How does one TRADE silver dollars for gold coins?

I have a large number of silver quarters which I might like to convert to gold. How is a TRADE accomplished (without the buy/sell activity, which would trigger capital gains taxation)? Is this a routine transaction?

 

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Welcome to CT first off.

If you did a swap at a local shop there would be no tax's due at time of swap.

When you cash in said gold/silver into cash that's when the Capital gains tax comes into effect. It is usually up to you to report it on your tax return. In my state the dealer does not report it unless you take cash in excess of over $9,999. If you take a check they do not report it. Now if they ever get audited and the IRS double checks your return against checks written that would be the only way they could catch you.

 

Check out the coin shows near your area. There is a lot of trading going on. Some of the larger shows have events setup just for this. Of course you will want to research the price of what you have and the cost of the kinds of gold you want to buy.

 

Thanks for the help

 

This is true, but don't underestimate this. Compliance audits are going up, and cash businesses like this are being targeted. Taking cash out of the transaction, (or check), legally triggers capital gains taxes. I have know a couple of dealers the last couple years where the IRS looked over their records, but were also very keen to copy their payment records. Pragmatically, if cash is received and the dealer doesn't know your name, that is hard to track. Legally its still a gain you are supposed to pay taxes on.

Btw the cash payment reporting is not a state law, its Federal. All cash payments $10,000 or more are legally required to be documented. The repealed provision of the health care law would have taken this down to $600 cumulative, cash or check.

 

An interesting question: What is the cash reporting requirement of legal tender precious metal coins? Is an ASE = $1 and a AGE = $50? A literal interpretation of this particular IRS regulation Form 8300 would say this is what one should do.
What does “cash” mean for the purposes of Form 8300?
Cash is money. It is currency and coins of the United States and any other country. Note that if a personal check is used to pay for the transaction, there are no reporting requirements.

It's a rhetorical question, however. This particular law was written to catch drug dealers laundering money. This is why it excludes personel checks. It allows the FBI and other drug enforcement agencies to use the tax laws to take down drug king pins. For the most part, it's irrelevant in terms of the IRS using it to determine capital gains.

A party's (individual or business) tax liability is solely determined by what is filed on the tax form with the IRS. The IRS may however contest it and at that time can request several kinds of audits or proof. As long as no obvious fraud is at play, they give plenty of opportunities for the party to work with them to come to a settlement if it is contested.

 

I am not a tax expert, and please keep that in mind. But it seems highly likely to me that the IRS would consider a trade of this sort to be a taxable event.