Are Gold Coin Sales Required to Be Reported to the IRS?
If you sell precious metal items, it is likely you will need to file IRS form 1099-B with the IRS for reporting requirements based on several variables.
Unscrupulous dealers sometimes report coin sales to the IRS when they exceed certain quantities or are paid in cash, using this threat of reporting as leverage to persuade investors into purchasing overpriced coins.
Sales to Dealers
Under certain conditions, coin sales by customers to dealers must be reported, including certain quantity thresholds or specific pieces that do not appear on the IRS Reportable Items List – these may include Gold Maple Leaves, 1-oz Krugerrands and Mexican Onza coins sold in quantities of 25 or more within a short timeframe.
As the dealer in this instance is required to fill out 1099-B forms after every sale in order to prevent tax evasion, he or she should enter information regarding both the buyer’s basis price (purchase price) and selling price of precious metals sold by him or her.
Basis is determined by subtracting the original purchase price from its current sale price, taking into account any shipping and handling fees you may have paid for shipping and handling. Profits made are taxed as capital gains at rates depending on whether they were held less than or over one year before being sold off or held over twelve months before sale.
Sales to Individuals
Purchasing gold coins to profit from their numismatic value rather than metal content can result in gains that will be taxed at ordinary income rates by the IRS, while holding onto them for over one year could see these gains taxed at lower long term capital gains rates.
An 8300 form must be filed when an individual pays in cash (such as money orders, traveler’s checks or bank wires) for over $10,000 worth of precious metals purchased from a dealer. This complies with anti-money laundering regulations and allows the IRS to keep tabs on large transactions that might otherwise go undetected.
Pre-1965 US coins do not need to be reported like other forms of bullion until their face value exceeds $10,000; whether dealers sell these as legal tender or collectibles will determine their reporting requirement, although American Silver Eagles and privately-minted silver bullion do not.
Sales to Banks
Precious metal dealers must file IRS 1099B forms when selling certain quantities of bullion pieces; exact specifications vary based on sales volumes. Examples of products requiring this filing include US coins not listed by the IRS in their “Reportable Items List,” as well as 100-oz silver bars. The International Council of Tangible Assets provides guidance regarding which products qualify, but these regulations can change quickly and without warning.
Law requires precious metals dealers to report any significant cash sales involving gold coin purchases even though these investments don’t fall under capital gains tax regulations like other investments do. This requirement was created in order to help combat money laundering and fraud by creating an audit trail of each transaction’s history; for instance if someone buys from one shop and then returns three hours later with more business with that dealer – both transactions will be treated by the IRS as related and should be reported accordingly.
Sales to Insurance Companies
Unscrupulous dealers may promise that they can sell you gold without reporting it to the IRS, yet this is an outright lie and should be avoided at all costs.
The IRS mandates that precious metal dealers report sales to individuals where the total cash payment exceeds $10k, however this only applies when dealing with coins and bullion exceeding certain quantity thresholds; specifically 1-oz Gold Maple Leaf Coins, 1-oz Krugerrand Coins, and 1-oz Mexican Onza Coins with quantities exceeding 25 are purchased simultaneously; American Gold Eagles or any fractional ounce gold coins do not meet this reporting threshold.
If you purchase gold coins as investments, any profit from their sale must be taxed as capital gains and accounted for on a capital gains tax return. The report must include information regarding your basis in each coin purchased as well as any resulting gains or losses.