www.irs.gov/publications/p15b/ar02.html
says:
Meals- Exempt if furnished on your business premises for your convenience.
Exempt if de minimis.

I disagree with your interpretation of what convenience means. I don't see how you can read convenience to mean "Can't really do your job" otherwise. To me inconvenience = having to travel 15 minutes to get a decent meal. "Can't really do your job" otherwise = stuff like if the company doesn't provide you meals you'd have to travel by helicopter to get to the nearest alternative meal spot. That's more than inconvenient.

From what I see the people who wrote that used "for your convenience" instead of other words for a reason and that's reasonable enough to me. If the Prof doesn't like it he should take it up with them.

I doubt the USA is really losing that much tax money from such meals. To me what would be wrong is if organizations/people are able to report and treat profits as theirs in their financial reports, statements and even operations (e.g. use them as collateral for loans) but not pay taxes on those very reported profits.

If you can treat it as yours in so many ways then it's yours and then you should pay the taxes due on them.

What with all the money we're in the hole, why hasn't anyone yet brought up the possibility of taxing religious organizations?

I'm sure they'd like to help.

If the recipient of a taxable fringe benefit is your employee, the benefit is subject to employment taxes and must be reported on Form W-2, Wage and Tax Statement. However, you can use special rules to withhold, deposit, and report the employment taxes. These rules are discussed in section 4.

IRS ruling.

It should be noted that in the above publication, meals on business premises are discussed and if they meet certain requirements, then the meal is not considered taxable to the employee.

Did he bother to google (heheh) the IRS Publication for this? (warning, PDF). Scroll down and:

The fair market value of meals or lodging furnished to an employee by an employer may be nontaxable to the employee. IRC Â119 provides an exclusion for meals and lodging under certain circumstances. Cash provided for meals is not excludable under this Code section; however, under certain circumstances cash can be excluded as a de minimis fringe benefit. IRC Â119

And a few other paragraphs clarifying this seem to indicate that Google and all the other Valley companies that do this are following the rules just fine. Sheesh! I'm not even a lawyer and certainly not a friggin' professor of such.

It's hard to deny that the Advanced Technology Vehicles Manufacturing Loan Program has generally been a success, whether you believe that the government should have been the ones to invest or not.

No it isn't. The government gives a tax credit of $7500 for every purchase of a specific model that lasts until potentially 1.5 billion in tax revenue has been lost.

The credit begins to phase out for a manufacturer’s vehicles when at least 200,000 qualifying vehicles have been sold for use in the United States (determined on a cumulative basis for sales after December 31, 2009).

Also, Telsa is not profitable. Go read their 10-K. Their profit is less than the temporary tax incentives the government of CA gives them. We won't even talk about the other non-sustainable handouts they get such as allowing owners free parking at the airport and free electricity at charging stations.

Yet, in the United States you are required to report to the IRS all your foreign bank accounts if the total value is over $25k, every year.
http://www.irs.gov/pub/irs-pdf/f90221.pdf

If you don't, they may not find out, but of they do its a problem for you.
To avoid this, hiding money in shell companies is frowned upon at least.

under the law / IRS rules the degree of control can make if they say to much about what you can do / what tools you use you may be a employee and the company has to pay up there part of the tax obligations.

http://www.irs.gov/pub/irs-utl/emporind.pdf

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Independent-Contractor-(Self-Employed)-or-Employee%3F

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Behavioral-Control

Types of Instructions Given

An employee is generally subject to the business’s instructions about when, where, and how to work. All of the following are examples of types of instructions about how to do work.

        When and where to do the work.
        What tools or equipment to use.
        What workers to hire or to assist with the work.
        Where to purchase supplies and services.
        What work must be performed by a specified individual.
        What order or sequence to follow when performing the work.

under the law / IRS rules the degree of control can make if they say to much about what you can do / what tools you use you may be a employee and the company has to pay up there part of the tax obligations.

http://www.irs.gov/pub/irs-utl/emporind.pdf

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Independent-Contractor-(Self-Employed)-or-Employee%3F

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Behavioral-Control

Types of Instructions Given

An employee is generally subject to the business’s instructions about when, where, and how to work. All of the following are examples of types of instructions about how to do work.

        When and where to do the work.
        What tools or equipment to use.
        What workers to hire or to assist with the work.
        Where to purchase supplies and services.
        What work must be performed by a specified individual.
        What order or sequence to follow when performing the work.

under the law / IRS rules the degree of control can make if they say to much about what you can do / what tools you use you may be a employee and the company has to pay up there part of the tax obligations.

http://www.irs.gov/pub/irs-utl/emporind.pdf

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Independent-Contractor-(Self-Employed)-or-Employee%3F

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Behavioral-Control

Types of Instructions Given

An employee is generally subject to the business’s instructions about when, where, and how to work. All of the following are examples of types of instructions about how to do work.

