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Selling coins and 1099s???

MadMartyMadMarty Posts: 16,697 ✭✭✭
I saw a guy bring a $1000 face bag of scrap silver into a coin shop. The exchange was 8.85 times face, total $8850. The dealer made a copy of his DL and got his SSN and told him to expect a 1099 at the end of the year!! He said (when I asked) that it was a government requirement on all bullion transactions over $3000 and the records have to be turned into the IRS. Do any other dealers know about this?
It is not exactly cheating, I prefer to consider it creative problem solving!!!

Comments

  • DorkGirlDorkGirl Posts: 9,994 ✭✭✭
    I saw my dealer do the same thing with gold and silver, but for selling any amount of either, just to have a record of it.
    Becky
  • StuartStuart Posts: 9,761 ✭✭✭✭✭
    Marty: Perhaps the seller should have considered splitting the sale up into 3 separate transactions of less than $3000 each which could have been executed on 3 different days to comply with the law ... image

    Stuart

    Collect 18th & 19th Century US Type Coins, Silver Dollars, $20 Gold Double Eagles and World Crowns & Talers with High Eye Appeal

    "Luck is what happens when Preparation meets Opportunity"
  • FrankcoinsFrankcoins Posts: 4,569 ✭✭✭


    << <i>Marty: Perhaps the seller should have considered splitting the sale up into 3 separate transactions of less than $3000 each which could have been executed on 3 different days to comply with the law ... image >>



    What a fast way to go to jail...deliberately "structuring" transactions to make reportable into non-reportable...
    Frank Provasek - PCGS Authorized Dealer, Life Member ANA, Member TNA. www.frankcoins.com
  • JrGMan2004JrGMan2004 Posts: 7,557
    I know that with ICTA anti-laundering requirements, we have to report to the gov't whenever we make apurchase over $10,000 from the public... I vaguely remember reading the requirements, but don't remember all the exact details...
    -George
    42/92
  • Here is a case where good records will play a part, the seller of the silver would be responsible for tax only on the profit made on the silver, as long as he can prove what it cost him in the first place .

    example if the 1000.00 bag of scrape silver cost him 4000.00 to assemble then he is responsible for the profit at 4,850.00.

    The dealer likewise with his record of paying 8,850.00 for the 1000.00 bag of scrape silver will be responsible only for the profit made from selling it .

    Rick
    Touch Not The Cat Bot A Glove !!

    image

    Always Looking for Raw Proof Lincoln Cents !!
  • TheRavenTheRaven Posts: 4,143 ✭✭✭✭
    Big difference between the $3,000 figure and $10,000 which is what I have always heard.....
    Collection under construction: VG Barber Quarters & Halves
  • sweetwillietsweetwilliet Posts: 2,315 ✭✭✭
    What a fast way to go to jail...deliberately "structuring" transactions to make reportable into non-reportable...

    Well, actually, it wouldn't be a fast way to go to jail, because it wouldn't have been reported!!

    Listen. Strange women lying in ponds distributing swords is no basis for a system of government. Supreme executive power derives from a mandate from the masses, not from some farcical aquatic ceremony.
    Will’sProoflikes
  • fcfc Posts: 12,793 ✭✭✭
    10,000, as in the number, rings a bell with me when it
    comes to cash/money transactions at banks.

    or was it casinos?

    but i never heard 10,000, the number, connected with
    bullion yet.
  • TheRavenTheRaven Posts: 4,143 ✭✭✭✭
    If you wanted to break up your sales to keep under a limit that would not be difficult to do and how would they know.....

    Private transactions are the way to go image
    Collection under construction: VG Barber Quarters & Halves
  • CladiatorCladiator Posts: 18,059 ✭✭✭✭✭


    << <i>Here is a case where good records will play a part, the seller of the silver would be responsible for tax only on the profit made on the silver, as long as he can prove what it cost him in the first place. >>

    So what happens if the feller doefn't remember and/or can't prove what it coft him originally? He's juft off the hook for any taxes?
  • rb345rb345 Posts: 64
    Cash transactions of $10,000 or more at banks have to be reported as part of federal drug and money laundering enforcement efforts. That
    requirement is very different from the $3000 sale reporting requirement concerning silver, because it is only intended to help the IRS to track
    income which might not be reported. As there is no duty to structure one's business affairs so as to owe additional taxes or so as to attract
    the attention of the IRS, selling smaller amounts to avoid that threshhold is not illegal.

