Dealers reporting coin sales?

[Lonestar]

Pardon if this has been discussed before, but when bullion coins are sold back to a dealer is the sale reported for tax purposes?  It is my understanding that American Gold Eagles sales (any quantity) are NOT reported to the IRS.  Regarding Krugerrands and others, reports are filed on sales of 25 coins and above.  Is this correct?  Any info source you can provide would be appreciated.

[craigr]

Pardon if this has been discussed before, but when bullion coins are sold back to a dealer is the sale reported for tax purposes?  It is my understanding that American Gold Eagles sales (any quantity) are NOT reported to the IRS.  Regarding Krugerrands and others, reports are filed on sales of 25 coins and above.  Is this correct?  Any info source you can provide would be appreciated.

There are limits but I don't recall what they are. It may also involve dollar limits. You should call your local dealer and ask them what they are. BTW. Not reporting capital gains is illegal.

[rickb]

This article seems to be fairly informative.  The bottom line is

• any transaction involving more than $10,000 in cash (not check, not wire transfer, but stacks of dollar bills) must be reported to the IRS
• any purchase of more than $3,000 of gold coins must be "recorded" (but not reported to anyone) - presumably the point is that this enables such purchases to be discovered after the fact if anyone has any interest in pursuing them
• proceeds from some sales to coin dealers (e.g. more than 25 1-oz gold coins of certain types, and not including US Gold Eagles) must be reported to the IRS - the point being to make sure you pay capital gains tax on what you're selling

The third point was apparently strengthened as of Jan 1, 2012 to include any purchase by coin dealers of any amount involving more than $600.  I don't know whether dealers are generally complying with this new requirement or not - however as Craig says, not reporting capital gains is illegal.  I'll add, it's illegal whether whoever buys your gold reports the sale to the IRS or not.  If you buy anything for $X and later sell it for more than $X, regardless of whether the purchase or sale is "reported", you're legally required to treat the difference as a capital gain - and pay the resulting taxes.

[dualstow]

I appreciate your posting that article, Rick.

A local dealer I used recently told me that he'd have to report any purchase over $10,000 I made. "Of course, you could buy some here and some down the street...", he said. I only bought a single coin, but he already knew I was paying by check when he stated that. I think he may have been misinformed.

For now, I'm glad that I can sell ETF shares if I have to rebalance. But, I guess I should keep track of dates and dealers. I still don't understand if it's FIFO (first in, first out) or if I can just declare a specific coin.

I also had no idea that American eagles may be treated differently than krugerrands. Is this going to be in the book, guys?

[MediumTex]

I also had no idea that American eagles may be treated differently than krugerrands. Is this going to be in the book, guys?

In general, I would like to stay away from getting into that level of detail for a couple of reasons.

First, these rules change all of the time, and there is no reason to think that the current rules won't continue to change in coming years.

Second, I always prefer to tell people to resolve specific tax-driven issues with their tax advisors.

I was not aware that eagles are treated any differently than krugs, other than the rule that a gold IRA can hold eagles but not krugs.

As far as reporting issues go in general, it seems like a coin shop is always going to have some kind of records of what it has sold and to whom, so there will always be a paper trail of some kind. 

[murphy_p_t]

"Jan 1, 2012 to include any purchase by coin dealers of any amount involving more than $600."

this requirement was dropped after outcry from the industry.

[Figuring It Out]

I spoke with a coin dealer last week who told me that when you sell American eagles, if you've held them long enough, they are taxed as a long-term capital gain, vs. any other country's gold coin, which is taxed at short-term no matter how long you've held it.

I wasn't aware of that and thought it significant in terms of what Id be inclined to purchase now.

Can anyone confirm that?

[FarmerD]

For now, I'm glad that I can sell ETF shares if I have to rebalance. But, I guess I should keep track of dates and dealers. I still don't understand if it's FIFO (first in, first out) or if I can just declare a specific coin.

Coins don't 't have serial numbers or any other way of identifying one coin from another.  Therefore If you sell an Eagle, simply figure out which Eagle in your collection was bought at the highest price.  Figure out your cap gains by determining the difference.  Make sure you don't mix apples and oranges by selling, for example, a Krugerrand, then figuring out your cap gains by comparing that sales price to the price of an Eagle you bought.  Remember, Eagles and Krugerrands sell for different premiums so that would affect your cap gains. 

[MediumTex]

I spoke with a coin dealer last week who told me that when you sell American eagles, if you've held them long enough, they are taxed as a long-term capital gain, vs. any other country's gold coin, which is taxed at short-term no matter how long you've held it.

I wasn't aware of that and thought it significant in terms of what Id be inclined to purchase now.

Can anyone confirm that?

I can confirm that that sounds like someone who doesn't have a clue what he is talking about.

Gold coins are taxed as collectibles, and the collectibles tax rate is basically the lower of 28% or your marginal tax rate.

It doesn't matter what kind of coin you are dealing with.