        When and where to do the work.
        What tools or equipment to use.
        What workers to hire or to assist with the work.
        Where to purchase supplies and services.
        What work must be performed by a specified individual.
        What order or sequence to follow when performing the work.

The current conception is that bitcoin will be treated more as a stock or commodity by the IRS. You will not be obligated to pay tax until you exchange for USD at some point, at which time it will be treated as capital gains.

When you mine bitcoins, there are two components: the income due to your generation of bitcoins (value of bitcoins mined MINUS expenditures attributable to gaining those bitcoins), AND the eventual capital gain if you sell them later at a higher price.

The generation of bitcoins might be a taxable event, and the future sale of bitcoins may be a taxable event (or a capital loss event, if the sales price is lower than your cost basis).

This is just like earning anything else of value -- you win a sweepstakes, you find hidden treasure, etc; there is an immediate taxable event in the amount of the fair market value of the item you gained or found minus the expenses.

The generation of bitcoins is essentially comparable to gambling winnings or finding a treasure trove; you mine for a certain amount of time, on a certain workload -- there is some probability you will generate bitcoins, there is some probability that you will need to mine longer or devote more resources.

The IRS ruling on such matters is the finder of treasure trove is in receipt of taxable income, for Federal income tax purposes, to the extent of its value in United States currency, for the taxable year in which it is reduced to undisputed possession

Please see here Gambling Winnings Are Always Taxable Income

IRS Form 8949

Individuals use Form 8949
to report:
* The sale or exchange of a capital asset
not reported on another form or schedule

Here is the IRS stance: http://www.irs.gov/taxtopics/tc431.html It details tax forms you should get, what has to be reported and doesn't.

It's worse than that. Not only do they get a government loan with very favorable terms, the federal government gives a credit to those who buy their product.

Tesla’s loan of $465 million was to be paid back over ten years following the start of production of the Model S.

We have a $7500 tax credit for electric vehicles purchased in 2010 through 2012, up from $2500 from 2008 through 2009. Like most taxes, this credit has rules but this one only has the requirement that the credit cannot reduce the tax below zero so we can assume utilization will be very high.
    Telsa won't release detailed numbers but this site shows about 73% of reservations from the US for the Model S. They do release delivery numbers which show 253 through Sept 1st, 2012 and 1000 Roadsters through Jan 2010.

7500 * 253 * .73 = $1.36 million over 3 months for the S.
2500 * 1000 * .73 = $1.82 million over 2 years for the Roadster.

So the feds are out at least 3 million to date. Strangely, this credit is based on production numbers.

The credit begins to phase out for a manufacturer’s vehicles when at least 200,000 qualifying vehicles manufactured by that manufacturer have been sold for use in the United States (determined on a cumulative basis for sales after December 31, 2009). For additional information see Notice 2009-89

We'll assume Telsa makes 20000 Model S since that is it's production target for 2013. If 73% are bought by Americans with a tax liability greater than $7500:
20,000 * .73 * 7500 = 100 million. If the complete production run is done the potential total tax credits could exceed 1 billion.

More reading of the 10-K shows this:

In December 2009, we finalized an arrangement with the California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA) that will result in an exemption from California state sales and use taxes for up to $320 million of manufacturing equipment. To the extent all of this equipment is purchased and would otherwise be subject to California state sales and use tax, we believe this incentive would result in tax savings by us of up to approximately $31 million over the period starting in December 2009 and ending in December 2013. The equipment purchases may be used only for three purposes: (i) to establish our production facility for Model S in California, (ii) to upgrade our
Palo Alto powertrain production facility, and (iii) to expand our current Tesla Roadster assembly operations at our Menlo Park facility. In January 2012, we finalized an additional agreement with CAEATFA that will result in an exemption from California state sales and use taxes for
up to $292 million of manufacturing equipment. To the extent all of this equipment is purchased and would otherwise be subject to California
state sales and use tax, we believe this incentive would result in tax savings by us of up to approximately $24 million over the period starting in December 2011 and ending in March 2015. The equipment purchases may be used only for two purposes: (i) to develop the Model X crossover vehicle and its production capacity in California and, (ii) to further upgrade our powertrain production facilities in California.

Up to $56 million in lost revenue from the State of California. I'm not convinced their operation is viable without the massive tax breaks they are receiving. Telsa operated at a 40 million loss in 2012 and I didn't go into the free parking, use of rest area charging stations, and other incentives given to drivers of electric vehicles.

It's worse than that. Not only do they get a government loan with very favorable terms, the federal government gives a credit to those who buy their product.

Tesla’s loan of $465 million was to be paid back over ten years following the start of production of the Model S.

