HB 2014 “Legal Tender Exchange; Tax Effect” Signed

HB 2014 “Legal Tender Exchange; Tax Effect” Signed

On May 10, just two days prior to the end of the first session of the 53rd Arizona Legislature, House Bill 2014 was transmitted to the Governor.  Today he signed the bill that finally treats the exchange of one type of American currency for another as an exchange and not a sale.  In a statement earlier today, I reminded constituents that, “We don’t buy one kind of money with another kind, we exchange currency, one species for another.

Current law, A.R.S. § 43-1001 states that “Arizona Gross Income is equal to the Federal Adjusted Gross Income for the taxable year and Arizona Adjusted Gross Income is an individual’s Arizona Gross Income modified by any statutory additions or subtractions.”

The new law makes a number of fixes that are long overdue for currency protection.  The change in law allows a tax deduction for net capital gains received, after December 31, 2017, from the exchange of one kind of legal tender for another. (Sec. 2, 4); and it requires any capital loss derived from the exchange of legal tender, after December 31, 2017, to be added to a taxpayer’s Arizona Gross Income. (Sec. 1, 3).

Most importantly the change in state law defines legal tender as a medium of exchange, including specie, that is authorized by the United States Constitution or Congress for the payment of debts, public charges, taxes, and dues. (Section 1, 2, 3, 4); and defines specie as coins having precious metal content. (Sec. 1, 2, 3, 4).  That means US Mint gold and silver coins.

I am pleased to extend special thanks to Dr. Ron Paul for his effort to help move this bill through the process.


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