    What would be illegal is failure to declare any profit on such a sale, and to pay taxes on such profit. And that remains true even if the sale is
    reported to the IRS.

    Either way it is the payment of owed tax, not the reporting of the sale, which matters.

    ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------


  • BarndogBarndog Posts: 20,502 ✭✭✭✭✭


    << <i>So what happens if the feller doefn't remember and/or can't prove what it coft him originally? He's juft off the hook for any taxes? >>



    Certainly, just like the guy from "Survivor"

  • bushmaster8bushmaster8 Posts: 5,616


    << <i>So what happens if the feller doefn't remember and/or can't prove what it coft him originally? He's juft off the hook for any taxes? >>



    Hardly. He would have have to pay tax on the entire $4850.
    "Wars are really ugly! They're dirty
    and they're cold.
    I don't want nobody to shoot me in the foxhole."
    Mary






    Best Franklin Website
  • StuartStuart Posts: 9,761 ✭✭✭✭✭
    << What a fast way to go to jail...deliberately "structuring" transactions to make reportable into non-reportable... >>


    Frank: Please re-read my previous post, especially the now highlighted words. If one is compliant with the law, then one is not at risk.

    << Perhaps the seller should have considered splitting the sale up into 3 separate transactions of less than $3000 each which could have been executed on 3 different days to comply with the law ...

    Stuart

    Collect 18th & 19th Century US Type Coins, Silver Dollars, $20 Gold Double Eagles and World Crowns & Talers with High Eye Appeal

    "Luck is what happens when Preparation meets Opportunity"
  • CladiatorCladiator Posts: 18,059 ✭✭✭✭✭
    Aha!, I thought for a second maybe I found a chink in the armor of our overlords. Oh well, guefs not.
  • RussRuss Posts: 48,514 ✭✭✭


    << <i><< So what happens if the feller doefn't remember and/or can't prove what it coft him originally? He's juft off the hook for any taxes? >>

    Hardly. He would have have to pay tax on the entire $4850. >>



    Actually, it would be the entire $8850.

    Russ, NCNE
  • MoneyCollectorMoneyCollector Posts: 451 ✭✭✭
    Actually, without records the taxable gain would only be $7,850 since the seller's tax basis would be $1,000, the face value of the coins. It would be assumed that the $1,000 face value is after-tax dollars (ie previously taxed.)
  • RussRuss Posts: 48,514 ✭✭✭


    << <i>Actually, without records the taxable gain would only be $7,850 since the seller's tax basis would be $1,000, the face value of the coins. >>



    Oh yeah, forgot about that face value thing. Pretty hard for the IRS to argue zero cost basis with coins.

    Russ, NCNE
  • FrankcoinsFrankcoins Posts: 4,569 ✭✭✭


    << <i><< What a fast way to go to jail...deliberately "structuring" transactions to make reportable into non-reportable... >>


    Frank: Please re-read my previous post, especially the now highlighted words. If one is compliant with the law, then one is not at risk.

    << Perhaps the seller should have considered splitting the sale up into 3 separate transactions of less than $3000 each which could have been executed on 3 different days to comply with the law ... >>



    From IRS form 8300

    Multiple payments. If you receive more
    than one cash payment for a single
    transaction or for related transactions,
    you must report the multiple payments
    any time you receive a total amount that
    exceeds $10,000 within any 12-month
    period. Submit the report within 15 days
    of the date you receive the payment that
    causes the total amount to exceed
    $10,000.

