Tax Issues of Awarding Bounties about bounties

[patrick727]

@Ken-dahl these are all really good points that need to be considered thoroughly. I've had a lot of these same conversations with Ed in regards to my SOW's with RChain and we have all come to the conclusions that until there is a market defined rate, then you create a basis of value by the SOW at a given time. And then that value becomes the tax basis and you will need to file all necessary info in the event it is above 500USD value, if operating in the US. Hope that helps some. The tokens are considered property and any increase in value is taxed as capital gains when you liquidate it.

[lapin7]

The price I would agree on is now the average price of AMP during the Redemption process. That's about $0.08 to $ 0,11, an average of the six batches.

…

-- HJ

On Wed, May 10, 2017 at 3:59 PM, patrick727 ***@***.***> wrote: @Ken-dahl <https://github.com/Ken-dahl> these are all really good points that need to be considered thoroughly. I've had a lot of these same conversations with Ed in regards to my SOW's with RChain and we have all come to the conclusions that until there is a market defined rate, then you create a basis of value by the SOW at a given time. And then that value becomes the tax basis and you will need to file all necessary info in the event it is above 500USD value, if operating in the US. Hope that helps some. The tokens are considered property and any increase in value is taxed as capital gains when you liquidate it. — You are receiving this because you were assigned. Reply to this email directly, view it on GitHub <#37 (comment)>, or mute the thread <https://github.com/notifications/unsubscribe-auth/AB0x9ydslKq4oHDAvhPhKzmI1J58pNReks5r4cLZgaJpZM4NVqfV> .

[Ken-dahl]

It would seem to me that language could be put in a "Disclaimer & Terms of Acceptance" that each Independent Contractor would sign that was part of the "Independent Contractor Agreement". I do think that we must ask for and receive a tax ID which I believe would be a Social Security number if a sole proprietor and or a tax ID # from the IRS. For foreign independent contractors perhaps the following language would work, "Independent Contractor agrees to conform with and abide by the laws regarding reporting and taxation governing compensation that are in force in the jurisdiction of their country and place of residence, and agrees that the value upon receipt is the value as determined by the closing price of trading on the day of receipt". Actually this might work for everyone, but in any case it looks like sending a 1099 to US contractors and a notification to the IRS along with the contractor tax ID number would be a requirement for US compliance above a $600 threshold. How to deal with foreign compliance of multiple foreign contractors I have no idea about, but in any case all of this should be vetted and approved by legal and tax counsel prior to roll out. On Wed, May 10, 2017 at 6:13 PM, HJ Hilbolling <[email protected]> wrote:

…

The price I would agree on is now the average price of AMP during the Redemption process. That's about $0.08 to $ 0,11, an average of the six batches. -- HJ On Wed, May 10, 2017 at 3:59 PM, patrick727 ***@***.***> wrote: > @Ken-dahl <https://github.com/Ken-dahl> these are all really good points > that need to be considered thoroughly. I've had a lot of these same > conversations with Ed in regards to my SOW's with RChain and we have all > come to the conclusions that until there is a market defined rate, then you > create a basis of value by the SOW at a given time. And then that value > becomes the tax basis and you will need to file all necessary info in the > event it is above 500USD value, if operating in the US. Hope that helps > some. The tokens are considered property and any increase in value is taxed > as capital gains when you liquidate it. > > — > You are receiving this because you were assigned. > Reply to this email directly, view it on GitHub > <#37 (comment)>, or mute > the thread > <https://github.com/notifications/unsubscribe-auth/ AB0x9ydslKq4oHDAvhPhKzmI1J58pNReks5r4cLZgaJpZM4NVqfV> > . > — You are receiving this because you were mentioned. Reply to this email directly, view it on GitHub <#37 (comment)>, or mute the thread <https://github.com/notifications/unsubscribe-auth/AaCFaQyYDk0HR-14AVIL600iC8C_ad5nks5r4lLAgaJpZM4NVqfV> .

-- Kendall Williams Divvy DAO Ltd. Proven Secure Solutions, Inc. office: 970-963-3471 Cell: 970-376-6362 [email protected] Confidentiality Statement: This email/fax, including attachments, may include confidential and/or proprietary information and may be used only by the person or entity to which it is addressed. If the reader of this email/fax is not the intended recipient or his or her agent, the reader is hereby notified that any dissemination, distribution or copying of this email/fax is prohibited. If you have received this email/fax in error, please notify the sender by replying to this message and deleting this email or destroying this facsimile immediately.

[patrick727]

@Ken-dahl there is a foreign tax form that is similar to a W-9 called a W-8BEN that they would have to fill out, and you would also have to make sure that you are complying to the local legalize within there area.

http://jiahkimlaw.com/business/eight-things-know-hiring-foreign-independent-contractor/

[Ken-dahl]

