Are Gold Coin Sales Reportable to the IRS?
Gold coins remain one of the most sought-after investments for precious metal investors; however, many investors do not fully comprehend their transaction’s tax ramifications.
Coin dealers must submit customer sales of Precious Metals sold through them on IRS Form 1099-B for tax reporting. Reporting requirements vary based on each piece sold.
Many gold dealers fear they will need to file extensive paperwork or report every sale they make of bullion. However, it is essential that dealers understand that most precious metal transactions do not need to be reported at all to the IRS; reporting is only required under three situations: 1) when receiving cash payments of large enough amounts in one or more related transactions to trigger cash reporting; 2) sales of pre-cious metal coins and ingots that exceed minimum ounce size requirements for delivery against an IRS commodity contract; or 3) selling to non-corporate sellers by bullion dealers.
Note that these reporting rules do not address capital gains taxes, which are assessed separately upon selling properties and calculated as the difference between their selling price and original cost, plus any applicable selling expenses, and their selling price.
Certain coins and bullion pieces sold by dealers are exempt from 1099B reporting due to specific sales quantities over a given time period and type. This applies mainly to pieces not included on the IRS Reportable Items List as well as certain US currency coins created after this list was created in the 1980s.
Additionally, some dealers establish purchase thresholds of bullion that must be reported to the IRS; certain states impose sales tax laws that impose this duty on precious metals dealers; however most coin and bullion buyers can avoid these sales tax obligations through careful planning of their buying habits.
Other exceptions to reporting gold purchases to the IRS occur when a purchaser pays in cash or with two or more cash instruments such as money orders, cashier’s checks and traveler’s checks that, individually or cumulatively, total less than $10,000. Personal checks, debits or bank wires do not fall within this classification of payment instruments under law.
Many dealers who sell precious metals claim their coins are exempt from reporting, but that may not always be the case. A customer who pays with cash exceeding $10,000 could require filing of Form 1099-B and therefore require reporting.
These rules vary based on the type of bullion sold: pre-1965 US gold coins are often reportable, whereas privately minted silver products and American Eagle coins may not. Furthermore, certain thresholds determine if an item should be reported.
If a dealer must file Form 1099-B for a transaction, the buyer will be provided with paperwork that identifies him or her. This form asks for information including their name, address, social security number, citizenship status and photo identifying mechanisms like driver’s licenses or passports to help the IRS identify possible tax fraudsters. Capital gains taxes typically apply when selling precious metals – although their rate varies based on individual’s income and holding period.
As one would expect, reporting requirements for precious metal dealers can often be confusing and unclear. One key area of confusion involves which types of bullion are reportable to the IRS; pre-1965 US coins sold over $10,000 face value typically fall into this category but there are exceptions such as purchases using cashier’s checks which do not trigger this requirement to file an IRS 1099B form.
Bullion items exempt from reporting requirements regardless of the quantity are 1-oz Gold Maple Leaves, Krugerrands and Mexican Onzas purchased in quantities of 25 or more and any US coin composed of 90% silver. While unscrupulous dealers may increase investor anxiety in order to justify higher prices, no dealer should intentionally violate any laws.
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