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<p>[QUOTE=&quot;Publius2, post: 4668292, member: 105571&quot;]Here&#039;s the explanation on capital gains tax on collectibles which includes coins.&nbsp; Long term capital gains on collectibles held over one year is 28% which is paid on the difference between the basis and what you sell it for.&nbsp; The basis is basically what you bought it for including certain additional costs of acquisition.&nbsp;&nbsp; The government does not consider your hobby to be a productive activity that benefits the country hence the high long-term capital gains compared to other investments.</p><p><br /></p><p>The basis cost cannot be indexed upward for inflation, back to one of the earlier points in this thread.&nbsp; So, let&#039;s buy a coin for $1000 and hold it for ten years where each year the inflation rate is 2%.&nbsp; If you could index, then the indexed basis would not be $1000 but rather 1000 x 1.02^10 or $1219.&nbsp; So, with indexing your basis cost rises and the capital gains that you owe 28% on is reduced from what it is under current law. </p><p><br /></p><p>But think about this:&nbsp; Let&#039;s say you get your favorite auction house to promote your favorite 2017 ultra-mega Proof 71 coin from Burkina Faso showing an incuse view of the capital city of <a href="https://en.wikipedia.org/wiki/Ouagadougou" target="_blank" class="externalLink ProxyLink" data-proxy-href="https://en.wikipedia.org/wiki/Ouagadougou" rel="nofollow">Ouagadougou</a> for $1000 capital gain.&nbsp; Then you have to pay the auction house some percentage, maybe 5%, plus paying Uncle Sugar his 28% of your $1000 capital gains.</p><p><br /></p><p>What if you didn&#039;t keep any records of your purchase price?&nbsp; Why then, the government gives you an opportunity to suggest a reasonable value which you of course high-ball and the government rejects and &quot;suggests&quot; a much lower one.&nbsp; After some back and forth during which you are paying off your tax attorney&#039;s Porsche the government wins anyway and oh, by the way, hands you some penalties and interest on top of all the previous indignities.</p><p><br /></p><p>All in all, it&#039;s pretty financially discouraging to be a collector.&nbsp; Why do we do it?&nbsp; Must be the love of the coins.</p><p><br /></p><p>See the link for more details on capital gains on collectibles.</p><p><br /></p><p><a href="https://www.investopedia.com/articles/personal-finance/061715/how-are-collectibles-taxed.asp#:~:text=If%20collectibles%20are%20sold%20at,commissions%20involved%20with%20that%20purchase" target="_blank" class="externalLink ProxyLink" data-proxy-href="https://www.investopedia.com/articles/personal-finance/061715/how-are-collectibles-taxed.asp#:~:text=If%20collectibles%20are%20sold%20at,commissions%20involved%20with%20that%20purchase" rel="nofollow">https://www.investopedia.com/articles/personal-finance/061715/how-are-collectibles-taxed.asp#:~:text=If collectibles are sold at,commissions involved with that purchase</a>.[/QUOTE]</p><p><br /></p>

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