Hi Patrick - This is valuable and very timely and i will study it more closely. The direction that my thinking is going in is that in a DAO environment, the autonomous individual working in a team environment, whereby the Team is developing open-source software for public use, rather than proprietary use, indicates a situation whereby a public good is produced. In this situation it would seem that there is no employer instruction per say because the Team is self governing and the deliverable is open source, and the DAO is a facilitator owned by its members who are all working for themselves. The question is, if the facilitator is supplying the tokens to the network through a bounty-task-reward (BTR) mechanism that benefits the members who manage themselves then what you really have is something like a guild, where the only actual employees would do whatever administrative functions were necessary to serve the Members. There may be a model for this in NAR, the National Association of Realtors, that I have been a Member of for some 35 years. So, some questions: 1) Would the guild administrative entity be considered an Employer of the Members for maintaining a workspace, or would the administrative entity actually be employed by the Members to maintain a decentralized workspace for them via a Contract? 2) Can a Washington State Coop function like a Guild? 3) Can the Members collectively issue the tokens through a voting mechanism even if the tokens and underlying contracts are created/developed by a smaller Team/subset of the Members. 4) Can the tokens be configured to issue themselves as their own DAO. Hmmm Token DAO.................... 5) In NAR there are three levels: Local Association; State Association; National Association; add International Association and you have one more level. The Members pay yearly dues to an entity at each level. Realtor income is mostly commission income and unless working specifically as an employee working for a property management entity, are considered to be independent contractors. Could Bounties be considered the same as Commissions? 6) If tokens are considered to be "property" then could a transfer of ownership of such Token Property be construed in much the same way as real estate as property? See: http://www.ntiweb.com/forms/v10n4.htm "For information reporting purposes, a "real estate transaction" is a sale or exchange of an ownership interest in "reportable real estate" (think reportable property) for money, indebtedness, *property or services.*13 A transaction is a sale or exchange for 1099-S purposes if it would otherwise be classified as a sale or exchange for federal income tax purposes,14 regardless of whether the transaction is currently taxable." 7) Following this logic and quoting from the same document we have: "Either the purchaser’s attorney or the seller’s attorney may be the reporting person if no closing statement is used or if multiple closing statements are used.9 If no one is responsible for closing the sale, however, the reporting person is, in order of priority, the mortgage lender, the transferor’s broker, the transferee’s broker or the transferee ( think Team Leader or the person completing the task). The parties may enter into an agreement that designates the reporting person .11 The regulations do not prohibit the designation of someone as a reporting person who would otherwise not be a reporting person but for the designation agreement. The designated person must, however, be an eligible person.( think the transferee who completed the task)12 In other words, it appears a *designation agreement* may be used to replace the person who ordinarily would be responsible for reporting under the regulations, provided an eligible person is designated instead." 8) So, would a Designation Agreement solve the issue of reporting the transfer of Property in the form of a Token Bounty in performance of a Service, and could the Tokens be treated like a Commission paid to an independent contractor if that person is a member of an organization that could be defined as a Guild where the guild like entity works for the Members? These are all legal questions that I am not able to answer, only ask, so if the group thinks there is some merit in this, perhaps there are some lawyers and legal experts who could take a look at it. Your thoughts?? All the best,

…

On Sat, May 13, 2017 at 7:33 AM, patrick727 ***@***.***> wrote: @Ken-dahl <https://github.com/ken-dahl> there is a foreign tax form that is similar to a W-9 called a W-8BEN that they would have to fill out, and you would also have to make sure that you are complying to the local legalize within there area. http://jiahkimlaw.com/business/eight-things-know- hiring-foreign-independent-contractor/ — You are receiving this because you were mentioned. Reply to this email directly, view it on GitHub <#37 (comment)>, or mute the thread <https://github.com/notifications/unsubscribe-auth/AaCFaUf6iElT9aFdEiQb7b98MzESQRFEks5r5bE8gaJpZM4NVqfV> .

-- Kendall Williams Divvy DAO Ltd. Proven Secure Solutions, Inc. office: 970-963-3471 Cell: 970-376-6362 [email protected] Confidentiality Statement: This email/fax, including attachments, may include confidential and/or proprietary information and may be used only by the person or entity to which it is addressed. If the reader of this email/fax is not the intended recipient or his or her agent, the reader is hereby notified that any dissemination, distribution or copying of this email/fax is prohibited. If you have received this email/fax in error, please notify the sender by replying to this message and deleting this email or destroying this facsimile immediately.

[kitblake]

Guilds have been particularly prominent in Swiss society since the 14th century. You can visit "Historic guilds houses in the old town of Zurich". The RChain digital infrastructure is the guild house.

1. I believe the guild would be employing the administrative entity to provide and maintain infrastructure. Naturally, guild members might be contracted to do construction.

2. Idk. (Maybe in Switzerland.)

3. The tokens (RHOCs) have already been issued. Their distribution has not been decided (see #15) but they are owned by the coop pending distribution.

4. Hmmm is right but DAO is looking like the way to go.

5. We could solve the Bounty problem by requiring that anybody earning more than $500 in a year has to be a company.

6, 7, 8 are too legal for me. Judicial expertise needed..

[Ken-dahl]

The main point about being a member of a guild is that you should be considered an independent contractor and that your member organization works for you, not the other way around. Here is one guild whose members are internet content creators called Internet Creators Guild: https://internetcreatorsguild.com/about

It would seem like anyone creating digital content over the internet could qualify as a member of this Guild. They charge $60 / yr. membership fee, but perhaps RChain could negotiate an "RChain Chapter" with its own fee, or one could model the Realtor local, state, national, international set up. Did I mention that NAR is the largest guild in the world. This is a very deep resource going back over a hundred years. Have to be a member to access.
With regard to whether the guild member has to be a company, I think individuals as sole proprietors would still be considered independent contractors if they were getting their work through having a guild association. In other words RChain Chapter puts out notice to members that "this project has these tasks looking for someone to complete". I have been looking at this in the context of the Divvy BTR mechanism whereby the teams determine the tasks and the bounties, and the team leader or project managers, or even the team by consensus, award the bounties for tasks completed. Where is the employer here and who is supervising? This would seem to be a DAO like function.

One other point. In Colorado an LLC can have as many members as it wants. A DAO could form itself into an LLC serving what ever functions its Members decided including whether to make much profit or not, but in any case any profit would pass through to the Member to be reported on their individual tax return via Schedule K-1, here: https://www.irs.gov/pub/irs-pdf/f1065sk1.pdf Just confirmed this with my tax preparer and discussed setting up the system which would require some time and effort initially but once up and running could generate K-1s for thousands of members with the stroke of a key.

Can expand on this if of interest.