Guy wants to convert 1 OZ. eagles into tenths
CaptHenway
Posts: 32,120 ✭✭✭✭✭
Had a call today from a guy who may want to convert 100 of his one ounce gold eagles into 1,000 one-tenth ounce gold eagles because of the 1099 situation.
Serious question: Let's hypothesize for the sake of discussion that it would cost him 8% to do so. (Don't have any numbers yet--that's just a WAG, so don't nitpick it) Should he?
TD
Serious question: Let's hypothesize for the sake of discussion that it would cost him 8% to do so. (Don't have any numbers yet--that's just a WAG, so don't nitpick it) Should he?
TD
Numismatist. 50 year member ANA. Winner of four ANA Heath Literary Awards; three Wayte and Olga Raymond Literary Awards; Numismatist of the Year Award 2009, and Lifetime Achievement Award 2020. Winner numerous NLG Literary Awards.
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And, I'm sure that the answer to that question really depends upon the course of action that the government takes, in many different areas.
The problem with losing one little freedom at a time is that they will end up making criminals of us all, but only in stages and only one small group at a time.
Isn't that the issue, or am I all screwed up?
I knew it would happen.
Not necessarily. He may not want his personal information, including his address and social security information in a file in the back room where the help has open access to a gold receipt. He may not want to put his dealer through the hassle of doing a 1099 everytime he needs a little cash to deal with stuff. He may not feel it is anyone's business when he sells his private assets and fully intends to fill out his annual statement. He may like the convenience of holding smaller units in case of a real or imagined SHTF situation. There are many reasons to have smaller denomination units and you really are not required to leave a paper trail everytime you do a transaction. Just like dealing in cash, just because he uses bens instead of citi, he's not a criminal. Pretty soon, you are likely going to be required to register your bens...what's a regular guy doing with a ben anyway, certainly he's up to no good.
Edited for clarification
So now it's illegal to even think about being party to a transaction where a guy wants to buy 1/10 oz. AGEs at a premium while selling off 1 oz. AGEs because of an intrusive and onerous law that ought to be repealed asap?
He may not want his personal information, including his address and social security information in a file in the back room where the help has open access. He may not want to put his dealer through the hassle of doing a 1099 everytime he needs a little cash to deal with stuff. He may not feel it is anyone's business when he sells his private assets and fully intends to fill out his annual statement. Just like dealing in cash, just because he uses bens instead of citi, he's not a criminal...
True enough. My remarks were intended to point out that we have very little to say about how we are taxed, and that our recourse is limited.
I knew it would happen.
I think he would farther ahead just to take the 11K and buy 1/10's....
Net him 7+ more ounces of gold...
LM-ANA3242-CSNS308-MSNS226-ICTA
I think he would farther ahead just to take the 11K and buy 1/10's....
Net him 7+ more ounces of gold...
Bingo! That's exactly right!
I knew it would happen.
IF and When the 1099 thing kicks in.... :-)
LM-ANA3242-CSNS308-MSNS226-ICTA
Tulving - 4% more for 1/10
Kitco - 6.5% more for 1/10
Apmex - 9% more for 1/10
In a strait trade I personally would not give up the tenth ouncers for less than 7.5% of spot per ounce. At 1350 spot I would collect 101.25 for every ounce of tenths I gave up for once ounce AGES. Your caller would have to give me his 100 one ouncers AND 10,125 for my 1000 tenth ouncer. That's MY best price. Otherwise I'm keeping the tenth ouncers.
I believe as we see gold continue up the premium differences will increase. If your caller is serious about converting to tenths, I would advise him to find his best trade and do it now.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
roadrunner
Yes, Sovereigns work!
I knew it would happen.
<< <i>Current Premium difference (over spot) between 1/10 ounce AGE and 1 ounce AGE:
Tulving - 4% more for 1/10
Kitco - 6.5% more for 1/10
Apmex - 9% more for 1/10
In a strait trade I personally would not give up the tenth ouncers for less than 7.5% of spot per ounce. At 1350 spot I would collect 101.25 for every ounce of tenths I gave up for once ounce AGES. Your caller would have to give me his 100 one ouncers AND 10,125 for my 1000 tenth ouncer. That's MY best price. Otherwise I'm keeping the tenth ouncers.
I believe as we see gold continue up the premium differences will increase. If your caller is serious about converting to tenths, I would advise him to find his best trade and do it now. >>
Yes, but they are not offering to take the one ounce eagles in at their full retail price in trade against a purchase of tenths. If I have to take the guys one ouncers in at trade and lay them off, plus make some money for myself, its going to cost the guy a lot more than those perceantages!!!!!!!
Based on a few calls we made, the best I could do for the guy is charge him +9.5% just to swap on a 100 ounce deal.
TD
I knew it would happen.
Then, what, to sell them he intends to do 1000 separate transactions to avoid this 1099 rule?
