Proposed change in the capital gains tax for coins
Mark
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The Wall Street Journal today (2-26) reported on a proposed change in the capital gains tax for collectables, such as coins. If coins (and other collectables) are held for less than 1 year, any capital gain on selling them is a short-term capital gain and is taxed at ordinary income tax rates. If coins are held more than 1 year, any capital gain on selling them is a long-term capital gain. The top capital gains rate on coins is 28%. The top long-term capital gains rate on stocks and bonds is 15% for people in the 25% or higher tax bracket and 5% for people in tax brackets lower than 25%.
The Bush adminstration has proposed changing how the capital gains tax is calculated for coins. According to the proposal, the new capital gains tax would be calculated by "taxing 50% of the capital gains on coins [or other collectables] as long-term capital gains and 50% as short-term capital gains." Take someone in the top 35% income tax bracket. For this person, who pays the top long-term capital gain rate of 15%, under the Bush proposal the capital gain tax rate for coins would be 50% x 15% + 50% x 35% = 25%. In other words, for this person the long-term capital gains rate on coins falls from 28% to 25%. Or, take someone in the 28% income tax bracket. For this person, who also pays the top long-term capital gain rate of 15%, the capital gain tax rate for coins under the new proposal would be 50% x 15% + 50% x 28% = 21.5%. So this person's capital gains rate on coins falls from 28% to 21.5%.
Of course, the Wall Street Journal reports that the outlook for passage seems dim.... sigh....
Mark
P.S.: Sorry about the math, but I figure that anyone who is active in the registries is already used to nasty math!!
The Bush adminstration has proposed changing how the capital gains tax is calculated for coins. According to the proposal, the new capital gains tax would be calculated by "taxing 50% of the capital gains on coins [or other collectables] as long-term capital gains and 50% as short-term capital gains." Take someone in the top 35% income tax bracket. For this person, who pays the top long-term capital gain rate of 15%, under the Bush proposal the capital gain tax rate for coins would be 50% x 15% + 50% x 35% = 25%. In other words, for this person the long-term capital gains rate on coins falls from 28% to 25%. Or, take someone in the 28% income tax bracket. For this person, who also pays the top long-term capital gain rate of 15%, the capital gain tax rate for coins under the new proposal would be 50% x 15% + 50% x 28% = 21.5%. So this person's capital gains rate on coins falls from 28% to 21.5%.
Of course, the Wall Street Journal reports that the outlook for passage seems dim.... sigh....
Mark
P.S.: Sorry about the math, but I figure that anyone who is active in the registries is already used to nasty math!!
Mark
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Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
Absolutely I declare all my coin sales and trades. I even declare whenever I win an I-Pod download in the most recent Pepsi game because these downloads are worth 99 cents. Plus when I take a penny from a change jar at a store to help pay some odd amount of tax, I definitely declare the penny as additional income.
Mark
P.S.:
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