Are American Eagle Gold Coins Taxable?
Gold American Eagle coins are an increasingly popular investment choice among precious metals investors, due to their legal tender status and potential tax benefits. Making them a welcome addition to any portfolio.
Money Metals Exchange provides an impressive range of American Eagle bullion coins in sizes of one ounce, 1/2 ounce, 1/4 ounce and 1/10 ounce for purchase at face value – but with an incredible bullion value far exceeding this amount.
Capital Gains Tax
As is true of any investment, profits from selling American Eagle gold coins are subject to capital gains rates which will vary based on your income, filing status and other considerations.
The IRS considers gold coins and bullion to be collectibles, so their taxes are levied at a rate of 28%; much higher than any of the long-term capital gains rates applied to most investments (0%, 15% or 20%).
Hold on to your coins for more than one year before selling them; that way, profits from selling will be classified as long-term capital gains instead of short-term gains and your tax liability can be significantly decreased.
Maintaining accurate records of your costs basis is vital in order to calculate and report tax liabilities accurately, so it’s best to seek professional guidance when buying or selling precious metals, so they can assist in preventing costly mistakes from being made when it comes to reporting gains and calculations.
Reportable Sales
US taxes impose capital gains tax at a rate determined by your income level and length of ownership, so keeping detailed records regarding precious metal purchases and sales as well as consulting a qualified tax professional are critical in order to successfully calculate capital gains taxation.
Under federal law, dealers are required to submit certain coin sales to the IRS using Form 1099-B. This includes sales exceeding $1,000 in face value or of 1 oz Gold Maple Leafs, Krugerrands or Mexican Onza coins sold in over 25 pieces and any US coin composed of 90% silver. Furthermore, any coin or bullion piece sold when payment of $10K cash or more was received triggers reporting requirements which helps monitor large commodity exchanges and combat money laundering activity.
Reportable Capital Gains
Gold Eagle coins are considered collectibles by the IRS, so selling them within a year of purchase requires you to pay capital gains tax at 28% of their profit margin.
Though many websites indicate that gold and silver bullion sales taxes do not need to be reported due to an obscure law, this is deceptive. Only certain US coins qualify for exemption from the 1099-B reporting requirement: pre-1965 American Gold Eagles as well as privately minted ones of $10,000 face value or greater are exempt. Other products eligible include 1 oz Gold Maple Leaf Coins, Krugerrand Coins, Mexican Onza Coins as well as any US coin composed of 90% silver content are all also exempt.
First step in assessing your tax obligations is calculating your cost basis – or the original fair market value (FMV) of the precious metal purchased – this will serve as your starting point when calculating capital gains and should serve as your point of reference when calculating them.
Self-Directed IRAs
American Eagle gold coins are a top choice among investors looking to diversify their portfolio with physical precious metals. Produced each year by the United States Mint, these popular coins allow retail investors to purchase gold bullion easily and with confidence.
American Gold Eagle coins are composed of one troy ounce of 22-karat gold combined with small amounts of alloy for additional strength and resilience against scratches or marring, which could lower their resale value. They’re approved as IRA investments by the United States government and guaranteed in weight, content and purity.
The IRS frowns upon Individual Retirement Accounts investing in collectibles, but under tax code regulations alternative assets that fulfill certain criteria may be held within an IRA. To prevent auditing from the Securities and Exchange Commission and avoid being audited themselves, savvy investors should consult a CPA before investing funds into any alternative asset investments. Furthermore, any prices or valuations provided by self-directed IRA promoters should also be verified for accuracy before proceeding with their investments.
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