Re: e$: The Book-Entry/Certificate Distinction

[tcmay@got.net (Timothy C. May)]

At 4:10 AM 8/24/95, Alan Penny wrote:
>The other night I heard that some of the rules for selling stock have
>been changed to allow companies to sell stock directly to investors.
>I have been thinking that this may have the potential to support an
>interesting system.

My company sold stock to me directly, through a Stock Participation Plan
and an Incentive Stock Option Plan.

>Imagine "Portfolio Accounts" with a debit-card like access method.

I use a debit card which directly accesses my stock account. More on this
in a moment.

>Instead of paying for an item at a store with money or credit you use
>your Portfolio-Account card and buy the item with shares/micro-shares
>of stock. Stock brokers may offer this type of service in response the
>competition of companies bypassing them. Stock brokers could setup
>services that mediate between transactions calculating trades and values
>"on-the-fly" (anonymity could be tricky to build into this system).

This is where it breaks down. Stock prices are denominated in dollars (or
the local currency, as applicable). And local purchases are denominated in
dollars. Nobody pays "one microMicrosoft" for a loaf of bread. They pay $1.
And Microsoft stock sells for $100, not 100 loaves of bread.

>If the company you worked for paid you with stock instead of money this
>would complete the loop.

The IRS and other tax authorities have this one figured out: barter
economies are not generally a way to avoid taxes.

>This also has the interesting feature of avoiding all taxes. Until you
>"cash out" your account you would not have to pay taxes, if you never
>need cash out your account, you never need to pay taxes. I suspect that
>our friendly governments would try to "correct" this "problem" in the
>long run if they can.

If you are paid in barter for some service, taxes are still owed, based on
the estimated value of services rendered.

By the way, a simpler example than all this talk of partial shares of
companies is simply to talk about paying each other in gold, or oil, or any
other commodities.

Try to convince the IRS that taxes are not owed because one was paid in
ounces of gold instead of dollars.

--Tim May

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Timothy C. May              | Crypto Anarchy: encryption, digital money,
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