tax consequences of coin collecting?

These are all great comments on a topic which is avoided and miss under stood. I completely agree with the idea of having cash on hand, and gifting to heirs and relatives. JustCarl, I admire your passion to the hobby and thank you for your insight and opinions.
I agree that giving the collection to relatives is a good way to gift on a yearly basis, but what do the heirs and relatives do if/when they sell the collection? I understand that hiding cash in mattress is a decent idea, but I don’t know about the comment of not spending the money. If I sell something it’s because I want/ need the money for something else, not to hide it in the mattress and not spend it. I understand that keeping a small cash amount on hand is smart, but hiding 100k in a mattress doesn’t seem appropriate.
This tread has shown some great ideas of what to do for tax prep and estate planning, but what do you do if you’re the heir?
Let’s say your father collected for 40 years spending a combined total of 50,000 dollars and over time the value of the collection has increase to 100,000. At this point your father gives you the collection and he passes on several years later. What you do if you are the heir and you want to sell the 100,000 collection, and also for the sake of this talk you don’t want to hide it in the mattress and you do want to spend it. What do you do? It goes back to my original post that the IRS would assume a 100% tax basis since you cannot prove how much it is worth now compared to when it was given to you. It might have been given to you and only appreciated let’s say 10% since, now you sell the collection valued at 100k you would owe collectible gains tax on the 10% only. But if you got audited and there is no paper trail or receipts you would be expected to pay tax on 100% instead of 10%.
Now for the kicker, let’s say that your father was in that 3.5 million tax bracket, making things even more difficult.
What do you do if you are the owner of the estate, and coin collection?
What do you do if you are the beneficiary of the estate and coin collection?
Any ideas and opinions are greatly appreciated.
Thanks CT

 

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The above is really simple. If it was me, I'd do one of several things.
If I didn't want the coins, I'd go to a coin show and rent a table and sell the entire mess. At the begining of those shows other dealers run around attemting to buy out new dealers.
Or at those shows mention to seveal dealers I want to dump and entire collection with out records or paper work.
Of ask if any dealer wants to split the profits for selling on consignment.
Or go to almost any flea market and sell them all off over a period of time since you don't normally get people at those places with thousands of dollars.
Otherwise, I'd just become a coin collector or a bigger one with the added stuff.

 

Taxes and Coins

Tax attorneys are worth talking to if you have anything substantial where you need confidentiality. Spouses and kids who get collections, land, antiques, paper assets, need to follow the law and be careful, unless you want to take the "What me worry?" approach. Hey, it worked for Alfred E. Neumann, it may work for you. If we were living in a Banana republic, you could probably get away with possession being the law, but with the surveillance state expanding not contracting, get good legal advice for your big money decisions.

I subscribe to PrePaid Legal, it runs about $40 a month for confidential advice. There are lawyers who will, for a few hundred dollars, tell you all you need to know on this topic. Or you could join ICTA and get their advice. To be poor in America and on the USDOJ or IRS hit parade would give you plenty of time to think about the decisions you have made.

 

colorado:
Dad's first mistake was giving them to you while he was alive.
You pick up his basis (cost) and pay taxes at ordinary income rate.

If you get them thru the estate then you get the 'stepped up basis' as of the date of death or 6 months later, which ever you choose (actully which ever the estate chooses).

if his estate was $3.5 mill this year (2010) no taxes, next year-- a ton of taxes.

 

I checked out the IRS site?

It only said you may get a reward of 15%-30%, but only if you whistle blow on a 2 million dollar plus evasion where the owner keeps at least 200k dollars a year. Wow, that eliminates most of us claiming a reward on anyone anytime soon

 

WOW! A lot to read, think and consider to find a way to keep the IRS (Illegal) business away from us. There is a lot of things people don't think about the IRS. I don't care how old you are at this moment in life. When the IRS started charging taxes, there was never a "law" stating that you "have to" pay taxes. I have too much to lose to fight but if I didn't have kids and had the time to take the IRS to court (with money) I would.

Watch this video and learn what the IRS really is.

http://www.youtube.com/watch?v=W_JP1xT_epY

 

To me the recent post (my post) is like putting a non existing rule stating that toned coin collectors are not allowed to "collect" without a permit, with nothing (proof) written on the constitutional papers by our founders.

If you know what I mean.

 

Wow

Those videos are great! though the links and comments will be silenced soon as per forum rules soon, but at least the message got to me and hopefully a couple others:thumb:

 

Thanks!

Great Video!:thumb:

 

Taxes and Coins

I would just reference the www.quatloos.com site for all these great theories about the voluntary nature of income taxes. The film referenced is "From Freedom to Fascism"; the maker of it was financially ruined by the IRS and he's now dead.

