Taxes when you sell Junk Silver?

Discussion in 'Bullion Investing' started by tommybee, Oct 19, 2010.

  1. justafarmer

    justafarmer Senior Member

    Read this again


    "From the New York Times:
    To improve compliance, the law requires businesses to file a 1099 tax form identifying anyone to whom they pay $600 or more for goods or merchandise in a year. Businesses will also have to send copies of the form to their vendors, suppliers and contractors."

    It clearly states - REQUIRES BUSINESSES TO FILE A 1099
    it clearly states - ANYONE TO WHOM THEY PAY $600 OR MORE
     
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  3. justafarmer

    justafarmer Senior Member

    At a coin show - how do you tell the businesses from ordinary people?

    Those who gather the required information to correctly file 1099s are probably dealers - those who don't gather this information are probably not. Dealers who do not comply with the 1099 rules if caught are subject to fines and back-up withholding.

    I agree the new 1099 rules are a pain in the rear - but it is not as complicated as we seem to be making it.
     
  4. GDJMSP

    GDJMSP Numismatist Moderator

    I know, I've said that all along. But the way the way the law is written, it does not mention that it applies only to businesses. Unless - you read the previous sections that were not changed.

    That's why it is so confusing to everybody.
     
  5. Treashunt

    Treashunt The Other Frank

    Mike

    You said: 'Section 6041 of the IRS code mandates the issuance of a 1099 for wages. I get several every year. If I sell more than $600 of articles to any one publisher, they send me a 1099. If I sell less, that all gets itemized and entered under "Other Income not Reported." Now the new law 2012, includes all goods and services, not just wages.'

    actually, very incorrect.

    The W-2 form is used for wages.
    The 1099 Miscl is for non-employee compensation, the law is very careful about that.
    for example: Consultants are 1099'd, but anyone who is deemed an employee had better get a form W-2.
    Or the Board of Labor & the IRS will be after you.
     
  6. justafarmer

    justafarmer Senior Member

    The new 1099 rules did not expanded the scope of who is required to file informational returns - it expanded the scope of the type of transactions that are required to be reported on 1099s.
     
  7. Conder101

    Conder101 Numismatist

    The way the law was written I think Mike has interpreted it correctly. I'm sure that is not what they intended when they wrote it though. And yes the way it is written they would have to generate 1099's for your purchases of groceries, DVD.s ammo and all that other stuff. But the law requires the BUSINESS to file the 1099's. (Thank goodness for all those nice barcoded cards and tags everyone is using nowadays, and the debit cards and the Credit Cards. It will make it much easier for the companies to keep track of your purchaces so they can send in the proper 1099 for each of us.)

    The 1099 filing requirement in the Healthcare law only really cares that the government get the information so how does he send it to himself? He keeps his copy and snds the government their copy.

    This new reporting requirement is simply a means of trying to track all the money to make sure everyone reports everything he receives and everything he pays out which can be used to make sure the people he pays it to also report that they received it.
     
  8. justafarmer

    justafarmer Senior Member

    When a grocery store sells a customer groceries - the grocery store is not making a payment for goods or services - it is the customer that is making the payment for goods and services.

    Therefore
    The grocery store does not have to file a 1099 on the transaction because they didn't make the payment.
    The customer does not have to file a 1099 on the transaction because the payment for the goods or services was not made in the course of conducting a trade or business.
     
  9. AlexN2coins2004

    AlexN2coins2004 ASEsInMYClassifiedAD

    except what if I were buying something for resale or for use in a business?
     
  10. justafarmer

    justafarmer Senior Member

    Alex - you would have made a payment for the purchase of goods and services in the course of conducting a trade or business. You would have to file a 1099 reporting the amount of payment and the taxpayer information of the prson or entity you purchased the goods or services from.

    But
    The person or entity you purchased the goods or services from is not required to file a 1099 because they did not make a payment for goods or services they are the ones that provided the goods or services.
     
  11. Owle

    Owle Junior Member

    ICTA is lobbying against the new requirements, let's hope they get a more common sense solution. Bottom line: the government wants more revenue and wants to discourage the cash economy. Frankly, the customer has a lot more recourse when paying for transactions with a check, and businesses paying customers with a check with verifiable IDs discourages various types of fraud. Coin dealers are the sharpest business owners I know of--they size up the customer, whether buying or selling, and make snap decisions based on their excellent business instincts. If the IRS just ramped up their audits of bullion dealers and coin dealers they would address the problem right there, the need for compliance on the law as it now exists. But my guess is that they are either pre-occupied with lower lying fruit, or bigger fish. It's frankly too much trouble to go over records in the volume that coin dealers are used to generating.
     
  12. AlexN2coins2004

    AlexN2coins2004 ASEsInMYClassifiedAD

    i think the whole thing is stupid..the more you constrict and or try to tax usually the less tax revenue the government gets...I personally would rather have 2% of a billion then 20% of a million...maybe the government will learn that lesson one day...course that will be when the government actually has respect for it's citizens and doesn't talk down to us cause we don't know better...since we are all like Homer simpson to some in the government...:rolleyes:

    signed by (just another Homer Simpson)
     
  13. kaparthy

    kaparthy Well-Known Member

    Right. My mistake. I got the form numbers mixed up. The fact remains that the new law changes the language of the IRS rules to require reporting on a 1099 of not just contracted non-employee compensation (i.e. "wages" in plain English) but any goods or services in excess of $600. That was the change. Myself, my work I sell for "wages." For some, I fill out a W-2 which is listed on the annual 1040. For others, it is 1099. For still others, I declare it myself.