    Penalties may also be imposed for
    causing, or attempting to cause, a trade
    or business to fail to file a required
    report; for causing, or attempting to
    cause, a trade or business to file a
    required report containing a material
    omission or misstatement of fact; or for
    structuring, or attempting to structure,
    transactions to avoid the reporting
    requirements. These violations may also
    be subject to criminal prosecution
    which, upon conviction, may result in
    imprisonment of up to 5 years or fines of
    up to $250,000 for individuals and
    $500,000 for corporations or both.
    Frank Provasek - PCGS Authorized Dealer, Life Member ANA, Member TNA. www.frankcoins.com
  • MadMartyMadMarty Posts: 16,697 ✭✭✭
    He also said they have to keep track of ALL bullion sales and buys. If the TOTAL for the year is over $3000 bought or sold it has to be reported.
    It is not exactly cheating, I prefer to consider it creative problem solving!!!

  • MrSpudMrSpud Posts: 4,499 ✭✭✭
    So what if someone who kept scrupulous records bought a $1000 face value bag of silver coins in 1999 for $5000 and then bought another bag yesterday for $9000. Then they mixed the two bags together and then split them back into 2 bags and then sold a bag tomorrow for $8000. Would they report a loss of $1000 or a profit of $3000?
    image

  • airplanenutairplanenut Posts: 22,198 ✭✭✭✭✭


    << <i>So what if someone who kept scrupulous records bought a $1000 face value bag of silver coins in 1999 for $5000 and then bought another bag yesterday for $9000. Then they mixed the two bags together and then split them back into 2 bags and then sold a bag tomorrow for $8000. Would they report a loss of $1000 or a profit of $3000?
    image >>

    You can claim whatever you want as your original payment, but you have a different cost basis when you sell the other bag. Let's use a simpler example:

    I buy item A and B together, and spend $500 (each is $250). Item A is for my collection, Item B for resale. I sell Item B for $450. I can claim a $200 profit now, but if I claim no profit (claim $450 buy price) and I sell item A, I can only report a purchase price of $50, not $250. Remember, though, that this likely won't work with an itemized receipt--just a receipt with the total for the whole purchase.
    JK Coin Photography - eBay Consignments | High Quality Photos | LOW Prices | 20% of Consignment Proceeds Go to Pancreatic Cancer Research
  • RussRuss Posts: 48,514 ✭✭✭


    << <i>You can claim whatever you want as your original payment, but you have a different cost basis when you sell the other bag. >>



    Are you sure the IRS doesn't require FIFO on stuff like this?

    Russ, NCNE
  • segojasegoja Posts: 6,136 ✭✭✭✭
    Now we are getting complicated.

    Where are the accountants when you need them?

    Doesn't the Patriot Act get involved here as well???
    JMSCoins Website Link


    Ike Specialist

    Finest Toned Ike I've Ever Seen, been looking since 1986

    image
  • sweetwillietsweetwilliet Posts: 2,315 ✭✭✭
    << You can claim whatever you want as your original payment, but you have a different cost basis when you sell the other bag. >>



    Are you sure the IRS doesn't require FIFO on stuff like this?

    I don't think FIFO applies if you mix the bags, you have no idea where each one went. In the above example, your cost basis for both is $14,000, so if you sell half for $8,000, you claim a profit of $1,000, and you new cost basis is $7,000 for the second bag. It is like mutual fund cost basis.
    Listen. Strange women lying in ponds distributing swords is no basis for a system of government. Supreme executive power derives from a mandate from the masses, not from some farcical aquatic ceremony.
    Will’sProoflikes
  • MadMartyMadMarty Posts: 16,697 ✭✭✭


    << <i>Now we are getting complicated.

    Where are the accountants when you need them?

    Doesn't the Patriot Act get involved here as well??? >>




    image
    It is not exactly cheating, I prefer to consider it creative problem solving!!!

  • TheRavenTheRaven Posts: 4,143 ✭✭✭✭
    So make it simple sell privately in smaller quantities.....
    Collection under construction: VG Barber Quarters & Halves
  • MrSpudMrSpud Posts: 4,499 ✭✭✭
    Ok, I think it is starting to make sense. Now I'll ask the tough question.