We have a $7500 tax credit for electric vehicles purchased in 2010 through 2012, up from $2500 from 2008 through 2009. Like most taxes, this credit has rules but this one only has the requirement that the credit cannot reduce the tax below zero so we can assume utilization will be very high.
    Telsa won't release detailed numbers but this site shows about 73% of reservations from the US for the Model S. They do release delivery numbers which show 253 through Sept 1st, 2012 and 1000 Roadsters through Jan 2010.

7500 * 253 * .73 = $1.36 million over 3 months for the S.
2500 * 1000 * .73 = $1.82 million over 2 years for the Roadster.

So the feds are out at least 3 million to date. Strangely, this credit is based on production numbers.

The credit begins to phase out for a manufacturer’s vehicles when at least 200,000 qualifying vehicles manufactured by that manufacturer have been sold for use in the United States (determined on a cumulative basis for sales after December 31, 2009). For additional information see Notice 2009-89

We'll assume Telsa makes 20000 Model S since that is it's production target for 2013. If 73% are bought by Americans with a tax liability greater than $7500:
20,000 * .73 * 7500 = 100 million. If the complete production run is done the potential total tax credits could exceed 1 billion.

More reading of the 10-K shows this:

In December 2009, we finalized an arrangement with the California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA) that will result in an exemption from California state sales and use taxes for up to $320 million of manufacturing equipment. To the extent all of this equipment is purchased and would otherwise be subject to California state sales and use tax, we believe this incentive would result in tax savings by us of up to approximately $31 million over the period starting in December 2009 and ending in December 2013. The equipment purchases may be used only for three purposes: (i) to establish our production facility for Model S in California, (ii) to upgrade our
Palo Alto powertrain production facility, and (iii) to expand our current Tesla Roadster assembly operations at our Menlo Park facility. In January 2012, we finalized an additional agreement with CAEATFA that will result in an exemption from California state sales and use taxes for
up to $292 million of manufacturing equipment. To the extent all of this equipment is purchased and would otherwise be subject to California
state sales and use tax, we believe this incentive would result in tax savings by us of up to approximately $24 million over the period starting in December 2011 and ending in March 2015. The equipment purchases may be used only for two purposes: (i) to develop the Model X crossover vehicle and its production capacity in California and, (ii) to further upgrade our powertrain production facilities in California.

Up to $56 million in lost revenue from the State of California. I'm not convinced their operation is viable without the massive tax breaks they are receiving. Telsa operated at a 40 million loss in 2012 and I didn't go into the free parking, use of rest area charging stations, and other incentives given to drivers of electric vehicles.

Production of Bitcoin should be taxable just like anything else that you make. If you have a business making clothes, your taxable income is the difference between what you sell the clothes for and your cost of making them. In the case of mining Bitcoin, your expenses are primarily computer equipment, electricity and physical space to contain the computer equipment.

Getting paid in Bitcoin is either the same as getting paid in a foreign currency or the same as barter - an exchange of value.

IRS has procedures for barter.

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Bartering-Tax-Center

And 57% of respondents agree by 2053 we will be flying around the galaxy in faster-than-light spaceships. You know, like the Millennium Falcon. They saw it in a movie. And most of those believe Obama is a Secret Muslim Nigerian. What are we trying to prove here?

(emboldening, mine)

Correct me if I'm wrong, but it sounds like we're simply trying to prove the validity of a certain method of business...

Hello, I am the Nigerian President of the USA,
As you know, my countries are in turmoil, so I need your help to smuggle my Secrit Muslim inheritance of pressious diamounds from Nigeria into the USA to solve this dire $16.5 trillien nashonal debt problem.

Unfortunately, only the Millennium Falcon is capable of transporting these valuables through the Evil Galactic Umpire's diplomatic sanctions, and they will not accept my payment of carbonite crystels, which is all I have access to in my current situation.

Please, you must help me save my people from Finance Oil Wars so that we may and purchase safe passage from the NASA smugglers. I only need All Social Security Benefits more to pay the smugglers. Please do not forward this message to the police of The Repelican Party or we will surely be found and executed, and our people will suffer great deals. For your assistance with this trouble I am willing to wire transfer you Peece on Earth and Goodwill dollars once this matter is settled.

To help, please make arrangements for payment at this website.
Please also reply and include your bank account and routing number and your All Pursonal Online information so I can send you compensation for your good deeds.

I sincerely Thank You in advance for help in these troubling times.
Signed,
Obama Hussein Jong il Bin Laden III.

Your link doesn't refute my statement. Yes, "you would be able to deduct up to $185,800 from your US expat taxes for the 2011 tax year" - but only if both spouses made $92k+ each.

Even if you trusted your random expat tax site over the IRS itself, if you look at Form 2555 (PDF) it's quite clear that the exclusion is per-person. Look at lines 37 - 45. Start with $95k (the 2012 exclusion), adjust for number of days outside the country, then subtract from your income. There's no method to double that $95k except by having two forms, one for each spouse - but then each spouse's income is listed separately, and gets their own $95k deduction.

