Hey guys! I recently bought my first CC Morgan- an 1879CC (not sure if capped or not) graded EF-40 by ANACS. I (believe I) got a good deal on it, but I have no idea how to determine my "official" purchase price and/or how I would do this if I had to keep books. Here's the situation: I purchased $21.90 FV silver dimes for $460. I sorted them, and kept 69 for my books (Whitmans) I sold $15.00 FV to my LCS, who offered $340 cash or a bit more for trade in (did not recieve a number). I picked out the slab, which he said wholesaled for $575. He let my have it for the silver + $160 cash. So, if I were a business keeping ledgers, I just registered a $174 loss- I spent $175 FV for $1 FV. This is after I lost $440 to buy the $21.90 in the first place. What would you say my price was??? Thanks! Johannes
I take it your saying 'if' because you are not. That being the case enjoy your hobby and don't worry about it.
Back story- I'm not a dealer, but am curious how, say, a dealer would deal with the obscurity of such a transaction
A business secret is just that, secret. There are numerous accounting methods that can be used. The easiest is probably cash in, cash out.
Well your balance is now -$280, but you have 2 assets your 69 dimes you kept and your Slabbed coin. I see posts above now and I think I may be doing the wrong thing (-$460+$340=-$120 -$120-$160=-$280) Just to satisfy your curiosity but what appliancejunk is 100% correct. Enjoy your hoppy don`t look at the business side of it (well to a certain extent) Owen
Your cost= $475.10 Purchase= #219 dimes for $460= $2.10 each kept= #69 X $2.10 = $144.90 net cost #150dimes = $315.10 Plus cash= $160 total = $475.10 Not bad if the piece was really worth $575.00 Actually you did good considering that today's melt is $2.50 So, if you add lost opportunity cost 150 X .40 = +$60 But! That is splitting hairs.
You should keep receipts for everything in the event that you ever need to prove something to the IRS. That said, no legitimate coin business that attempts to keep accurate books would have chalked up a loss as you described. It is best if you give a cost basis to every portion of your transaction. You may do this by treating all the silver dimes as being equal and dividing up the cost to buy them as Treashunt did, or might do something such as breaking up the original dime purchase into two groups as below- $15 FV silver dimes at $340 cost $6.90 FV silver dimes at $120 cost Sale of $15 FV silver dimes at $340 Cash $160 Final cost of 1879-CC Morgan dollar equals the sale of the $15 FV silver dimes ($340) plus the cash ($160) to yield $500. The remaining $6.90 FV in silver dimes then cost you $120 and this number will be needed when and if you ever sell or trade these coins.
I'll write out the rationale for my post. However, considering that the OP appears to have neither received an actual price nor a receipt, the discussion is purely theoretical, at best. Additionally, I would not run a business either way listed below, but if one is a casual hobbyist then it should be fine. In a mixed lot what I wrote previously can be considered his cost. He paid $460 for $21.90 FV silver and determined that the silver purchase was a blend of two lots that he acquired together. One lot was $15 FV that he paid $340 for and the other lot was $6.90 that he paid $120 for and both came from this original $21.90 FV lot. This can be done to break the lot down since various coins are assigned differing values, but the entire lot ends up adding to the cost to acquire. However, if this is done then the $6.90 FV that is recorded as a $120 cost to acquire must use that number when and if it is sold. If done this way then the buyer ended up paying $340 ($15 FV in dimes) plus $160 (cash) to obtain the Morgan dollar for a cost of $500. Alternatively, the lot can be broken down as a cost per coin as you had done where the cost is $2.10 per dime and that is just as easy to do. In fact, it may even be easier to do. The Morgan dollar is then acquired for $315 ($15 FV in dimes) plus $160 (cash) for a cost of $475. In a real transaction, though, I don't know that this could be considered a like-trade. Therefore, each transaction would have to be recorded independent of the other. In such a case the buyer had an offer of $340 for the dimes in addition to $160 cash, which comes to $500 cost to obtain the Morgan.
If you're talking a profit/loss statement, face value is irrelevant. You would need to list what you paid for the coins against what you sold them for. If your dimes were "junk" silver (worth only spot) and the Morgan has additional numismatic value, your comparing apples to oranges. My guess, the Morgan cost you $500-$525, can't tell because you didn't get a trade quote (although I suspect there was no additional value if he didn't specify it). If my math's right, you paid roughly $2.10 per dime. You kept 69 of those, at a cost to you of about $145, leaving you with $315 worth of dimes. You got an offer of $340 (already a $25 increase) and added $160 for the Morgan. So it looks like at this point you are $135 in the hole for the Morgan. You still have 69 of those dimes (an asset, and not a factor in the purchase of the Morgan). Compare that to the fair market value of that coin, and decide if you're still down or up. But keep in mind that if you later sell the Morgan, it will be the actual purchase price, and not FMV, that determines profit/loss. At this point you haven't lost any money, as you still have the assets (coins). So, you have 69 dimes, and a slabbed CC Morgan that cost you $560. Current FMV is $720-760 (depending on whether it is a capped or not) for the Morgan (http://www.numismedia.com/fmv/prices/mordlr/pricesgd.shtml) and about $173 for the dimes.
Well, I would only register that you "lost $440 to buy the $21.90 in the first place" if I wanted you to go to prison. Accounting for collectable or bullion coins at face value seems perfectly reasonable, but They are onto that trick, and people have indeed been sent away for it. It will NOT fly in an audit.
