Tax Question for Collectibles: U.S. Coin vs. Bicycle vs. Thimbles
Prethen
Posts: 3,461 ✭✭✭
I realize on the business side of coins, if you buy/sell as a business, there's an obvious tax consequence. I've seen on this board multiple times that, even as a collector, when you sell, there is a tax consequence.
If I bought a coin 30 years ago for $10 and sell it tomorrow for $100. I assume that there's a capital gain of $90 that has to be reported.
How about the opposite? If I bought it for $100 30 years ago and then sell it for $10, is there a capital loss of $90?
How about a bicycle? If I profit on the sale of a bicycle that I used for years...is there a tax consequence?
How about a collection of thimbles? I realize that such a collector will likely be sunk when they go to sale. But, for argument sake, would they have to report a capital gain on sale of such a collection if it were to be more than they paid?
My point is, for the coin collector, what makes their sale of a coin special over that of any other time they might sell? Is there a special part of the tax code that someone can refer to? And, if a loss is taken, I would suspect if gains must be reported then a net loss could result in a tax deduction?
If I bought a coin 30 years ago for $10 and sell it tomorrow for $100. I assume that there's a capital gain of $90 that has to be reported.
How about the opposite? If I bought it for $100 30 years ago and then sell it for $10, is there a capital loss of $90?
How about a bicycle? If I profit on the sale of a bicycle that I used for years...is there a tax consequence?
How about a collection of thimbles? I realize that such a collector will likely be sunk when they go to sale. But, for argument sake, would they have to report a capital gain on sale of such a collection if it were to be more than they paid?
My point is, for the coin collector, what makes their sale of a coin special over that of any other time they might sell? Is there a special part of the tax code that someone can refer to? And, if a loss is taken, I would suspect if gains must be reported then a net loss could result in a tax deduction?
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<< <i>I realize on the business side of coins, if you buy/sell as a business, there's an obvious tax consequence. I've seen on this board multiple times that, even as a collector, when you sell, there is a tax consequence.
If I bought a coin 30 years ago for $10 and sell it tomorrow for $100. I assume that there's a capital gain of $90 that has to be reported.
How about the opposite? If I bought it for $100 30 years ago and then sell it for $10, is there a capital loss of $90?
How about a bicycle? If I profit on the sale of a bicycle that I used for years...is there a tax consequence?
How about a collection of thimbles? I realize that such a collector will likely be sunk when they go to sale. But, for argument sake, would they have to report a capital gain on sale of such a collection if it were to be more than they paid?
My point is, for the coin collector, what makes their sale of a coin special over that of any other time they might sell? Is there a special part of the tax code that someone can refer to? And, if a loss is taken, I would suspect if gains must be reported then a net loss could result in a tax deduction? >>
Are we talking about a cash transaction?
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
``https://ebay.us/m/KxolR5
No Way Out: Stimulus and Money Printing Are the Only Path Left
If I hit a home run, I try to sell some losers to offset the gain.
It's like MLB - if I hit a home run 8-10% of the time, I'm happy.
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Non-Registry Collection
Game Used Cards Collection
<< <i>I realize on the business side of coins, if you buy/sell as a business, there's an obvious tax consequence. I've seen on this board multiple times that, even as a collector, when you sell, there is a tax consequence.
If I bought a coin 30 years ago for $10 and sell it tomorrow for $100. I assume that there's a capital gain of $90 that has to be reported.
How about the opposite? If I bought it for $100 30 years ago and then sell it for $10, is there a capital loss of $90?
How about a bicycle? If I profit on the sale of a bicycle that I used for years...is there a tax consequence?
How about a collection of thimbles? I realize that such a collector will likely be sunk when they go to sale. But, for argument sake, would they have to report a capital gain on sale of such a collection if it were to be more than they paid?
