Selling coins and 1099s???
MadMarty
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!!!
0
Comments
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"
<< <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 ... >>
What a fast way to go to jail...deliberately "structuring" transactions to make reportable into non-reportable...
42/92
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
Always Looking for Raw Proof Lincoln Cents !!
Well, actually, it wouldn't be a fast way to go to jail, because it wouldn't have been reported!!
Will’sProoflikes
comes to cash/money transactions at banks.
or was it casinos?
but i never heard 10,000, the number, connected with
bullion yet.
Private transactions are the way to go
<< <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?
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.
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
<< <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"
<< <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.
and they're cold.
I don't want nobody to shoot me in the foxhole."
Mary
Best Franklin Website
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"
<< <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
<< <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
<< <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.
<< <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?
>>
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.
<< <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
Where are the accountants when you need them?
Doesn't the Patriot Act get involved here as well???
Ike Specialist
Finest Toned Ike I've Ever Seen, been looking since 1986
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.
Will’sProoflikes
<< <i>Now we are getting complicated.
Where are the accountants when you need them?
Doesn't the Patriot Act get involved here as well??? >>
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?
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.
<< <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)
Random Collector
www.marksmedals.com
<< <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?
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?
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?
There's smoe bad info in this thread, excepting Frank Provasek's, which is dead on.
<< <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
Makes sense.....
San Diego, CA
1000 or more ounces of .999 Silver Bullion
$1000 Face Silver Bag
25 or more Gold Krands, Maple Leafs, or Onzas
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.
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