 

Do I understand this correctly ? We are suppose to pay Capital Gain Tax on coins that are worth less than when issued ? Whats wrong with that picture ?

 

not at all, but you cannot take the tax loss.

 

See an tax accountant for guidance and prep. I do. And I don't mean those cheezy tax prep places either... I mean a real tax accountant. Costs around $200 yearly. And that $200 is tax deductible the following year.

I don't understand why people attempt to try figuring out taxes on their own - esp. if they're buying and selling, and are planning their estate.

If someone's modern car breaks, most people typically don't try to figure it out by themselves - they go see a mechanic. If someone's furnace stops working, most people typically don't try to fix the furnace themselves, they call in an HVAC service. If someone has a medical issue - most people go see a doctor...

If someone's collection is that extensive and valuable...why should going to see a tax professional be any different?

The only possible explanation otherwise would be temporary financial hardship. But then again, if a person's car breaks or they lose their furnace... most times they will figure out a way to get'em fixed regardless...

And finally, the last thing I want is the headache with Uncle Sam / Big Brother, or nowadays, the edited Republic of the United States...

-- my two cents.

 

Tax Preparation Firms

The "cheesy" tax preparation firms....I would think Liberty Tax or HR Block are going to be relatively competent. Not many CPAs working for them, but they do follow the law. If you want someone who is going to be reliable year after year, who do you go to? Most substantial self-employed businesses will have an accountant do there accounts every month--it sure takes a load off the mind to have organizational competance hired to review your business and make helpful recomendations.

Before I started my business, a "friend" with an Aaron Russo-Irwin Schiff-Lynn Meredith "freedom" attitude planted his theories in my head. He had "given up" his Social Security number to be free of the Leviathan system. He fought the driving and insurance laws too. It became a full time job for him just to evade the law enforcement agencies.

This is no way to run a business. There are many people who will not do business with someone who is not following the laws, and thus encourage illegal conduct. There are plenty of people who have gotten a raw deal, and had ex-wives or business partners take them for all they were worth. This is why we have the need for lawyers and accountants and contracts to protect the innocent from the reckless and dishonest.

 

An established Accounting practice that keeps up with tax laws, advises accordingly to tax law, submits pursuant to tax laws, and as equally important, keeps records of their client's tax records year-over-year for purposes related to depreciation and other multi-year accounting.

 

Tax Preparation Firms

Thanks, agreed.

I am in full compliance, have been for many years. Don't listen to the siren songs of tax cheating. It will save you a lot of aggravation, and give you confidence.

 

I concur. Exactly to my point of going to an established accounting practice who knows their stuff pursuant to law and keeps good records. IMO tax law can be complicated, and diligently obtaining sound guidance and advice from a tax professional is best.

 

Does that disprove the point he was trying to make? Some people go to court and win. Some people go to court and lose. If there was a law on the books, every case should lose. Lets not miss the point. It's not pretty.

I fully understand them and know what they're capable of. If my opinion mattered, they would be abolished before sunrise tomorrow. Instead, for the sake of health care, they're adding 16,500 more of them to the payroll.

JustCarl is right. Nobody knows what goes on at show. You dont have to go to a single show and sell out 100k worth. You're only required to pay capital gains on anything anyway. Most honest people still have no idea what those capital gains actually are. I'd like to know if they factor inflation in to them. If they do, there can't be much to worry about!

 

Coins and Taxes

What matters is what works. Follow your conscience even if you end up in jail like Gandhi and Thoreau. Thoreau's Civil Disobedience article is worth taking a look at: http://en.wikipedia.org/wiki/Civil_Disobedience_(Thoreau)

If you resist taxes several things will happen:


There are only four results that can occur if a person decides to follow idiotic tax protester theories:

1. Person does not pay taxes. IRS does not notice or determines the amount is too small to bother. Nothing happens to person and they get to live out their life enjoying benefits that everyone else is paying for. THIS IS RARE.

2. Person does not pay taxes. IRS eventually notices and proceeds to assess penalties and interest to encourage the person to pay what is owed. If the person does not, the IRS can legally levy bank accounts, place liens on property, or even foreclose on property owned by the person. This is much more common.

3. Person does not pay taxes. IRS decides to recommend to the DOJ that criminal charges are pursued. Person luckily is able to convince a jury they were too stupid to know that they had to pay taxes and are acquitted. IRS can legally proceed with all actions described in #2 above.

4. Person does not pay taxes. IRS decides to recommend to the DOJ that criminal charges are pursued. The person is convicted of various tax related charges and spends time in prison. The IRS continues with the civil actions described in #2 above.

Since there are only four results and three of them are bad, does anyone except the delusional believe it is a good idea to not pay taxes? BTW, all of the actions above taken by the IRS and DOJ are legal and Constitutional.