My point is, for the coin collector, what makes their sale of a coin special over that of any other time they might sell? Is there a special part of the tax code that someone can refer to? And, if a loss is taken, I would suspect if gains must be reported then a net loss could result in a tax deduction? >>
It's been stated here in the past by those who I assume are qualified accountants that non-business coin sales would fall under a hobby tax. As such, the gains are taxed as ordinary income. Losses are allowed only to the point that they can offset gains, but you cannot claim a net loss. At tax time, you may want to verify that this is still the case. If you bought a bicycle for $20 at a garage sale, fixed it up and later sold it for $100, then you have $80 of ordinary gains. I assume that if you sold your world series ticket for $3,000 that any gains would be taxable as well.
<< <i>Here's an article I found on the web on this: Link. To summarize, in general, collectibles are subject to a capital gains tax rate of 28%. The bicycle and thimbles would not be considered collectibles unless they were categorized as "antiques." You could claim the capital gain or loss in your case. You probably just need to have some kind of proof of your cost basis (e.g., how does the IRS know you really bought that coin for $100 30 years ago? do you have a receipt?). >>
If you can't document your cost/basis, IIRC the IRS generally assumes it to be $0.
<< <i>I just make a spreadsheet and hand it to the accountant.
If I hit a home run, I try to sell some losers to offset the gain.
It's like MLB - if I hit a home run 8-10% of the time, I'm happy.
You should be happy...if you "hit a home run 8-10% of the time" you're headed for the hall of fame.*
*Based on average of 600 at bats per season and career of 12 years.
<< <i>
<< <i>Here's an article I found on the web on this: Link. To summarize, in general, collectibles are subject to a capital gains tax rate of 28%. The bicycle and thimbles would not be considered collectibles unless they were categorized as "antiques." You could claim the capital gain or loss in your case. You probably just need to have some kind of proof of your cost basis (e.g., how does the IRS know you really bought that coin for $100 30 years ago? do you have a receipt?). >>
If you can't document your cost/basis, IIRC the IRS generally assumes it to be $0. >>
Wouldn't it at least be face value?
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
For the calenday year 2011, I took some pretty nice gains early in the year, well into five figures, on sales of coins. Then in November, I sold some losers and took a pretty big loss. Since this was the first time I had big numbers to report, I added it all up and reported everything accurately, and ended up with a net loss. So what's the point you ask? The point is: for all the numbers that went into my tax forms, be they sold amounts or cost bases, there was never a point that I was asked to provide any documentation, and everything was taken by the IRS at face value, and never questioned.
Of course, if you are audited, you'd better have something to show, be they receipts or cancelled checks, or you're gonna have to pay capital gains on the whole nut.
Empty Nest Collection
To be safe, report everything, even losses. Some companies like PayPal will issue 1099's if you exceed certain levels (PP is something like $20k+ and 200+ transactions).
Last year I wasn't going to bother reporting the dozen or so ebay sales I had because it was a net loss. But I got a 1099 for my personal PayPal account. I questioned it and learned PayPal will issue a separate 1099 if you exceed their levels for all receipts under a single SSN. Because my business accepts PayPal I had to deal with itemizing my trivial sales.
Take your chances on not reporting a net loss. But if the receipts are reported a red flag will be raised.
Lance.
<< <i>If I have a net loss after selling my coins, do I even need to report it at all? They sold (or are selling) through Heritage. Will Heritage report my auction proceeds to the IRS? They don't know my SSN, and I'm not telling them what it is. >>
I wouldn't think that you would need to, but it would be wise to keep records JIC. IIRC, Heritage and other auction houses do not issue 1099s for proceeds from consignments. They are giving you your money and not theirs.
``https://ebay.us/m/KxolR5
<< <i>I realize on the business side of coins, if you buy/sell as a business, there's an obvious tax consequence. I've seen on this board multiple times that, even as a collector, when you sell, there is a tax consequence.
If I bought a coin 30 years ago for $10 and sell it tomorrow for $100. I assume that there's a capital gain of $90 that has to be reported.
How about the opposite? If I bought it for $100 30 years ago and then sell it for $10, is there a capital loss of $90?
How about a bicycle? If I profit on the sale of a bicycle that I used for years...is there a tax consequence?
How about a collection of thimbles? I realize that such a collector will likely be sunk when they go to sale. But, for argument sake, would they have to report a capital gain on sale of such a collection if it were to be more than they paid?