    Right. But if you read the IRS Code, a "corporation" is any person who owes tax. Incorporation is at the state level. These are federal taxes. So, they just define it as best they can.

    The subject here is buying and selling "junk" silver, i.e., US 90% silver coins and similar. You might claim that you are just an ordinary person, but according to the IRS, if you owe the tax, then you are a business, by definition.

    I agree that it is unenforceable -- as will be the requirement in 2014 that people without health insurance pay a special tax -- but that is not the question. I am sure that in 1912, a lot of things seemed unenforceable, not the least of which was who drinks a glass of beer. And yet ... my favorite brand is Elliott Ness from the Great Lakes Brewing Company of Cleveland, Ohio.
     
  14. quartertapper

    quartertapper Numismatist

    If anyone here subscribes to Coin World, there is an article in theOctober 2010 issue addressing this topic. There are senators from both parties are working on repealing this part of a much larger bill. One had introduced an amendment to raise the $600 to a more reasonable and realistic $5,000. It was shot down, of course. But I think that before 2012 this law will change to benefit us at least somewhat. Remain hopeful!!!
     
  15. justafarmer

    justafarmer Senior Member

    If a Corporation is any person who owes tax then why isn't everyone who owes tax required to file form 1120?
     
  16. kaparthy

    kaparthy Well-Known Member

    I understand and appreciate the question. If you want to challenge the tax laws, please, go right ahead. I just cited what the laws say. I did not write them. I am not responsible for them.
     
  17. 10gary22

    10gary22 Junior Member

    Somehow, I think it must be $600 for a single transaction like the $1000 requirement for gambling winnings. In other words, there is no requirement to issue a 1099 if I have won $100 11 times over the year nothing happens, but hit for $1000 and they get my info before they hand me the money.

    But, every time I sold a coin or ingot to a bullion dealer, they got my info. Even as long as decades ago. But these new rules would seem to apply when the item being purchased by the dealer would show a profit to the seller ?

    I mean that the vast majority of retailers buy their wares from wholesalers (other businesses). Pawn shops, coin dealers, bullion brokers, etc purchase from individuals as a rule. So the rules would apply to them. I don't see that much has changed with the record keeping. Only now the 1099 must be issued ?

    Since the records must be kept anyway, it doesn't seem like much of a problem to send the forms.
     
  18. Hobo

    Hobo Squirrel Hater

    Take the case of the Ohio family who earlier this year discovered their 1856-O Coronet Double Eagle that had been handed down in their family for over 100 years was very rare and very valuable. (Only 20 to 30 examples of 1856-O Double Eagles are known.) Their coin was graded EF-45 by NGC and they sold the coin at auction for $345,000. After paying the seller's fee of 15% ($51,750) I assume they received a net total of $293,250.

    But wait! Uncle Sam wants his share of their windfall. Hopefully Uncle Sam allowed them to claim a basis of $20 in the coin so they "only" owed 28% capital gains tax on $293,250 meaining they had to write the IRS a check for $82,104.40. (If Ohio has an income tax they will have to pony up even more.) They will be lucky to net $211,125.60 (or 61.2% of the selling price). 38.8% for fees and taxes takes a big bite out of your profit.

    Here's one for you, nineteen for me.
     
  19. imrich

    imrich Supporter! Supporter

    Correct and Appreciated Declarations

    Your statements are correct and appreciated relative to many of the uninformed posts which have been presented by others. "Capital Gains" and "Collectible Gains" taxes have been in effect as long as I can remember.

    I believe it will be found that these are taxes only on the "gains", and proper filing allows deductions for all expenses. There aren't taxes unless there's profit, and when properly filed, a loss can be applied as a deduction against "earned income".

    If residents of this country were to educate themselves by discussing the tax laws with "foreigners", I suspect that they would establish that their concerns about all profits being taken by the government, are incorrect in this country, and that we currently have a more favorable tax structure than many countries.

    A thorough investigation of current tax laws should reveal that the regulation changes are not laws changes but relatively minimal new
    enforcement policies, that really don't affect those who comply with existing tax laws. The changes in tax "regulations " are intended to close the cracks through which a significant portion of our society has slid untaxed income.

    Policy changes as those currently being federally mandated will increase elusive untaxed income for both the federal and state government. The ultimate effect is to justify an increase in tax enforcement employees, wholly supported by new tax revenues, which will allow better collections when Congress/Legislatures approve increased tax levies.

    The benefit of the new regulations to the average taxpayer is that honorable compliers will realize a reduced future increase in their tax levy because more elusive profiteers will share the burden of elevated government employment/expenditures, through "fair taxation" for all.

    This is my story, as a
    government/political representative, and "I'm sticking to it". :devil:
     
  20. justafarmer

    justafarmer Senior Member

    As for the "Ohio family who earlier this year discovered their 1856-O Coronet Double Eagle that had been handed down in their family for over 100 years was very rare and very valuable." should have carried a basis from the estate.
     
  21. illini420

    illini420 1909 Collector


    Correct, each time a family member who owned the coin died and passed the coin to the next family member, under current law the basis should have been stepped up to the fair market value at that time (and estate tax should have been paid on the value if applicable).
     
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