    Suppose someone buys 3 key date coins in PCGS holders (Say something like 3 PF68 DCAM AH Kennedys) and three more key date coins slabbed in third tier slabs (Say something like 3 PF68 DCAM AH Kennedys in a Billybob slab) from the same dealer for a lump sum. Can that person then claim that each coin cost the same and sell the third tier ones on E-bay for a loss (assuming that the bidding doesn't reach the cost per coin) and then keep the PCGS coins for their long term collection?
  • carlcarl Posts: 2,054
    I wonder at times if some of these threads are actually posted by some government agency. Sort of like the ones that are supposed to be monitoring our phone calls. All of the concerns here are fairly true but not to often followed, at least of what I have seen.
    I go to coin shows 2, 3 and sometimes more a month and have never seen anyone document what they buy, only some, and I mean some, dealers document what they sell. I may have missed the more expensive transactions, but I don't think to many people worry about a 1099 for coin sales. I know at flea markets there are people that sell items for lots and lots of money and no records of any kind there. I know of at least 6 coin dealers that do the flea markets from 2 to 3 times a week and no records. If anyone ever asks my name for a coin sale, I walk away. I think the IRS has a lot more to think about than a few coin dealers making off with not paying a few pennies.
    However, there are stories of the IRS spending millions to capture someone that cheated them out of a few hundred dollars.
    Carl


  • << <i>Ok, I think it is starting to make sense. Now I'll ask the tough question.

    Suppose someone buys 3 key date coins in PCGS holders (Say something like 3 PF68 DCAM AH Kennedys) and three more key date coins slabbed in third tier slabs (Say something like 3 PF68 DCAM AH Kennedys in a Billybob slab) from the same dealer for a lump sum. Can that person then claim that each coin cost the same and sell the third tier ones on E-bay for a loss (assuming that the bidding doesn't reach the cost per coin) and then keep the PCGS coins for their long term collection? >>



    Yes I believe you could do this, but this would reduce your cost basis in the 3 PCGS coins, thus increasing your gain (and therefore tax) when you eventually sold your collection.

    Lets suppose that you pay $1000 each for the PCGS coins, and $100 each for billybobs coins. Total $3300 (paid in a lump sum).

    Cost Basis: each coin is $550
    So you sell the 3 third world slabs for $300. Your total basis in the coins is $1650. Loss of $1350.
    You still have 3 PCGS coins, but your cost basis is only $550 each (instead of the $1000 you 'actually' paid). So if you sell them for $1000 each 1 year later, you will have a taxable gain of $1350 ($3000-$1650)
    Mark Piersall
    Random Collector
    www.marksmedals.com
  • MrSpudMrSpud Posts: 4,499 ✭✭✭


    << <i>Yes I believe you could do this, but this would reduce your cost basis in the 3 PCGS coins, thus increasing your gain (and therefore tax) when you eventually sold your collection. >>


    OK, I see. You would still end up having to report the profit eventually. But still, you would be able to assemble a more expensive collection this way totally legally. The return on investment could, at least in theory, end up higher because you would have the future money that would have gone to the IRS earlier in the form of coins in your collection (hopefully) gaining in value. Kind of like when they remove money pre-tax from your paycheck for a 401K so that it can be invested in your retirement. You still have to pay the tax when you are old but you end up with more than if you would have had to pay the tax before it was put into the 401K. Is this correcct?
    image

    One last set of questions. Say you have a really nice collection that you put together over the years. You also sold bullion (that you bought back in 1999 for melt value) and bought and sold a bunch of coins at a loss while you were putting together the long term collection (i.e. by buying both PCGS for long term and Billybob for resale). By coincedence the amount of loss you incurred selling Billybob coins exactly matched any profit you made on selling the bullion thus realizing a profit of $0. Are you then allowed to move to Guatemala and take your long term collection with you? If so, when you get older in Guatemala are you allowed to sell your coin collection on E-bay? Would you still have to pay income tax on any profits to the country you lived in years ago? After you sold them would you be allowed to move back from Guatemala to the country you came from?
    image
  • MadMartyMadMarty Posts: 16,697 ✭✭✭
    You are getting off track people... BULLION!!! Has nothing to do with collector coins, just BULLION!!!
    It is not exactly cheating, I prefer to consider it creative problem solving!!!