My point is, for the coin collector, what makes their sale of a coin special over that of any other time they might sell? Is there a special part of the tax code that someone can refer to? And, if a loss is taken, I would suspect if gains must be reported then a net loss could result in a tax deduction? >>
The IRS does not care if you sell one $100 coin, bicycle, or thimble one time, and whether or not you make a profit or loss on it. Technically, yes, practically, no. Report the income or loss as you please, it alone almost certainly won't matter either way.
UNLESS it is part of a pattern. Whether you are selling coins, bicycles, or thimbles, or whatever, they care VERY MUCH if you make $9000 once, or make $90 hundreds of times a year, every year, and do not report the income.
Edited to add: just my opinion. consult your tax advisor.
Liberty: Parent of Science & Industry
<< <i>We have a couple of forum member accountants so maybe we'll hear from one of them.
To be safe, report everything, even losses. Some companies like PayPal will issue 1099's if you exceed certain levels (PP is something like $20k+ and 200+ transactions).
Last year I wasn't going to bother reporting the dozen or so ebay sales I had because it was a net loss. But I got a 1099 for my personal PayPal account. I questioned it and learned PayPal will issue a separate 1099 if you exceed their levels for all receipts under a single SSN. Because my business accepts PayPal I had to deal with itemizing my trivial sales.
Take your chances on not reporting a net loss. But if the receipts are reported a red flag will be raised.
Lance. >>
Was it Paypal or ebay that issued the 1099?
Paypal is a bank, I deposit 1000's of checks a year and my bank does not issue me a 1099 on the deposits. They do issue me a 1099 for the interest they payed me.
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<< <i>
<< <i>We have a couple of forum member accountants so maybe we'll hear from one of them.
To be safe, report everything, even losses. Some companies like PayPal will issue 1099's if you exceed certain levels (PP is something like $20k+ and 200+ transactions).
Last year I wasn't going to bother reporting the dozen or so ebay sales I had because it was a net loss. But I got a 1099 for my personal PayPal account. I questioned it and learned PayPal will issue a separate 1099 if you exceed their levels for all receipts under a single SSN. Because my business accepts PayPal I had to deal with itemizing my trivial sales.
Take your chances on not reporting a net loss. But if the receipts are reported a red flag will be raised.
Lance. >>
Was it Paypal or ebay that issued the 1099?
Paypal is a bank, I deposit 1000's of checks a year and my bank does not issue me a 1099 on the deposits. They do issue me a 1099 for the interest they payed me. >>
Paypal issues a 1099-K if you're received payments of 20K or more (cumulative) to your paypal account.
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Non-Registry Collection
Game Used Cards Collection
Unreported income is fairly easy to track if someone has the ability and desire to do so. It is safe to assume that your tax authorities have both.
No Way Out: Stimulus and Money Printing Are the Only Path Left
<< <i>
<< <i>
<< <i>We have a couple of forum member accountants so maybe we'll hear from one of them.
To be safe, report everything, even losses. Some companies like PayPal will issue 1099's if you exceed certain levels (PP is something like $20k+ and 200+ transactions).
Last year I wasn't going to bother reporting the dozen or so ebay sales I had because it was a net loss. But I got a 1099 for my personal PayPal account. I questioned it and learned PayPal will issue a separate 1099 if you exceed their levels for all receipts under a single SSN. Because my business accepts PayPal I had to deal with itemizing my trivial sales.
Take your chances on not reporting a net loss. But if the receipts are reported a red flag will be raised.
Lance. >>
Was it Paypal or ebay that issued the 1099?
Paypal is a bank, I deposit 1000's of checks a year and my bank does not issue me a 1099 on the deposits. They do issue me a 1099 for the interest they payed me. >>
Paypal issues a 1099-K if you're received payments of 20K or more (cumulative) to your paypal account. >>
Correct. It was PayPal. I believe you need $20k or more AND 200 or more transactions.
Lance.