I guess it depends on how much his time is worth to him.
If he wants to spend the precious extra hours of his life selling these off one at a time to dodge reporting and taxation requirements, that would be up to him.
It isn't the decision I'd make.
Liberty: Parent of Science & Industry
He may be acting prematurely. If I were him I wouldn't convert until later in 2011 when I was sure the 1099 provision in the law was not modified or removed. A good chance a republican majority might change things before 2012.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>Well, of course the relevant question is whether the guy ever intends to report profits from the sale of his gold.
And, I'm sure that the answer to that question really depends upon the course of action that the government takes, in many different areas.
The problem with losing one little freedom at a time is that they will end up making criminals of us all, but only in stages and only one small group at a time.
Isn't that the issue, or am I all screwed up? >>
consider that "The Sons of Liberty" were the original American Criminals and that's not such bad company
Congress had a good chance of repealing the 1099 section a few weeks ago, but it was blocked... blame it on political gridlock.
<< <i>What if he forgets converting and takes the gold and sells it in Canada? (assuming the 1099 thingy stays in the law without an IRS exemption)
Congress had a good chance of repealing the 1099 section a few weeks ago, but it was blocked...by the Republicans. Although I don't hold it against them. I blame it on political gridlock. >>
If you think the repubs blocked a repeal of the 1099 provison you are sorely misled. Take a look at what was tied to that and what was actually voted on and then take another peek.
<< <i>What if he forgets converting and takes the gold and sells it in Canada? (assuming the 1099 thingy stays in the law without an IRS exemption) >>
That is an interesting notion! Sell it to the proverbial Swiss Bank!!!!
.
Can export restrictions be far behind????
TD
I knew it would happen.
If he wants to spend the precious extra hours of his life selling these off one at a time to dodge reporting and taxation requirements, that would be up to him.
It isn't the decision I'd make
And that's also 1000 separate dealers if he decides to sell all in one year. 500 if 2 yrs. 250 if 4 yrs. etc.
roadrunner
<< <i>My understanding is that you can't take more than $10,000 out of the country without having it taxed by 50% already. Is that not the case? >>
I don't think there's any tax involved, you just have to declare it. Anyway, the face value is likely to be a lot less than $10,000.
I believe the law specifies "monetary instruments". Here's the definition:
(1) Coin or currency of the United States or of any other country,
(2) traveler’s checks in any form,
(3) negotiable instruments (including checks, promissory notes, and money orders) in bearer form, endorsed without restriction, made out to a fictitious payee, or otherwise in such form that title thereto passes upon delivery,
(4) incomplete instruments (including checks, promissory notes, and money orders) that are
signed but on which the name of the payee has been omitted, and
(5) securities or stock in bearer form or otherwise in such form that title thereto passes upon delivery.
I can't see where it could apply to the value of things you take with you. Otherwise they would be weighing the gold jewelry of everyone. I would be comfortable knowing the face value of the AGEs would be far below the $10k limit.
New collectors, please educate yourself before spending money on coins; there are people who believe that using numismatic knowledge to rip the naïve is what this hobby is all about.
<< <i>
<< <i>My understanding is that you can't take more than $10,000 out of the country without having it taxed by 50% already. Is that not the case? >>
I don't think there's any tax involved, you just have to declare it. Anyway, the face value is likely to be a lot less than $10,000.
I believe the law specifies "monetary instruments". Here's the definition:
(1) Coin or currency of the United States or of any other country,
(2) traveler’s checks in any form,
(3) negotiable instruments (including checks, promissory notes, and money orders) in bearer form, endorsed without restriction, made out to a fictitious payee, or otherwise in such form that title thereto passes upon delivery,
(4) incomplete instruments (including checks, promissory notes, and money orders) that are
signed but on which the name of the payee has been omitted, and
(5) securities or stock in bearer form or otherwise in such form that title thereto passes upon delivery.
I can't see where it could apply to the value of things you take with you. Otherwise they would be weighing the gold jewelry of everyone. I would be comfortable knowing the face value of the AGEs would be far below the $10k limit. >>
As per the US Customs&Border Protection, "Gold Bullion is not a monetary instrument for purposes of this requirement".
in 1099 reporting requirements for coin transactions in ANY WAY. Some people went hysterical when they saw ALL PAYMENTS
AGGREGATING $600 OR MORE IN A CALENDAR YEAR, but that only applies to items denoted 1 through 6. ALL PAYMENTS
does not mean ALL PAYMENTS of EVERYTHING! I have verified this with three departments of the IRS and the Thomson Reuters
RIA company that develops the continuing education CPE courses in conjunctiion with the IRS. They just happen to be located
a few miles from where I live. Here is the page from their newly released training guide.
<< <i>Looks like the tax laws can be both complex and confusing at the same time... >>
Well, when you pay lawyers to write 'em, don't be surprised if you have to pay lawyers to explain 'em.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Our wonderful government at work.