Tax Question on Coins

unclebob · December 10, 2015 3:29AM

I have a couple of nice cherry picks sitting in my lock box. Are there any tax consequences on a coin as I don't sell them?

pmac · December 10, 2015 3:32AM

I don't think there are any tax ramifications until you sell.

garrynot · December 10, 2015 3:33AM

If you are asking if there are any tax consequences to the increase or decrease in market value of coins as you hold them, no.

BillJones · December 10, 2015 3:35AM

You don't pay income taxes on something until you sell it. That has been in effect since 1954. At that time the IRS thought about taxing unrealized gains, but it was impossible to enforce and administrate.

guitarwes · December 10, 2015 4:52AM

Not if you don't sell them. I believe there are tax consequences if you trade them for bullion though.

Elcontador · December 10, 2015 6:26AM

If you keep them until you die, they receive a date of death valuation for estate tax purposes, as well as for a new cost basis re future sale. Your estate would need to be able to support such valuation, so paying for a written appraisal regarding expensive coins would be prudent at that point in time.

ms71 · December 10, 2015 7:11AM

No tax implications until you sell or trade them. If you trade them, it's just like selling them unless it's a "like kind" exchange; i.e., collectible coins for collectible coins. Even if that's the case, there are forms you have to file with your tax return; the forms document the "cost basis" of the new asset as what was the cost basis of the old asset. If you were to trade collectible coins for bullion coins, that's a sale for tax purposes, not a trade. Also, keep in mind that you cannot offset the gains on some of the coins you sell with losses on others. That is specifically prohibited for "collectibles" in the tax code. As an example, say you buy two coins for $10,000 each. Later, you sell them, one for $15,000 and one for $5,000. The $5,000 gain on the one coin is taxable, the $5,000 loss on the other cannot be declared.

roadrunner · December 10, 2015 7:24AM

Originally posted by: ms71

..... Also, keep in mind that you cannot offset the gains on some of the coins you sell with losses on others. That is specifically prohibited for "collectibles" in the tax code. As an example, say you buy two coins for $10,000 each. Later, you sell them, one for $15,000 and one for $5,000. The $5,000 gain on the one coin is taxable, the $5,000 loss on the other cannot be declared.

That's news to me. As long as you can show there is a profit/investment motive with your "collection" then losses can offset gains. Those coin losses can also offset other capital gains such as stocks, bonds, etc. And if you're spending $10,000 per coin, the odds are very high you are doing this to hopefully make a profit...or at least not lose money on net basis. Keep records of your trips to shows, slabbing fees, reg mail receipts, agent commissions/consultations, numismatic periodical costs, analyst newsletter subscriptions, safe deposit box fees, etc. as those tend to support you're doing this as more than just a pure hobbyist and for "pleasure" only. Something tells me when Gene Gardner sold his collection recently, he deducted his losses against his gains.

Per the tax code gold and silver bullion are treated as "collectibles." And you can most certainly deduct your bullion losses against your bullion gains. If the tax code was changed to prevent counting a $5K loss against a $5K gain, I'd declare myself a dealer, get a resale number, and file a schedule C each year. As a dealer you can deduct every expense related to your venture. The only downside is having to pay self-employment tax. If you're already maxed out on SS taxes with your primary job(s), then there would be no self-employment taxes due as a part time coin dealer. Even as a dealer you can put coins aside for specific investment and have them treated separately from your business.

I'm not a CPA or attorney, so contact your trusted professional in this matter rather than relying on the CU Coin Forum. Your cherry picks remain "worth" what you paid for them until sold or traded.

BillJones · December 10, 2015 7:41AM

Originally posted by: ms71
No tax implications until you sell or trade them. If you trade them, it's just like selling them unless it's a "like kind" exchange; i.e., collectible coins for collectible coins. Even if that's the case, there are forms you have to file with your tax return; the forms document the "cost basis" of the new asset as what was the cost basis of the old asset. If you were to trade collectible coins for bullion coins, that's a sale for tax purposes, not a trade. Also, keep in mind that you cannot offset the gains on some of the coins you sell with losses on others. That is specifically prohibited for "collectibles" in the tax code. As an example, say you buy two coins for $10,000 each. Later, you sell them, one for $15,000 and one for $5,000. The $5,000 gain on the one coin is taxable, the $5,000 loss on the other cannot be declared.

And gambling losses can be used to offset gambling winnings on the Federal level. Gamblers get better treatment that coin collectors. That sucks.

roadrunner · December 10, 2015 7:50AM

Casual collector vs. Investor....different rules apply.

Note, however, that if you earned a profit in three of the most recent five tax years -- counting the current year -- the Internal Revenue Service presumes that you're an investor.

This is why I've always said that there are very few casual/purist collectors around here. No one goes into it to intentionally lose money. Frankly, I'd be surprised if less than 66% of all forum members indicated that not losing money was one of their objectives.

Casual hobbyist, investor, collector, or dealer

If you're collecting butterflies or using a metal detector odds are it's a casual hobby. $10,000 coins usually fall into the investor theme. If your coin holdings sit in the bank for most of the time, that sounds like an investor to me. Consult your tax attorney.

TopographicOceans · December 10, 2015 8:04AM

Originally posted by: roadrunner
Frankly, I'd be surprised if less than 66% of all forum members indicated that not losing money was one of their objectives..

Not losing money is one of my objectives. However it doesn't always work out that way.

BIGAL2749 · December 10, 2015 8:20AM

Can't beat the information one gets belonging to this forum.

<br Thanks Roadrunner for the two links.

TwoSides2aCoin · December 10, 2015 8:52AM

Cherry picks are exempt from taxes until they're sold for a profit. Then the income or capital gain is taxable, as all income is but the classification (capital gains or income) is something you should ask your tax pro about when doing your reporting. But it's not reportable until you sell it. Could I see the coin ?

Treashunt · December 10, 2015 8:00PM

Originally posted by: roadrunner

Originally posted by: ms71

. The only downside is having to pay self-employment tax. If you're already maxed out on SS taxes with your primary job(s), then there would be no self-employment taxes due as a part time coin dealer. Even as a dealer you can put coins aside for specific investment and have them treated separately from your business.

I'm not a CPA or attorney, so contact your trusted professional in this matter rather than relying on the CU Coin Forum. Your cherry picks remain "worth" what you paid for them until sold or traded.

No SSI if you are maxed out, but Medicare at a rate (with matching) of 2.9% is due

TwoSides2aCoin · December 10, 2015 9:13PM

The IRS has the FED to print money so they can get paid.

ricko · December 11, 2015 12:31AM

Fortunately, I do not sell coins.... so no tax problems. My estate will have to deal with the

taxes. Cheers, RickO

johnny9434 · December 11, 2015 5:25AM

Originally posted by: pmac
I don't think there are any tax ramifications until you sell.

yeah what he said.

Tax Question on Coins

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