Question about taxation of physical gold sales in U.S.

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switters's picture
switters
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Question about taxation of physical gold sales in U.S.

I've been researching the tax assessed on sale of physical gold in the U.S.  My current understanding is that it's taxed as a collectible at the rate of 28%.  However, I've also read that in the US there are no requirements for either the buyer or the seller of gold and silver to report the transaction to the government. The only reporting required is for cash transactions of more than $10,000.  

Let's use a hypothetical scenario here.  Say I buy 30,000 in gold coins from a local dealer.  Should I assume that they'll report the transaction to the government because it's above $10,000?  Let's say for the sake of argument they do.

If I sell $9,000 of gold to that dealer on three separate days (meaning three separate transactions), in theory they shouldn't have to report it to the government, correct?

What are the legal issues here?

tictac1's picture
tictac1
Status: Silver Member (Offline)
Joined: Sep 25 2009
Posts: 175
I've never been taxed on

I've never been taxed on gold or silver coins, certainly not at 28%.

Moving money around in under $10K increments (8K-9K) sounds like a good idea, but it has been used as de facto evidence of fraud/tax evasion.  I'll have to dig up the cases if you want specifics.

However, I can't imagine anyone looking that closely unless you gave them a reason to.

Take a look here-

http://en.wikipedia.org/wiki/Structuring

SagerXX's picture
SagerXX
Status: Diamond Member (Online)
Joined: Feb 11 2009
Posts: 2237
No tax on PMs in NY

If you purchase more than $1000 in a single transaction, there's no sales tax in NY state. I pay cash, and when they ask if want a receipt I say no thanks.

SailAway's picture
SailAway
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Posts: 404
Tax on collectibles
switters wrote:

I've been researching the tax assessed on sale of physical gold in the U.S.  My current understanding is that it's taxed as a collectible at the rate of 28%.  

 

switters,

The short story is collectibles like gold & silver are taxed as income, here is how it works (I just tried on an online tax software):

- If you kept your gold less than a year, then it's just normal income.

- If you kept your gold more than a year then it's going to be the lesser of 28% or your marginal tax bracket.

So unless you are in a tax bracket higher than 28% then you'll pay 15%, 25% or 28% depending upon your taxable income. If you are in the higher tax brackets then AMT usually starts to kick in and you might end up paying more than 28%. Of course you have state tax on top of that...

Disclaimer: I'm not a tax adviser, these are just the numbers I got when I simulate it using an online tax software.

Hope this help.

 

Saffron's picture
Saffron
Status: Gold Member (Offline)
Joined: Aug 29 2009
Posts: 250
tax on collectibles
SailAway wrote:

The short story is collectibles like gold & silver are taxed as income, here is how it works (I just tried on an online tax software):

- If you kept your gold less than a year, then it's just normal income.

- If you kept your gold more than a year then it's going to be the lesser of 28% or your marginal tax bracket.

 

Are they taxing you on any profit you made or in general off the price of the pm? How would they know how long you've had it if you don't keep a receipt, like Sager mentioned above. And how do they figure what your profit was if you don't have a receipt to show what you paid? 

~ s

hucklejohn's picture
hucklejohn
Status: Gold Member (Offline)
Joined: Dec 13 2008
Posts: 281
I have found the taxation of

I have found the taxation of precious metals in its various forms to be quite confusing.  I offer a couple of web sites for your review:

 

http://goldnews.bullionvault.com/gold_tax_060320102

http://inflationdata.com/inflation/Gold_Investment_Articles/Gold_Taxes.asp

 

SailAway's picture
SailAway
Status: Gold Member (Offline)
Joined: Aug 11 2010
Posts: 404
Re: tax on collectibles
Saffron wrote:
SailAway wrote:

The short story is collectibles like gold & silver are taxed as income, here is how it works (I just tried on an online tax software):

- If you kept your gold less than a year, then it's just normal income.

- If you kept your gold more than a year then it's going to be the lesser of 28% or your marginal tax bracket.

 

Are they taxing you on any profit you made or in general off the price of the pm? How would they know how long you've had it if you don't keep a receipt, like Sager mentioned above. And how do they figure what your profit was if you don't have a receipt to show what you paid? 

~ s

Yes you pay taxes on the capital gain only, not the whole sell proceed (In the USA). And I guess that if you are audited by the IRS it would be up to you to provide proofs of when and how much you paid for your metal.

 

nickbert's picture
nickbert
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Posts: 1208
Saffron wrote:Are they
Saffron wrote:

Are they taxing you on any profit you made or in general off the price of the pm? How would they know how long you've had it if you don't keep a receipt, like Sager mentioned above. And how do they figure what your profit was if you don't have a receipt to show what you paid? 

~ s

As far as I know you're being taxed on the gains.  As to how would the IRS know how long you've had it or how much gain you've realized, if you've been dealing exclusively in physical gold/silver it's up to you to tell them.  As to whether you tell them or not, well that's up to you I guess.

On a personal level, I do find it perversely funny that a mostly corrupt and dishonest government expects its citizens, the same citizens that it's screwing over with depreciating currency and gross misallocation of their tax money, to go with the government's "do as I say not as I do" line and comply with an honor system demanded by an entity with absolutely no honor.  Now that's chutzpah!Tongue out

- Nickbert

RichPickings's picture
RichPickings
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Joined: Feb 9 2014
Posts: 2
taxes on precious metals

Wow the lack of info on this topic is amazing. This thread is over 4 years old and yet it's pretty close to the top of a search on gold taxes, taxation on gold etc. For anyone interested (hello, hello anyone there...) I found this site ,   www.preciousmetaltax.com  to be pretty good, esp if you're American, which I guess most here are,... it does seem one's options basically boil down to spreading your financial self around the world, confusing the tax man at every turn....

RichPickings's picture
RichPickings
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Joined: Feb 9 2014
Posts: 2
90% windfall CGT

Just re-read Jim Rickards "Currency Wars" for the second time. One of his predictions is for a 90% windfall capital gains tax on privately held gold in the US. Yikes.

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