if i were to sell 20-30K in metal - tax consequences?

this is what i was told

One fact that is rarely mentioned is that even the government doesn't count gold as an investment. For tax purposes, gold is considered a collectible. Rather then the 15% capital gains tax levied on investments held longer than 1 year, profits on gold are taxed at 28%, same as if you sold a painting or sculpture or other piece of art or collectible item

The only way around that is to hold it in a tax-free account like your Roth. You can buy a gold ETF and avoid that tax hit. I'm not recommending that, but that would be the way around the tax issue.

 

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I don't mind paying taxes (God knows I pay my share!)...but the direct tax (income tax) is killing this country's soul and has got to go. When promises of tax rebates to non-taxpayers are used to buy votes...that IS taxation without "fair" representation!

 

Hi Coleguy, sorry if this is a dumb question, but you said you "..just sold a few thousand in silver and had to pay no taxes on it..." and I am curious, this: wouldn't you be paying taxes (or not, as the case may be) NEXT year, when you file your taxes for 2011? Seems I get asked by my cpa/accountant each year questions like this, did I sell any... and depending on my answer it will then show up as a tax owed or not (as the case may be). So, why would you or would you not pay taxes right now?

Like I said, sorry if it's a dumb question.. I'm NO accountant, but I do trust mine! Darn, she's a stickler...(And I sure want her to be, since in the end I'm the one who's ultimately responsible..)

Lucy

 

I'm represented but my interests aren't. I'm middle class if that means anything anymore. I'm not rich enough to get anyone's attention and not poor enough for a handout.

 

I take his question as not being what you put it to being, I think he honestly wants to know how to handle it? does he need to pay taxes on it right now or wait til he files his yearly taxes? also does it count as the 28-29% or whatever is it collectible tax?

 

If you make a profit above a certain amount you have to pay estimated taxes throughout the year, not just April 15 like other people.

 

so what are you actually complaining about?

 

Quarterly's...I had forgotten...can you tell I don't have a job anymore, since my husbands' company got new owners...

Still, if it were me, and I chose to part with pm's, since I no longer do quarterly estimates, would I then have to make an estimated 1/4'ly return? I am not asking for legal or acctg ADVICE, just a theoretical question, a conversational question. I suppose, were I to err, I would rather err in the direction that wouldn't cause me trouble later
Render unto Caesar, and all that..

Thank you for your answer.
Lucy

 

Personally I would go somewhere smaller and sell smaller lots than 25k, like maybe lots of 1k. If you sell that big of a lot to anyone you will have to report it on a 1099, I think that's the right form. Apmex would more likely do everything above board and you will most likely be on video.

I am not suggesting you fudge on your taxes, what I am saying is make it easy on yourself.

 

Good question. Never had anything like that to sell. I wonder if you could also deduct loses? Assuming you have both buy and sell receipts. Not into precious metals myself.

 

Well, technically it was coins for coins as all the silver was dimes and halves. I'm not sure how I could prove or disprove a profit was made on the exchange as no physical cash traded hands, and as I exchanged about $80 face value for $2.04 face, all by definition numismatic coins. Even the IRS would have a hard time arguing I made a cent on that.

Like I mentioned above, I got no cash whatsoever on the deal, but took it as store credit. As the people in the shop said, if I took it in cash, anything over $1,299 in Nevada I would pay taxes on, but credit is excluded. Seeing as they're one of the largest and most respected coin sellers on the west coast, I had to assume they knew their tax laws. Once again, what exactly would I have claimed as capital on that transaction? As far as I'm concerned, I took a loss.
Guy

 

Thank you for your response. I can once again see my world is so small (meaning there's a lot I don't know).

Interesting info.

Lucy

 

I would say you should run it past your tax person. There is a limit under which no quarterly filing is required.

 

Well first, don't trust a firm for tax advise. They will do what THEY are required, not is what is required of you. Two things, I would argue with the poster saying PM and junk silver are not like kind exchanges. These are effectively "like" investments which is what like kind exchange rules were created for. If it were me, I would take that position all the way to Tax Court. However, exchanging bullion for collectible coins I would say that the accountant was right, they are not "like". Like in that case would be trading a 1909 sVDB for a 1916d dime, not trading silver bars or 400 junk mercuries for a 1916d.

Second, any tax owed if not exchanged would depend on your basis. This is how much it cost when you purchased it. If you like kind exchange it, the basis will be from the original purchase, not todays value. Lets say you paid $500 for junk silver, like kind exchanged it for $2000, then later sell it. Your gain will be the difference between $500 and sale price. If you are holding on to the like kind exchanged product, you basis is $500 right now.

 

I agree that face value or any other value is meaningless. If you traded non-numismatic for numismatic, that would be harder. It all depends on audit risk they would be comfortable with.

 

Fair enough. Now, how does one go about determining what those gains were and how much is owed? Considering I usually pay between 55 and 65K in taxes each year, a few hundred more won't break me any more.
Guy

 

Well the gain will be as simple as how much you paid for them, any costs of maintaining them, (part of safe deposit or insurance charge), versus sale price. That is the gain. Taxability will be listed on a separate cap gain form on your taxes. Most collectibles have a separate cap gain rate.

Man 55 to 65 in taxes, must be nice. I am only privileged enough to pay about 45k a year income taxes.

The worst part about this whole thing is "capital gains" do not take into account inflation. Basically the government is taxing you on inflation on most of these sales. I have always thought there should be a chart converting purchase price into current dollars, THEN charging you tax on a gain, not taxing for simple inflation. It was brought up a few times, but the Democrats shout it down as a "tax break for the rich".

 

This is complicated at best. The coins were given to me years ago, so I paid nothing for them. Their value was about $1800. I traded, not sold them for $2200 in other coins. So is my taxable amount based on the $1800 as that was basically a gain on $0 invested, or the $2200 I ended up with in trade value? If nothing else I'm going to have my taxes done next week so I can ask my accountant. If he's known for one thing, it's nothing gets overlooked and he won't fudge one cent, so I'm not worried about auditors.
Guy