<< <i>My father is a CPA and lists me as a sole proprietorship and lists all gains and loses period. He includes every thing I spend that is a consumable from paper towels to special cleaners for my Horns I sell and does the same for my numismatic items. the goal is to break even or show a loss that is just enough to offset any taxes owed or to get a refund. He does calculate gains and net depreciation on every thing and even does something with bartering when I trade one for of currency for another. (like when I pay $99.00 for a 1909-S Lincoln cent with 99 one dollar bills). If you Have questions like this then you need a good CPA who can get this done right for you and earn you some money back. ( why let the GOV use your money for free!!!!) >>
Did he tell you that a self employed business owner also pays an extra self employment tax (social security and medicare) of up to 13.3% on net income (not just profit)? Ask him if you are eligible to treat everything as investment income and would it save you on taxes. While the deductions are more limited with investment income so is the headache of the records that go with those deductions.
No Way Out: Stimulus and Money Printing Are the Only Path Left
<< <i>Was it Paypal or ebay that issued the 1099?
Paypal is a bank, I deposit 1000's of checks a year and my bank does not issue me a 1099 on the deposits. They do issue me a 1099 for the interest they payed me. >>
As a processor of money between buyers and sellers, Paypal is required to report account holder transactions to the IRS. Look for the threshold on what has to be reported to be lowered over time. Also look for taxing authorities to find new ways to have others do their job for them.
No Way Out: Stimulus and Money Printing Are the Only Path Left
If you're being audited, expect the worst.
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
"I only golf on days that end in 'Y'" (DE59)
<< <i>Too bad we can't use the $$ figure the government stamps on silver and gold coins ($50 for the 1oz eagle) for tax purposes. >>
There actually was a case where someone paid for something using American Eagle Gold coins
at face value. To reduce the tax gain on selling a house or something. The IRS either lost
the case or decided not to appeal.
I am searching for a link.
<< <i>I realize on the business side of coins, if you buy/sell as a business, there's an obvious tax consequence. I've seen on this board multiple times that, even as a collector, when you sell, there is a tax consequence.
If I bought a coin 30 years ago for $10 and sell it tomorrow for $100. I assume that there's a capital gain of $90 that has to be reported.
How about the opposite? If I bought it for $100 30 years ago and then sell it for $10, is there a capital loss of $90?
How about a bicycle? If I profit on the sale of a bicycle that I used for years...is there a tax consequence?
How about a collection of thimbles? I realize that such a collector will likely be sunk when they go to sale. But, for argument sake, would they have to report a capital gain on sale of such a collection if it were to be more than they paid?
My point is, for the coin collector, what makes their sale of a coin special over that of any other time they might sell? Is there a special part of the tax code that someone can refer to? And, if a loss is taken, I would suspect if gains must be reported then a net loss could result in a tax deduction? >>
Technically the $90 would not be a capital gain because common coins are not capital assets like stocks, property, real estate, etc. If you sold it at a $90 loss, the $90 could not be used to offset gains from the sale of say 100 shares of CLCT stock.
<< <i>
<< <i>I realize on the business side of coins, if you buy/sell as a business, there's an obvious tax consequence. I've seen on this board multiple times that, even as a collector, when you sell, there is a tax consequence.
If I bought a coin 30 years ago for $10 and sell it tomorrow for $100. I assume that there's a capital gain of $90 that has to be reported.
How about the opposite? If I bought it for $100 30 years ago and then sell it for $10, is there a capital loss of $90?
How about a bicycle? If I profit on the sale of a bicycle that I used for years...is there a tax consequence?
How about a collection of thimbles? I realize that such a collector will likely be sunk when they go to sale. But, for argument sake, would they have to report a capital gain on sale of such a collection if it were to be more than they paid?
My point is, for the coin collector, what makes their sale of a coin special over that of any other time they might sell? Is there a special part of the tax code that someone can refer to? And, if a loss is taken, I would suspect if gains must be reported then a net loss could result in a tax deduction? >>
Technically the $90 would not be a capital gain because common coins are not capital assets like stocks, property, real estate, etc. If you sold it at a $90 loss, the $90 could not be used to offset gains from the sale of say 100 shares of CLCT stock. >>
The $90 is a capital gain on the sale of a collectible and subject to income tax if the seller treats it as an investment. If treated as a business sale it is a $90 gain that is taxed as business income. Coins can be treated as investments for tax purposes just as art, baseball cards and bullion are provided the seller is not selling them as a business.
