Are Gold Coin Sales Reported to IRS?
Many investors favor physical gold coins as a safe-haven asset, providing protection from inflation and geopolitical instability.
When purchasing precious metals with cash, money orders or bank or certified checks, the dealer is required by law to notify the IRS of this transaction; with certain exceptions.
Coins
Gold coins make an excellent addition to an investment portfolio. Their near-full value remains secure within storage facilities while they feature intricate and unique designs that stand out. Unfortunately, like most bullion products, they were not meant for circulation as money; hence Gresham’s Law states: “Bad money drives good money out of circulation.”
IRS law mandates dealers file 1099-B forms when selling coins in excess of certain predetermined quantities listed on their Reportable Items List. Usually these quantities consist of pre-1965 US silver dimes, quarters and half dollars as well as gold coins minted post-1965 such as bullion rounds or one ounce Gold Maple Leaf coins or more one ounce Krugerrand coins or Mexican Onza coins (with one exception being American Gold Eagle coins which do not trigger this reporting obligation); collector coins often face difficulty finding buyers willing to pay more than simply their gold content!
Bars & Rounds
The IRS mandates that dealers report any sale of items included on its Reportable Items List, such as coins with face values over $1,000 and US coins containing 90% silver content, gold bullion bars one kilogram (1kg or 1,000 troy ounces in size) or bullion bars 1kg (1 kg/1k troy ounces), as well as bullion bars 1 kg (1k/1k troy ounces in size. Gains on these sales may be subject to capital gains taxes. You can reduce this tax liability using appraisal costs (such as appraisal and storage costs), which reduce your taxable gains on these transactions.
Some investors may have privacy concerns or seek to keep their precious metal purchases hidden from the government; however, this is an inaccurate perception. All precious metal sales must be reported to the IRS unless paid for with cash exceeding $10,000; hence it is imperative that customers fully understand their obligations when purchasing and selling precious metals.
Palladium & Platinum
Many customers sell precious metals anonymously in order to safeguard their privacy and reduce identity theft risks. Furthermore, they don’t wish for banks or anyone else to know their gold purchases and sales activities.
Though some dealers may set their own reporting rules, federal law mandates all brokers and dealers to report all sales of coins or bullion pieces listed as Reportable Items on Form 1099-B with seller’s information as well as transaction amounts.
Silver products that require reporting include pre-1965 US coin sales exceeding $10,000 face value and all 90% silver US coins produced after 1965, as well as any 90% silver US coin produced post-1965, such as all 90% silver coins issued post-1965 (except American Silver Eagles, private mint coins and bars which do not fall under this reporting requirement. Laws mandating precious metals transactions were initially instituted during the 1980’s in order to keep track of significant cash payments and prevent individuals from trading precious metals unreported as income sources.
Other Precious Metals
Many individuals sell precious metals anonymously due to privacy or identity theft risks or simply to avoid making the government and banks aware that they’re selling gold. But this shouldn’t be used as an excuse not to report gold sales transactions to the IRS using form 8300. If someone purchases precious metals with cash transactions they must file form 8300 with them to report the transaction.
Dealers that purchase certain precious metal coins and bars from customers in excess of established thresholds must issue them 1099B forms similar to what taxpayers receive when selling stocks or mutual funds. Reporting criteria vary according to coin or bullion type and quantity, though 1 oz Gold Maple Leaves, Krugerrands and Mexican Onzas typically qualify for reporting purposes in any quantity other than fractional ounces.
As capital gains are taxed at the same rate as any other form of profit, selling coins outside an Individual Retirement Account should also be taxed as capital gains despite being classified as collectibles by the IRS.
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