I have been doing collecting and coin dealing for about ten years. I saw hard assets and certified coins as a refuge from the world of stocks and bonds, which I saw as an area where only the hedge funds and insiders gleaned profits. My bet has turned out well as hard assets, at least, have netted substantial gains. My concerns, however, is the lack of accountability in certain sectors of the coin and hard asset industry as we see many of our fellow Americans suffering through an economic crisis. I have had three CPA's tell me I didn't need to pay taxes on hard assets or certified coins. As a former Boy Scout, I didn't listen to them and provided all of my transaction records to the CPA's so they could present honest returns to the IRS. Many leaders in this industry have warned that government regulations were inevitable as state and federal governments struggle to close budget gaps. Here in Connecticut there are pawn shops, jewelry buyers, and even bullion dealers who offer 10-20% and even more behind the current spot price for the most easily quantified asset in the world. It is an outrage. Katie Couric had her morning TV program send a US Eagle into "Cash for Gold", and I think they offered her $300 or $400 for it. Eventually the complaints reach a critical mass, and a DA or US attorney does an investigation in cases of fraud. I'm sure that day is coming for the fly by night outfits, etc.. File this issue under "ethics in numismatics". I practice a strict ethical code in my life. My word is my bond or guarantee. I am very reluctant to report issues to the government because they are usually not very effective. I would appreciate feedback for other coin dealers and collectors to share their experience as they try to do the right thing and whether government has been helpful or a hindrance to the industry and the hobby.
You need to find new CPA's. Hard assets and coins definitely are treated as capital gains. Coins as further treated as collectibles and are taxed at 28% for capital gains purposes (Unless you are in the 15% tax bracket then they are just taxed at 15%.)
CPA's Thanks for the feedback. There are probably different categories, short- term capital gains, long-term, whether you're doing it as a business, as a collector. If I as a collector, were to say, crack a coin out of an old holder, score a "home-run", then quickly sell the tangible at a substantial profit, clearly this would be a short-term capital gain, taxed at the max.. Most people just say for you to rely on the judgment of your CPA. But if the CPA plays fast and loose with the numbers, because generally the government doesn't know "basis" on the coins, what you paid, it is highly unlikely you will be called on the carpet for understating your transactions. Like I said, I want to be 100% honest for conscience sake, not because I expect to be audited. I spoke with JJ Van Grover on this issue, and he said the city auditors had meticulously gone over his books a number of times. He passed with flying colors. He son worked with the IRS criminal division. He had quite a few stories to tell. God rest his soul.
