Taxes on Sale of Coins -- get it right people!

SellStock

NO, NO, NO, NO, NO!!!!!!!!!!!!!

It amazes me how many times I still see collectors (not dealers) make the same mistake about the sale of coins and the tax consequences.
The sale of a coin does NOT, I repeat, DOES NOT go under "OTHER INCOME" if you are NOT a dealer. As stated directly from an IRS publication:

"Precious Metals and Stones, Stamps, and Coins

Gold, silver, gems, stamps, coins, etc., are capital assets except when they are held for sale by a dealer. Any gain or loss from their sale or exchange generally is a capital gain or loss. If you are a dealer, the amount received from the sale is ordinary business income."

If you report the sale of any coin you sell on eBay as OTHER INCOME, you are hurting yourself by paying more taxes than you should!!!!!!!!

So, please report this under Capital Gains and Losses (Schedule D). Again, COINS ARE A CAPITAL ASSET!!!!!!!!!!!!!!!!!!!!!!!

"nuff said........

-------------------------
Steve

jonesy

I sold $20000 worth of coins at Heritage last year. I'm not a dealer. Was I supposed to pay taxes on that?

pharmer

let me guess, a little tax-season accountant rant? Take up house painting with that broad brush and relax.

prooflike

I sold $20000 worth of coins at Heritage last year. I'm not a dealer. Was I supposed to pay taxes on that

$20000 - your costs = net capital gian

YES.

jonesy

<< <i>I sold $20000 worth of coins at Heritage last year. I'm not a dealer. Was I supposed to pay taxes on that

$20000 - your costs = net capital gian

YES. >>


Seriously???

prooflike

Forgot to add, unless you reinvest in collectible coins, then it is a "wash"

you can not reinvest in bullion.

jonesy

Suppose I paid $21000 for them.

MadMarty

<< <i>

<< <i>I sold $20000 worth of coins at Heritage last year. I'm not a dealer. Was I supposed to pay taxes on that

$20000 - your costs = net capital gian

YES. >>


Seriously??? >>



We know Jonesy, the dog ate the receipts!!! Your audit is waiting!!

prooflike

yes seriously,

If you sold all your coins for $100,000 and never bought coins for the rest of that fiscal year, and your initial cost on coins was $40,000, your auction sellers fees were $10,000, then you would be liable for capital gains tax on $50,000.

jonesy

I saved the reciepts!! How is the IRS gonna find out?? Will Heritage squeal?? Rat me out?? Hang me out to dry???

Longacre

<< <i>Take up house painting with that broad brush and relax. >>



I never heard that before. I need to use that sometimes!

prooflike

Suppose I paid $21000 for them.

then you would have a capital loss. limit $3000/year, but carries over indefinitely until your loss is consumed.

the only way the IRS could find out is during an audit or if you exceed the reportable deposit amount. I am not encouraging 'dishonesty' here, just don't get caught if you elect to be 'dishonest'

I'm not a tax preparer, nor am I giving advice. Depending on your volume and participation, the IRS may not deem your coin selling as a hobby or investment, but a business, even if you don't consider it a business.

But that decision is best left to the IRS during your audit

Coinhusker1

<< <i>Suppose I paid $21000 for them. >>



You would have a $1,000 capital loss then (assuming you proceeds net of commissions from the Heritage sales was $20k), which you could apply against other capital gains, or carry it over if you do not have any capital gains to use it on.

Edit: Prooflike beat me to it!

prooflike

Morale of this story, when you sell coins, buy more coins and don't worry about it!

jonesy

I want to thank everyone for their advice!!

prooflike

Nobody here gave you advice, what are you talking about ???

weresteve

<< <i>NO, NO, NO, NO, NO!!!!!!!!!!!!! >>



At least one good thing about the upcoming ANA show ... State of Missouri does not require sales tax on coins.

Steve

carl

Actually the poor government really needs the money so we should all be happy to pay any taxes we can so the government can put all that money to all thoes great causes such as thier salaries. Now just imagine if some poor poltician had to work for less than a few hundred thousand a year, plus expense accounts, plus bonuses and plus under the table tidbits and all because we didn't want to pay taxes on coins and other collectables. Why they would have to go to work. Do you all want that? And just because someone doesn't want to pay additional taxes. Now let me think. I've had about 15 giveaways on this forum. Are those tax deductable? What about the cost of the plastic rolls and coin books? Are they tax deductable? If I started that some poor poltician may have to not drive a new car every 6 months and all because of me.

Conder101

<< <i>It amazes me how many times I still see collectors (not dealers) make the same mistake about the sale of coins and the tax consequences.
The sale of a coin does NOT, I repeat, DOES NOT go under "OTHER INCOME" if you are NOT a dealer. As stated directly from an IRS publication:

"Precious Metals and Stones, Stamps, and Coins

Gold, silver, gems, stamps, coins, etc., are capital assets except when they are held for sale by a dealer. Any gain or loss from their sale or exchange generally is a capital gain or loss. If you are a dealer, the amount received from the sale is ordinary business income."

If you report the sale of any coin you sell on eBay as OTHER INCOME, you are hurting yourself by paying more taxes than you should!!!!!!!!

So, please report this under Capital Gains and Losses (Schedule D). Again, COINS ARE A CAPITAL ASSET!!!!!!!!!!!!!!!!!!!!!!! >>


I'd rather list it as other income since my personal tax rate isn't 28% which is the rate coins and collectibles are taxed at under capital gains,

coinlieutenant

I file a schedule C but then you have to pay double on social security though...self employment tax...you're screwed either way...

J

BAJJERFAN

<<"then you would have a capital loss. limit $3000/year, but carries over indefinitely until your loss is consumed.">>

From what has been stated here previously you cannot have a net capital loss on coin sales and excess loss over $3000 cannot be carried over to future years. You can only use capital losses on coins to offset gains on other coins. If you sell one coin for a $1500 profit and another for a $1600 loss your reportable cap gains would be $0 not a $100 loss. Also I don't believe that you can avoid tax (if you choose to report your profits) by reinvesting those profits in other coins.
I might be wrong about the above but that is what I remember about hobby tax from earlier threads on the topic here.

1040taxman

This is a good thread.Where you put an activity like this on your tax return depends on your personal situation.If you do this as part of your livelihood,then it becomes business income and should go on schdeule C,Form 1040.If this is just a hobby,then it would go on the "other income" line of your form 1040.You can only deduct hobby losses to the extent of hobby gains.You can refer to Publication 535 at IRS.GOV.

1040taxman

To extend this further:it would constitute a business if this activity is 50% or more of your income in a given year.You must also show a profit from this type of activity in 3 of any 5 years to constitue a business.For Schedule D,Form 1040 you cannot deduct losses on the sale of coins,but as stated previously,must report any gains subject to a 28% cap gain rate.

Nic

Can one deduct costs in acquiring the coins (travel etc.) when calculating net profit if not filing as a business? K

1040taxman

NIC,No you cannot deduct travel,or any other kind of miscellaneous type of expenses because they are considered personal in nature.

Longacre

All this tax talk is making me a little sleepy...

oreville

cONDER101:

You said: <<<<<<I'd rather list it as other income since my personal tax rate isn't 28% which is the rate coins and collectibles are taxed at under capital gains>>>>>>>>

Not correct.



This 28% rate for collectibles is only the MAXIMUM tax rate for the long term rate on sale of collectibles. If your actual marginal tax rate is less than 28%, then you will be taxed at those lower rates NOT at 28%.

Where did you get the idea that you had to pay the 28% capital gains tax rate when your regular rate is 10%, 15% or 25%?