The income on any sale is always subject to taxes. Technically, the profit on a bicycle is also subject to income tax. Where the IRS draws the dollar amount line on deciding to enforce the paying of tax on a sale is, well. . . up to the IRS. Its like doing 57 MPH in a 55 MPH speed zone. Technically, you are breaking the law, but at what speed will the cop choose to enforce it?
It is up to the seller (or his accountant) to determine, within IRS parameters, which is the best method for him/her to treat the income. An on-line review of IRS 1040 Schedules C and D will answer a lot of questions.
No Way Out: Stimulus and Money Printing Are the Only Path Left
<< <i>
<< <i>
<< <i>I realize on the business side of coins, if you buy/sell as a business, there's an obvious tax consequence. I've seen on this board multiple times that, even as a collector, when you sell, there is a tax consequence.
If I bought a coin 30 years ago for $10 and sell it tomorrow for $100. I assume that there's a capital gain of $90 that has to be reported.
How about the opposite? If I bought it for $100 30 years ago and then sell it for $10, is there a capital loss of $90?
How about a bicycle? If I profit on the sale of a bicycle that I used for years...is there a tax consequence?
How about a collection of thimbles? I realize that such a collector will likely be sunk when they go to sale. But, for argument sake, would they have to report a capital gain on sale of such a collection if it were to be more than they paid?
My point is, for the coin collector, what makes their sale of a coin special over that of any other time they might sell? Is there a special part of the tax code that someone can refer to? And, if a loss is taken, I would suspect if gains must be reported then a net loss could result in a tax deduction? >>
Technically the $90 would not be a capital gain because common coins are not capital assets like stocks, property, real estate, etc. If you sold it at a $90 loss, the $90 could not be used to offset gains from the sale of say 100 shares of CLCT stock. >>
The $90 is a capital gain on the sale of a collectible and subject to income tax if the seller treats it as an investment. If treated as a business sale it is a $90 gain that is taxed as business income. Coins can be treated as investments for tax purposes just as art, baseball cards and bullion are provided the seller is not selling them as a business.
The income on any sale is always subject to taxes. Technically, the profit on a bicycle is also subject to income tax. Where the IRS draws the dollar amount line on deciding to enforce the paying of tax on a sale is, well. . . up to the IRS. Its like doing 57 MPH in a 55 MPH speed zone. Technically, you are breaking the law, but at what speed will the cop choose to enforce it?
It is up to the seller (or his accountant) to determine, within IRS parameters, which is the best method for him/her to treat the income. An on-line review of IRS 1040 Schedules C and D will answer a lot of questions. >>
True.
From the 1040 instructions.
Capital Gainsand Losses
This section discusses the tax treatment of gains and losses from different types of invest-ment transactions.Character of gain or loss. You need to clas-sify your gains and losses as either ordinary or capital gains or losses. You then need to clas-sify your capital gains and losses as either short term or long term. If you have long-term gains and losses, you must identify your 28% rate gains and losses.
The point all along is that gains from sale of a common coin or bicycle are generally not treated the same as gains from the sale of something like a stock. If I understand the rules correctly, you can use the loss on one coin to offset a gain on another, but you can't use the loss on the bicycle to offset any ordinary gains. AS ALWAYS: CONSULT YOUR TAX ADVISOR.
<< <i>I guess what the point of all this is would be that coins as a collectible are nothing special to the IRS...correct? It's just a widget that you can buy/sell with tax consequences. Does that sound right? >>
Depends on how you report the income:
1. a one time sale of personal property that is basically "other income."
2. sale of an investment (Schedule D)
3. sale of business inventory (Schedule C).
Collectibles are taxed at the higher 28% tax rate.
<< <i>but you can't use the loss on the bicycle to offset any ordinary gains. >>
you can if you buy and sell bicycles as an investment or if you own a business that buys and sells bicycles. It boils down to the sale of either personal property, investment assets or business inventory.
No Way Out: Stimulus and Money Printing Are the Only Path Left