To receipt or not to receipt?

At the time that you inherit coins, the new tax basis, which is the cost number you take against the amount of money you receive from a sale to calculate the gain or loss, is based on the market value at the time you received them. If the coins don't amount to much, you can look at a pricing source, like "Coin World Trends," and use that. I maintain the cost of my coins are a rather large XL spread sheet.

If you have received expensive coins, an appraisal is necessary for estate purposes. That is needed to fix the value on the estate for tax purposes. Those numbers will transfer to you when you receive the coins.

 

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Uncle Sam doesn't tax inheritances for most people, you can also give gifts without any federal tax reporting of up to $15,000 value per year, The Tax Cuts and Jobs Act (TCJA) doubled the estate tax exemption to $11.18 million for singles and $22.36 million for married couples, but only for 2018 through 2025. I don't think anyone's inherited coin collection is going to trigger any estate tax consequences - I mean I hope I'm wrong, I'd like to see that collection, but as a practical matter... very unlikely.

 

I doubt that my estate will even come near $3M, even with the coins. And I doubt, given the condition of the coins that any of them are rare. I haven't even spent a thousand dollars on coins, and of the inherited ones if any of them are rare it would surprise me.

So given that my estate will be less than ten million, do I still need to worry about receipts? I doubt very much that my son will ever sell a lot of them.

 

99% of the coins I buy are from eBay and I take a screen shot of the purchase and I keep it on my iPhone and the Cloud. I also use the albums feature in photos and store photos of my coins.

 

When there is no receipt or in this case found in circulation the IRS will use the coin's (or currency's) face value for the cost basis.

 

But of course my estate wouldn't even go through probate because I have a will, right? So whatever I have when I pass goes to my heirs. Like my dad's small coin collection came to me without the IRS even noticing. So again, there was no need for receipts.

 

Without going on about taxes when selling coins. I feel receipts are important when dealing with higher value coins. If you pay by credit card you should get a receipt. However, if your buying cheaper coins with cash it depends on the situation. Most dealers would prefer not to bother with receipts on coins sold for under $100.00. It adds to cost and time plus bookkeeping. In general your local dealer has to keep track of sales. He also has to keep track of inventory. There are a number of ways they can do it. Realistically, coins worth less than $100.00 may be clumped into a general description such as junk silver. He could record that he sold 5 Morgan dollars for X amount. I know a lot of dealers that will make notations as to what they sold. Now if he sold a 1889 CC dollar in Fine he would make that entry. I also know that in some states if a dealer buys a group of coins or a collection they have to hold those coins for a month before selling them. They also have to record who they got them from. I've seen dealers ask for an ID when buying coins. It helps protect them from being accused of buying stolen coins. No ID means no sale.

 

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Most collectors start off small and don't worry about receipts. As the years go by and the value of the collection grows, receipts become important.
Lets say you sell it all to a dealer and he gives you a large check and the IRS wants to know where that income came from. They want proof of your cost basis.
An old man once told me "keep your ducks in a row for the day you sell".

 

Agreed. My response describes how the IRS would calculate a cost basis IF they got involved.

 

At one LCS, I sometimes ask if he'll take, say, $25 instead of the $28 he is asking for. His typical response has been, "Sure, but then I'll have to charge you tax."

Everyone in the store laughs and I hand him $28.

No receipt.

 

For those with valuable coin collections and that have an interest in estate planning, there is a proposal floating about Congress to eliminate the "new basis value" feature in inheritance valuations. With this Congress and this Administration there is a fairly high prospect of some version of this becoming law. What this would mean for coin collectors and everyone else with inheritance subject to capital gains, maybe including real estate is:

Say you inherited a coin collection worth $100,000 at current valuations per the appraisal. Under the existing tax law, that $100,000 appraisal would be the "new basis value" and when you sold the coins, any capital gains tax would be based on the difference between the "new basis value" and the sales price. So, let's say your ancestor bought the coins for $50,000 and you sold them for $100,000. The capital gains tax would be based upon a $50,000 gain.

Under the proposals being floated, you would not be allowed to appraise the coins at a new basis value, you would have to pay capital gains upon sale between the original cost of the coins to your ancestor and the sales price upon your sale. If you don't have the original costs in a form that is acceptable to the IRS, then they would value the taxable capital gains in the worst possible manner to you. So, under the worst case condition, the face value of your coins is $200 which is what the IRS has now determined is the basis value. Now you owe capital gains based upon the difference between the basis and the sale price, in this case $100,000 minus $200 equals tax owed on $99,800 instead of $50,000 if you had had the receipts.

You can have a yuck about cheating the state our of their sales tax and indulge in fantasies that because you have a will your estate will not have to go through probate, but for anybody that has anything of value, you should be aware of the implications for your heirs.

Get and keep your receipts!

 

A lot of things can and will get through Congress, doesn’t mean they’ll get through the senate. Your point about getting receipts for higher value things is certainly on point though.

 

What coins are you referring to? I don't see any coins. Hmmm

 

Ummm, Congress includes both the House and Senate.

 

So you're saying I buy a $35 coin and sell it for $50 I have to declare it? Seems awful picky just to get a small amount. And what if my entire estate is less than $100K?

My dad had a small coin collection, mostly cents and dimes found in change. He gave it to me and no taxes involved. Not only can the IRS give it a pass as a gift, but we didn't even report it.

 

Theres Congress and the Senate. Congress is used as a catch all term but there are congressional representatives and senators. Countless things get through one and not the other

 

It's a sausage factory. That means I try to arrange my affairs to minimize the chances of being ground up. If getting and keeping receipts was the least of the effort needed to protect myself and my heirs, it seems like an extremely small effort.

I guess I think that if more collectors demanded receipts, the dealer community might be incentivized to provide them with less grousing. But I'm not on any kind of a crusade, just answering the OP's question..

 

No arguments to any of that. It’s just smart to have some sort of receipt for any substantial purchase. Worst case you end up filling a random folder with them, there’s really no downside to getting them