Inherited coins and taxes

I inherited a coin collection. The estimated basis I got was 70k, but the collection sold for 90k. All of this happened in a matter of a few months.

I calculate that i owe $5,600 in capital gains, which says these coins appreciated by 28.5% in the past 6 months. But I know that coin prices have been falling. Therefore, the estimated "basis" was wrong.

Can I revise my paperwork to correct the error, or am I stuck paying capital gains tax?

 

Log in or Sign up to hide this ad.

Your best bet is to consult a CPA. Most of us here at CoinTalk are collectors, not experts on taxes.

 

Agreed. A few dollars now could save you big $$ later.

 

Don't ask your accountant or lawyer to grade a Morgan dollar, and don't ask coin collectors to give you free tax/legal advice!

There is clearly enough at stake here to justify a consultation fee with someone qualified to advise you accurately.

 

Ok, I have never seen a CPA before, but I guess this one qualifies.

Thanks.

And by the way, I did have the coins graded by an expert, but looking back he said that he tries to under estimate so people are not disappointed with what they get.

Anyway, you and I know the coin market has not jumped 28% in the past half year. Now I just need a financial expert to advise me on how to report this so I don't get raped by the IRS.


Thanks again.

 

Rather than a cpa, or perhaps along with one, consult your local Bar association for a lawyer specializing in probate- inheritance law to see if the first estimate can be replaced. I suspect the advice of either, and the legal actions to make changes if possible, will be as much as the capital gains tax. Neither lawyers nor CPAs are cheap.

If you paid for the appraisal, you didn't get a honest one, so you may have recourse there.

Get professional advice and perhaps a professional appraisal.

And WELCOME to the forum!

Jim

 

You would think collectors would be knowledgeable enough these days to not leave coin collections to others in their wills. Nobody wants to pay taxes on things left behind, and it becomes more a burden for the descendants than a benefit. If anyone here doesn't know for some reason, leaving coins behind to loved ones as a gift isn't taxable. Thats the only way to do it right.
Guy~

 

Inheritance has no taxes, unless it is over 6 million I believe. If it was estimated for one price and sold for another in that short of a period, the estimate was bad. IMHO you owe no taxes.



leaving coins behind to loved ones as a gift isn't taxable.

Gifts are taxable over 10k in value!

 

No, there is taxes on all inheritance if the total is over 100,000 in CA. Thats not per item, thats everything. Unfortunately, I've been through this twice and know quite well.
Guy~

 

That's in California, Not Federal income taxes but state.

 

Precisely why the OP needs qualified professional tax advice. There are almost 60 different sets of tax (and inheritance) laws in the U.S., and everyone is subject to at least two of them - federal, state, and district and territorial jurisdictions; and even the best experts aren't competent in all of them.

 

I did not mean to imply differently. Just threw in what I knew.:whistle:

 

stop now! There is no tax on the trade of coins according to us law

Also Trade includes the sale of a coin, ever notice how you are not charged taxes at a coin store?

 

I thought we were talking about inheritance tax, not income tax. Those are two entirely different animals.

Inheritance taxes are taxes owed on property left by one individual upon his/her death to another individual. Inheritance tax may be owed on the coin collection if the total of the estate exceeds the threshold at the time of the individual's death.

If the coin collection was bought and sold at a profit income tax may be owed in the form of capital gains.

 

You need a CPA that is local to you.
You should have received a stepped up basis on the property to market value.
It sold for market value. Let a good CPA do your taxes this year. He can fix this. You should not have to pay any state or federal income tax on this amount. There are too many issues with this type of deal for folks here to help you solve this on your own.

 

As I type this I look up at my wife's CPA license... Good advice to consult with a licensed tax expert. It's worth getting their professional advice. The original poster may find that a first consultation might even be free. In any event, run, not walk to get good help.

There are state as well as federal ramifications here.

 

Your statement is just plain wrong wrong if by tax you mean income tax - just ask your friendly neighborhood coin dealer what s/he paid last year in federal taxes, and also in state taxes if s/he resides in a state or city which has an income tax.

You are also wrong if you mean federal gift and estate taxes, as coins are taxable property under federal (and where applicable state) gift and estate tax laws. (Sometimes they are taxed on the basis of their face value as money, sometimes on their value as collectibles.)

Wrong again. In some states coin shop sales are fully subject to sales tax, in others they are fully exempt, and in some - like California - they are exempt if the transaction is greater than a specified threshold ($1,000 under the California Revenue & Taxation Code chapter on sales and use taxes).

Outside of the District of Columbia and possibly other federal enclaves, there is no sales/use tax on anything; but constitutionally federal law could not preempt state laws imposing such taxes.

Bottom line - IMHO anyone who relies on the tax advice of an unqualified person fully deserves to

• pay the substantial penalties and interest, and
• suffer the criminal penalties

they can incur for non-payment or underpayment of taxes.

(Of course, if you can provide a citation to a section of the US Code which actually justifies your statement of "US law", I'll be glad to concede that your expertise exceeds that which I have developed in the 45 years I have been practicing law - including several years as a member of the bar of the US Tax Court.)

Unfortunately, although an attorney, licensed accountant, or IRS Enrolled Agent can be sued for malpractice if they give incompetent advice, someone relying on advice from their friendly neighborhood plumber, coin collector, hair dresser, etc., has no recourse.

 

i agree with what others have said about getting a cpa

 

My wife and I inherited coins worth about $50K when her father died last year. Some things I've learned - (1) Federal estate taxes will depend on the overall value of the estate, not just the coins. And it also depends in which year the death occurred. Last year, the estate tax deduction was $2 million, so anything under that was not taxed. (2) The basis of the coins is their value on the date of death (or 6 months later if the alternate valuation date is used). So an appraisal is invaluable for setting the basis.
This setting of basis should be independent of whether or not estate taxes were owed. (3) If there was an executor of the estate, you should be discussing this with them.

But as everyone else has said, you need to consult your own CPA.

 

This is basically wrong in every respect. Anyone who allows these statements to influence their decisionmaking could be in for a rude awakening.

Bad advice can be worse than no advice at all.