Thus, if you have one person making $180k and the spouse making $0, then that $180k is going to go on one Form 2555, deduct $95k, and be left with $85k of un-excluded taxable income.

>If you happen to be married the $90,000 exclusion is doubled; you would not even begin to owe taxes in the US until you are well beyond $250,000 or so.

The exclusion is per-person. If you earn $90k and your wife earns $90k, no tax. If you earn $180k and your wife earns $0, lots of tax.

"For tax year 2011, the maximum foreign earned income exclusion is up to $92,900 per qualifying person. If married and both individuals work abroad and both meet either the bona fide residence test or the physical presence test, each one can choose the foreign earned income exclusion. Together, they can exclude as much as $185,800 for the 2011 tax year."

They weren't "given" money. They organized land, labor and capital in such a way as to create wealth for themselves, their partners/investors, employees and customers that would not otherwise have existed.

That's only perfeclty true if the system is perfectly efficient. If the system is biased against the wealthy, they get paid less than they earn. If it is biased in their favor, they get paid more than they earn. Both cases, interestingly, have occurred in the US within the past 70 years. Check the IRS SOI for back records on income concentration, then compare that to GDP per capita growth rate -- if we have increasing concentration and a decreasing growth rate, it would mean we are paying the wealthy more and getting less growth -- ie: inefficiently distorted in favor of the wealthy. For a second dimension along which to measure, check GDP per capita versus Gini of the world's nations. Here's my chart on PPC/Gini, and I've done the math with the SOI -- but don't take my word for it. Do the research yourself to confirm.

Yeah, it's a common lie in the US that we have "high taxes" when we have low taxes, especially on the rich.

Unless math has changed recently, both 33% and 35% are > 29%.

2011 Tax Computation Worksheet—Line 44

At least $100,000 but not over $174,400 = 28% rate
Over $174,400 but not over $379,150 = 33% rate
Over $379,150 $ = 35% rate

U.S. corporate tax rate: No. 1 in the world

Yeah, it's a common lie in the US that we have "high taxes" when we have low taxes, especially on the rich.

Unless math has changed recently, both 33% and 35% are > 29%.

2011 Tax Computation Worksheet—Line 44

At least $100,000 but not over $174,400 = 28% rate
Over $174,400 but not over $379,150 = 33% rate
Over $379,150 $ = 35% rate

U.S. corporate tax rate: No. 1 in the world

I don't know how that could ever be counted as an "investment"... This sounds more like "employee compensation"... Was this reported as taxable income by all your employees?

I think we're going to have to subject your company to a rigorous audit, sir. Expect a note in the mail in about 3-6 weeks.

Love,
The United States Internal Revenue Service
www.irs.gov

If you leave the US you won't have to pay US taxes.

Nope, the US is about the only country in the world that taxes non-residents the same as residents.

Not exactly. If you are a non-resident US citizen and you earn your income from a foreign company, then you get an exemption on this foreign-earned income up to $95K a year. So, you only pay US taxes if you make more than that amount.

http://www.irs.gov/Individuals/International-Taxpayers/Foreign-Earned-Income-Exclusion

If you leave the US you won't have to pay US taxes.

Nope, the US is about the only country in the world that taxes non-residents the same as residents.

Actually non-residents are only taxed the same way if the income was earned inside the USA. I live outside the USA but am a US citizen. I work for a company based outside the USA. I still have to file taxes in the US, but I also get an exemption for my foreign earned income. Unless you make more than $90K per year you wont pay anything in US taxes.

See http://www.irs.gov/Individuals/International-Taxpayers/Foreign-Earned-Income-Exclusion

You can also structure your life (mortgage, charitable donations, tax-exempt bonds, stabbing your self in the eyes to go blind, etc) for tax purposes if you want. Maybe you don't want to but then again, most businesses don't take advantage of all the tax credits and loopholes either, only the massive ones that can afford the bean counters and former IRS agents to make it possible (like, say, GE paying a 0% rate in the US).

We basically have PAYE right now. If you owe more then $1,000 on April 15 you have to file a Form 2210, and pay a penalty.

http://www.irs.gov/taxtopics/tc306.html

...just like other .gov websites

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Gift-Tax

I hope that the tax man has the decency to leave this alone - not remove some percentage of it.

Doubtful. Gifts are taxable above an annual exclusion except in certain circumstances.

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Frequently-Asked-Questions-on-Gift-Taxes

Yeah, but the IRS has a place on your tax return to declare barter transactions. So you can pay appropriate taxes if you choose to be an upstanding citizen. As for the compliance with Federal and State policies regarding food safety, sanitation, etc ... you're on your own.