  • MrSpudMrSpud Posts: 4,499 ✭✭✭
    Ok image

    You also sold bullion (that you bought back in 1999 for melt value) and bought and sold a bunch of coins at a loss while you were putting together the long term collection (i.e. by buying both PCGS for long term and Billybob for resale). By coincedence the amount of loss you incurred selling Billybob coins exactly matched any profit you made on selling the bullion thus realizing a profit of $0. Would this work for the taxman?
  • ebaytraderebaytrader Posts: 3,312 ✭✭✭
    image


    There's smoe bad info in this thread, excepting Frank Provasek's, which is dead on.
  • 17751775 Posts: 78 ✭✭✭
    For all of you that have not been around long; the reporting on a 1099 has NOTHING to do with the dollar amount ;dealers are required to send a 1099 when certain commodety items are sold to them; $1000 face(or more) in US 90% silver; 25 1 oz Eagles; 25 1oz Maple leafs; 25 1oz KR; 25 1oz Mexican; and 1000 oz. (or more) of 999 silver. It makes no difference what the dollar amount is. This is the brker reporting requirement not the 8300 cash reporting;
  • RussRuss Posts: 48,514 ✭✭✭


    << <i>Suppose someone buys 3 key date coins in PCGS holders (Say something like 3 PF68 DCAM AH Kennedys) and three more key date coins slabbed in third tier slabs (Say something like 3 PF68 DCAM AH Kennedys in a Billybob slab) from the same dealer for a lump sum. Can that person then claim that each coin cost the same and sell the third tier ones on E-bay for a loss (assuming that the bidding doesn't reach the cost per coin) and then keep the PCGS coins for their long term collection? >>

    Yes I believe you could do this, but this would reduce your cost basis in the 3 PCGS coins, thus increasing your gain (and therefore tax) when you eventually sold your collection.

    Lets suppose that you pay $1000 each for the PCGS coins, and $100 each for billybobs coins. Total $3300 (paid in a lump sum). >>



    DEAL!!!!!!

    Russ, NCNE
  • TheRavenTheRaven Posts: 4,143 ✭✭✭✭
    So the government is concerned with $1000 in change being bought/sold sold instead of $100 face being bought for $1000.....

    Makes sense.....
    Collection under construction: VG Barber Quarters & Halves
  • LALASD4LALASD4 Posts: 3,602 ✭✭✭
    This sounds pretty simple, it is just like the 1099's that you get from your stock broker at the end of the year that reports every stock sale on it. And you just have to report it on Schedule D.
    Coin Collector, Chicken Owner, Licensed Tax Preparer & Insurance Broker/Agent.
    San Diego, CA


    image
  • A 1099b form needs to be filled out by a dealer when the items they purchase qualify as a commodity contract minimum. It has nothing to do with the amount for which the items were purchased, and some bullion items, such as American Eagles, are exempt. 1099b Forms are required when a dealer purchases
    1000 or more ounces of .999 Silver Bullion
    $1000 Face Silver Bag
    25 or more Gold Krands, Maple Leafs, or Onzas
  • May I complicate matters further? Hobby losses are not deductible. So is it really acceptable to reallocated the tax bases of the six coins in the previous hypo? Besides that, why would you want to? In doing so, the basis on the expensive coins is eaten away, and the tax liablility is increased upon their subsequent sale without an offsetting deduction. image

    Of course, you could always show that your "hobby" made a profit in three of the last five years and should therefore be viewed as a business. Or you could show that the loss was a capital loss and could be claimed that way if the coins were bought with an expectation of gain. image
    The strangest things seem suddenly routine.
  • You can thank the good old "Patriot" Act for this nonsense. Many of my local shops have signs posted stating the Patriot Act requirements now in effect.

    I should also point out that I was unable to buy Sac Dollars or halves from many banks other than my own because they said the Patriot Act forbids it.

    It's this kind of garbage that made me much less conservative than I use to be, because under the Democrats or Moderate Republicans (who always get bashed as "Big Brother" by talk radio) we didn't have this outrageous invasion of privacy. This is nothing but a gimmick to pick up more tax revenue for war-mongering under the guise of "patriotism".

    Since this administration took over, middle class tax audits have gone to record levels. Rush and Hannity and the bunch can stick the Patriot Act up their you know what (I use to listen to these guys until reality bit me on the arse)....

    BigBen

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