COINS AND paying TAXES pls help..

Specifically. 26 United States Code, Subtitle A, Chapter 1, Subchapter A, Part I, §1(h)(4), states:

With all due respect, I think it would be a great idea for those who don't know what they are talking about to stop pontificating.

 

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You know I've hear this mentioned several times, and the answer I've come up with as to why money earned in a garage sale is not taxable is that you're selling items for much less than you originally paid, thus are not actually earning any profit. See below for the "hobby rule" as to why you couldn't claim the loss though...

Not entirely true... you can deduct hobby expenses for selling coins. However if coin selling is a hobby, and not a business, you can only deduct expenses up to the total amount of earnings you claim as taxable income. In other words, if it's a hobby and not a business, you can not claim a net loss for the year; best you can do is break even. (Similar to the rule about how you can only claim as much gambling losses as winnings.) To actually be able to claim a net loss for the business of selling coins, that 3 year rule of attempting to make a profit (and actually earning a net profit in at least one of them) applies.

Hobby expenses can include anything necessary to participate in the hobby. In the realm of coin collecting, you could justify things like supplies, books, and grading fees, to name a few. (Books may be a little iffy, you'd have to establish that you bought the book primarily for the sake of participating in the hobby.)

Amen on that. The only thing that will get you in more trouble than trying to hide legitimately taxable income from the IRS, is lying about it. (However of those 3 people only Al Capone got in trouble for tax evasion; it's what he went to jail for. A landmark case btw that established that even illegal income is subject to tax; Capone unsuccesfully tried to use the defense that you can not legally tax illegal income.)

 

And that's only one of the reasons why the Fair Tax makes sense. Taxes would be paid when you spend money, not when you earn it.

 

Gains on coins are taxed at the 28% rate, but there are exceptions:

Unfortunately, I imagine for most people that are able to collect and profit in this hobby, most don't qualify for the lower brackets. I don't know why they even bother to have them, unless someone inherits a collection who falls into a lower bracket.
Guy~

 

I don't know if this comment was directed at me or not. But, if it was, I do not appreciate the comment. Topic 409 on Capital gains and Losses, right from the IRS website, says that capital gains on coins is taxed at a MAXIMUM rate of 28%. NOT a flat 28%!! So like I said before, it could be taxed at a much lower rate than 28% (0%, 5%, 15%, 25%). It depends on many factors.

And yes, there are many collectors who are in lower than 28% tax brackets.

 

Now, THAT is Funny!

LOL!

 

The main cons to a federal sales tax (as opposed to a federal income tax):

1. It is proportianately regressive (people of lower incomes pay a higher proprtion of their income in tax) due to the fact that people of lower incomes have to spend a higher proportion of their income on basic necessities, not having the luxury of saving as much of their income as higher income earners can.

2. By taxing spending rather than income, you encourage saving and discourage spending. The economic impact of that would discourage economic growth.

3. It would greatly reduce the need and demand for tax accountants. Some would say that's a good thing, but people who are in that field or are trying to enter it may disagree lol...

Anyway if you want to discuss such a thing in greater detail beyond the scope of profits from selling coins, would sugged the PRWE forum.

 

Ask an accountant like Doug suggested. He will tell you no one really cares. Unless it is a big piece of change the IRS is busy knocking on the doors of drug dealers and taking all their possesions for using ill gotten gains. Getting a fortune is hard , but keeping it is harder.