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<p>[QUOTE=&quot;Troodon, post: 459510, member: 4626&quot;]I think you summed it up correctly... by California&#039;s logic if a coin is more than $1000 it is viewed as a capital investment.&nbsp; Presumably if such a coin is sold at a profit down the road, you&#039;d pay capital gains tax on it (of which California gets a cut of by virtue of your California taxable income being based on your federal taxable income).</p><p><br /></p><p>But if it&#039;s less than $1000, they presume it to be a hobby purchase that you&#039;re going to keep probably indefinitely, so they need to get their cut now by means of collecting sales tax on it.&nbsp; (Unless you have proof that you&#039;re in the business of selling coins and have a resale license, in which case you&#039;re exempt.)</p><p><br /></p><p>Of course the reverse could easily be true if you buy a $1000+ coin to keep indefinitely as part of your personal collection, or buy a less than $1000 with the intent of selling it at a profit, but this appears to be California&#039;s policy.&nbsp; Keep in mind this kind of thing varies from state to state.&nbsp; (Some states and jurisdictions don&#039;t tax coins at all, some it&#039;s taxable no matter what, and many positions in between.)</p><p><br /></p><p>Theoretically every time you sell a coin at a profit it should be considered a capital gain... but materiality can come into play, as well as justification of it being a like kind exchange, that sometimes the IRS doesn&#039;t expect a cut (especially if the potential gain is small compared to your total income and you&#039;re doing this basically as a hobby.)&nbsp; If you&#039;re in the business of selling coins at a profit, that&#039;s a whole different story of course.</p><p><br /></p><p>DISCLAIMER: Please keep in mind that the above should not be construed as professional tax advice... if you have any questions regarding tax implications consult a tax accountant and/or a lawyer.[/QUOTE]</p><p><br /></p>

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