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Very Important Question about Estate Planning- Bullion verses 90%

I was given a tax law that talks about what can be stepped up in value when it comes to coin collections. For example a $20 gold coin purchased in 1970 for $35 dollars by your father will be stepped up in value when you inherit them. Your cost basis will be what they were worth when they became yours.
I am attaching a copy of an IRS rule that was given to me by an estate attorney. I think that it says gold and silver bullion does not qualify as a step up in value. Does that include 100 ounce silver bullion bars, on only coins made in $50, $25 etc bullion.
My reason for asking is why would a 1964 half dollar be able to be stepped up in value but not a 1 ounce silver round. Am I reading this wrong or has the question as to which is a better investment between buying 90% junk silver verses silver rounds or bars. If one can be given to your family at a new cost basis, and the other one cannot be stepped up in value.

Can someone clarify this for me- I am attaching the rule that was sent to me-

Exception for certain coins and bullion.-- the term “collectible” shall not include--
(A) any coin which is--
(i) a gold coin described in paragraph (7), (8), (9), or (10) of section 5112(a) of title 31, United States Code (see below),
(ii) a silver coin described in section 5112(e) of title 31, United States Code (see below),
(iii) a platinum coin described in section 5112(k) of title 31, United States Code (see below), or
(iv) a coin issued under the laws of any State, or
(B) any gold, silver, platinum, or palladium bullion of a fineness equal to or exceeding the minimum fineness that a contract market (as described in section 7 of the Commodity Exchange Act, 7 U.S.C. 7) requires for metals which may be delivered in satisfaction of a regulated futures contract,
if such bullion is in the physical possession of a trustee described under subsection (a) of this section.

Here are the sections that are made reference to above:

Section 5112(a) of title 31 of the United States Code states that the Secretary of the Treasury may mint and issue only the following coins:
(7) A fifty dollar gold coin that is 32.7 millimeters in diameter, weighs 33.931 grams, and contains one troy ounce of fine gold.
(8) A twenty-five dollar gold coin that is 27.0 millimeters in diameter, weighs 16.966 grams, and contains one-half troy ounce of fine gold.
(9) A ten dollar gold coin that is 22.0 millimeters in diameter, weighs 8.483 grams, and contains one-fourth troy ounce of fine gold.
(10) A five dollar gold coin that is 16.5 millimeters in diameter, weighs 3.393 grams, and contains one-tenth troy ounce of fine gold.

Section 5112(e) of title 31 states that the Secretary shall mint and issue, in quantities sufficient to meet public demand, coins which
(a) are 40.6 millimeters in diameter and weigh 31.103 grams;
(b) contain .999 fine silver;
(c) have a design--
(d) symbolic of Liberty on the obverse side; and
(e) of an eagle on the reverse side;
(f) have inscriptions of the year of minting or issuance, and the words “Liberty”, “In God We Trust”, “United States of America”, “1 Oz. Fine Silver”, “E Pluribus Unum”, and “One Dollar”; and
(g) have reeded edges.

Section 5112(K) of title 31 states the Secretary may mint and issue platinum bullion coins and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary's discretion, may prescribe from time to time.


Comments

  • ModCrewmanModCrewman Posts: 4,027 ✭✭✭✭✭
    That code section with the definition of collectibles appears to be from the IRC section 408(m)(3) which relates to allowable investments for an IRA account.

    As a CPA...I'm not aware of any limitation on the basis step-up rules being applied to bullion.
  • That sure makes sense to me and I hope that it is true. I would have to divide my silver in half, the older coins to keep, the bullion coins and bars to sell- That doesn't seem right. Thank you for responding.
  • MsMorrisineMsMorrisine Posts: 32,123 ✭✭✭✭✭
    Is there a contract market for silver rounds 1oz silver and gold bars??


    I'm trying to plave a no name round into (A) or (B) and wonder how even they would fit in.



    If I were advising Congress or the IRS, I would tell them that taking a 1964 Kennedy solely as one or the other is dangerous since they are sold as both. What a great loophole if not written properly. All CC Morgans could be treated as 90% Silver if the law was not written right. And I wonder how one would word that law to ensure collectible Morgans are treated separately from cull Morgans.

    Current maintainer of Stone's Master List of Favorite Websites // My BST transactions
  • MsMorrisineMsMorrisine Posts: 32,123 ✭✭✭✭✭
    nevermind.
    Current maintainer of Stone's Master List of Favorite Websites // My BST transactions
  • Raybob15239Raybob15239 Posts: 1,359 ✭✭✭
    I'm not aware of a restriction on the stepped up basis. I believe that it applies to all assets, regardless of their nature.
    Successful B/S/T transactions: As Seller: PascoWA (June 2008); MsMorrisine (April 2009); ECHOES (July 2009) As Buyer: bfjohnson (July 2008); robkool (Dec 2010); itsnotjustme (Dec 2010) TwoSides2aCoin (Dec 2018) PrivateCoin Jan 2019
  • roadrunnerroadrunner Posts: 28,303 ✭✭✭✭✭
    The tax code currently treats bullion as a "collectible" for capital gains purposes. How would they work around that?

    roadrunner
    Barbarous Relic No More, LSCC -GoldSeek--shadow stats--SafeHaven--321gold

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