Gold Trading Tax Implications – For many of our clients at Atlanta Gold and Coin Buyers, investing in precious metals is a form of passive income that often results in a profit or loss just from sales or market activity. However, as with any other source of income, passive or otherwise, we want our clients to be aware of the tax implications of their trading. One of the questions we get from new buyers or sellers is “Do I have to report the sale of gold and silver coins to the IRS?”
According to IRS policy, there are two conditions under which bullion dealers are legally required to report your trades:
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Failure to report can result in fines, penalties or criminal charges, so it’s important to know the circumstances under which a purchase or sale may be considered a reportable transaction. Both with coin sellers and customers. When reporting one of the aforementioned transactions, there are special forms that bullion dealers must fill out. These forms are 1099-B and 8300.
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The 1099 series is a set of forms used to report any profit earned by a non-corporate vendor. They allow the IRS to prevent many tax evasion cases. The focus is on tracking individuals who can sell items as a source of income. When trading in precious metals, traders must complete Form 1099-B. This is done when the customer sells any of the products listed in the IRS Reportable Goods List in certain quantities, which we discuss later in this section.
Reporting criteria vary depending on the coin or bullion being traded. The criteria for reporting customer bar and pellet sales is primarily determined by the purity and quantity of each item. However, this criterion is different for each type of precious metal.
For bullion and bullion sales to be considered reportable, each gold bullion must have a fineness of at least 0.995 and the total purchase amount must be 1 kilogram (32.15 troy ounces) or more. Similarly, to sell silver bars and rounds to ensure reporting, each piece of silver must be at least 0.999 fine for a total purchase of 1,000 troy ounces or more.
Finally, sales of palladium and platinum bullion also have reporting requirements. A coin dealer must issue a 1099-B to purchase 100 troy ounces and 25 troy ounces, respectively. In addition, both metals have a fineness limit of 0.9995. Compared to bars and rings, the reporting criteria for customer coin sales is a bit simpler because the restrictions are very specific.
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Additionally, some bullion products are not subject to reporting, regardless of how much the customer is able to sell. Such sections include, but are not limited to:
To learn more or download Form 1099-B, you can find this information directly from the IRS.
Bullion dealers are required by federal tax law to report certain customer sales. In addition, they are legally required to report any cash payment they may receive for a transaction of $10,000 or more. These laws, passed by the National Treasury in the 1980s, were a way to monitor major commodity exchanges in the United States. Also, by reporting these large cash payments, the IRS can prevent any potential money laundering schemes.
Bullion dealers must complete Form 8300 to report receipt of such payment. Like Form 1099-B, bullion dealers are required to disclose payment details for their transactions, as well as certain information about paying customers. Note that while customers have the option to opt out of some of this information, precious metal dealers are still required to provide this form.
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When it comes to purchasing bullion, the term “cash” is defined as the use of the following payment methods for purchases of $10,000 or less:
It is important to note that any of the aforementioned forms of payment for purchases over $10,000 other than US currency are not considered cash. Therefore, the tax inspectorate is not informed about it.
Other forms of payment that are not required include personal checks, money orders, payment apps such as CashApp, Venmo, Zelle, and ACH transfers.
As mentioned earlier, selling precious metal coins, rings and bars can be an additional source of income for many customers. Therefore, in the IRS’s view, any gain a client receives from the sale of their precious metals holdings is taxable and therefore taxable. This tax is called “capital gains” tax. Therefore, “capital gain” means any gain from the sale or exchange of shares or personal property. In the case of precious metals, capital gains occur when a particular coin or precious metal increases in value and is subsequently sold at a higher price. In short, capital gains are one of the main parts of the large transaction reports that the IRS looks for.
Reportable Silver & Gold Bullion Transactions Infographic
This price difference between the initial price of the precious metal and the final sale price is considered capital gains. There, any such gain is subject to capital gains tax.
We always recommend that customers retain copies of their transaction receipts as this may help them determine what tax liabilities are associated with their transactions, if any. Capital gains or losses often occur easily if the same person buys and sells exactly the items on which they are claiming tax. However, inherited gifts, coins and precious metals can sometimes be misleading.
Although we are not tax experts, your cost basis will generally depend on the date you receive the gift. For example, if your parents gave you a 1-ounce gold eagle when the price of gold was $1,800, you would use $1,800 as the purchase price for tax purposes. We also often buy real estate coin collections and get questions about tax obligations. In cases where a coin collection has been inherited, the date of transfer is usually the date used to determine the cost basis of the collection.
Depending on when you get the coins or bars, you can sell at a profit or a loss. However, when selling at a profit, remember that you should use the value of the coin or bar on the day the item was gifted or shipped as your cost basis. This will significantly reduce your tax liability as the full sale value of the coin or bullion is not taxed, only the realized profit.
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In short, trading precious metals can be confusing enough without considering the information required by the IRS. Most of us are not CPAs or tax accountants, but Atlanta Gold and Coin Buyers will be happy to answer any questions you may have. This means that very few of our transactions qualify as reportable transactions. If this is the case, we always inform our customers in advance. Feel free to contact us for buy or sell rates, our positions, selling or buying your coins, rounds, bullion or anything else!
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**Disclaimer: Nothing in this blog is investment advice, performance or recommendation that any security, portfolio of securities, investment product, trade or investment strategy is suitable for any particular individual. By reading this blog we cannot infer anything about your personal circumstances, finances or goals and objectives, they are all your own and any opinions or information on this blog are opinions or information only. You should not use this blog to make financial decisions and we recommend that you seek professional advice from a person authorized to provide investment advice.
Tony Davis is the owner of Atlanta Gold & Coin Buyers, a full-service coin and bullion dealer located in Atlanta, specializing in the purchase, sale and appraisal of all types and sizes of coins and coin collections. Tony writes regularly on a variety of economic and numismatic topics affecting the coin and bullion markets and has been published on many leading industry websites, including Coin Week, the US Numismatic Association, Coin Collector’s Aid, Coinflation and Coin Auctions. little. For more information about the products, services and educational resources his company offers, visit the Atlanta Gold & Coin website. Tony can be reached at sales@ or 404-236-9744
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Buffer copy Email mail Facebook Flipboard Hacker Newsline LinkedIn Messenger Mix Pinterest Pocket Print Reddit SMS Telegram Tumblr Twitter VK WhatsApp Prevent inflation especially by investing in gold. Political instability and geopolitical tensions have also increased interest in gold.
Gold is not a perfect hedge against inflation. Gold prices rose in 2020 but fell in 2021. In general, gold prices will increase if
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