Bitcoin Generation Inc. (BTGN)

[KELLYCO]

Are you saying Gary lied in a filing?
Or to you?
Because if you actually read some of them instead of repeating Gary fluffy explanations you will see that Gary and Sharon are only taking a percentage in cash.
Do you think they know they have to pay taxes on the shares also?

http://mindfusion.wordpress.com/2008/09/21/article-tax-aspects-of-receiving-stock-in-exchange-for-providing-services-to-a-corporation/

I think they are using this method.

"Nonstuatory Stock Options

“Nonstatutory Stock Options” (also called “nonqualified stock options”) are options that do not meet the requirements of an ISO. These options do not need to be issued pursuant to a “plan”; furthermore, if a “plan” is used it is not required to adhere to the provisions of an ISO plan. If an NSO has a “readily ascertainable fair market value” at the time it is granted, then the option is taxed to the recipient at the time of such grant."

Which means there is more dilution to count on.

What is $100,000.00 times .0015?
=66,666,667 shares per hundred thousand dollars

But it is really not salary because Gary claims there is no employees.

So this should apply.

Restricted Stock



"For tax purposes, if stock is received outright in exchange for the performance of services (i.e., without being subject to restrictions), then the recipient is immediately taxed on the difference between the value of the stock and the amount (if any) the recipient paid for such stock. In such a situation the recipient would be required to pay a tax at ordinary income tax rates (currently ranging from 10% to 35%). However, if the stock is subject to “a substantial risk of forfeiture” then, for tax purposes, the recipient has received “restricted stock.” In such instances, tax consequences will apply in the first taxable year when the interest in the stock is either not subject to “a substantial risk of forfeiture” or is transferable free from any substantial risk of forfeiture affecting the stock. In such first taxable year the recipient is taxed to the extent the fair market value of the stock exceeds the amount (if any) paid for such stock. This taxable amount is subject to the applicable ordinary tax rate (currently ranging from 10% to 35%). In either situation the employee can expect to pay tax at ordinary income tax rates, whether immediately in the former situation or at a subsequent date in the latter situation. The recipient should be aware of a possible tax trap when receiving restricted stock. Even if the recipient recognizes the tax trap, exactly how to handle it remains an issue because whether the stock’s value will increase or decrease over time and whether or not the stock will be forfeited before it vests with the employee cannot be easily predicted."

http://www.cpa2biz.com/Content/media/PRODUCER_CONTENT/Newsletters/Articles_2007/CorpTax/Services.jsp

""Section 83: Property in Exchange for Services

Planning beyond stock transfers.

September 27, 2007
by Blake Christian, CPA
Mention IRC Section 83 and most tax practitioners immediately think of bargain stock transfers.

Fortunately, or unfortunately in certain cases, Section 83 has much broader applications, which can have significant tax impact on both the transferring corporation, as well as the recipient/service provider.

Background

IRC Section 83 first appeared in the Code in 1969. The IRS and taxpayers use this Code section to include the value of property (other than cash and most stock options) in the taxable income of service providers (either a W-2 employee or independent contractor).

Section 83 As a Valuable Tax Planning Tool

The broad application of Section 83, the ability to control the timing and sometimes the amount and character of the income associated with the property, makes this a valuable tax planning tool for closely-held businesses. The strategy of using property instead of cash can benefit businesses in almost any industry and offers flexibility for cash-strapped companies.

The overall Section 83 strategy is three-fold:

Minimize Ordinary Income,

Maximize Capital Gain Income, and/or

Defer Income without significantly compromising on 1 and 2
In its simplest form, when a service provider receives property as compensation, the service provider must include the difference between: 1) the fair market value (FMV) of the property and 2) the amount paid in taxable income.

Similarly, the transferring business claims a tax deduction for the compensation the service provider received. However, the taxability of such transfers, and measurement of the taxable income, is deferred if the business imposes restrictions on the transferred property.

Besides the ability to shift income from a corporate entity to employees and other service providers, a Section 83(b) election (discussed below) provides flexibility for the timing, amount and character of the income reportable by the service provider.

To show some typical examples, using the most common property transfer — corporate stock — of how Section 83 applies in a corporate context:

Example 1:

Let us say start-up tech company, Yo-Yo, issues 1,000 shares to each of its new employees and a few key vendors when investors are paying $1 a share for its stock. There are no restrictions placed on the shares by the employer. The employer will report $1,000 of added compensation on the employee W-2s and vendor 1099s for the value of the stock transferred. The corporation has to withhold taxes on such amounts, which can be problematic. The corporation will deduct the same amount on its tax return as compensation and consulting expenses.

If the Yo-Yo stock increases to $11 a share a year later and a recipient sells the shares, the recipient recognizes a $10,000 long-term capital gain. Yo-Yo has no tax impact or reporting duty associated with the sale.




Example 2:

Now assume Yo-Yo requires the employees to stay with the company for at least a year to have full ownership of the shares.

Absent a Section 83(b) election, each recipient will report the full $11,000 value as ordinary income when the restrictions lapse after one year. Bad news for the recipients, but Yo-Yo gets a full $11,000 tax deduction for each transfer.




Example 3:

After receiving $11,000 of stock, and being drilled with ordinary income tax rates, half the recipients sell their shares a month later for $12,000 and the rest hold their shares, expecting a Google-esque payday in the future. Unfortunately, the stock tanks the following year and settles back to $1 a share. The remaining recipients sell their shares for one dollar a share after 12 months.

The sellers at $12,000 will report a short-term capital gain of $1,000 and Yo-Yo has no tax impact. The other half who sold their shares at $1 a share will report a long-term capital loss of $10,000 ($1,000 sales price, less $11,000 basis).""

Either way I did not see an 8-k outlining what is going on.
That's another naughty,naughty.