When I Sell Gold Do I Report it to the IRS?
Many individuals wish to sell gold anonymously for various reasons, however the IRS requires certain precious metals and coins be reported accordingly when sold as required under their regulations.
Rare coin and bullion sales over $10,000 must be reported to the IRS, while short-term capital gains taxes apply at an initial maximum rate of 28% for collectibles like gold.
What is a Reportable Transaction?
Reportable transactions are defined by the IRS as any transactions which they consider potentially susceptible to abusive tax avoidance, such as transactions listed as reportable in published guidance, as well as those identified with this potential for abusive tax avoidance.
These transactions must be reported using Form 8886. Generally speaking, taxpayers must use this form to disclose all reportable transactions they participated in for each year that participation occurred.
The 8896 requires individuals to identify their material advisors and disclose any pertinent details about them, too. Material advisors include any individuals who receive compensation for providing advice or assistance on one or more reportable transactions.
Material advisor is defined in Section 8896 only if:
What is a Non-Reportable Transaction?
Congress has passed several income tax laws designed to curb abusive tax avoidance transactions, including reporting requirements on Form 8886 by participants engaged in certain large cash transactions to the IRS.
Reportable transactions include any transaction that matches or substantially matches an identified tax avoidance transaction by the IRS in terms of notice, regulation or published guidance. These five categories include confidential transactions, contracts that provide contractual protection from losses, transactions of interest and listed transactions.
Reporting requirements cover an array of activities, such as depositing or withdrawing more than $10,000 cash from an account, receiving traveler’s checks, money orders or bank drafts from anyone other than your spouse and purchasing or selling real property below fair market value that is not your primary residence.
What is a Capital Gains Tax?
Capital gains taxes apply when selling an asset for more than it cost you initially, and can vary based on how long and your income level you held onto the asset before selling.
To calculate capital gains, start by identifying your basis – this should include all commissions and fees associated with purchasing the asset in question – then subtract its realized price from your basis to find your profits.
As capital assets, most investments such as stocks, bonds, cryptocurrency, real estate and collectibles (such as fine art, antiques and precious metals) fall under IRS jurisdiction for taxation at either short-term or long-term capital gains rates, depending on how long an investor holds them for. Retirement and savings accounts (such as 401(k), individual retirement accounts (IRA), 529 plans or health savings accounts do not usually fall into these tax categories.
What is a Long-Term Capital Gains Tax?
Any profit realized from selling capital assets are subject to federal capital gains taxes; their rate depends on how long they were owned and your income level.
Your capital gains taxes can be minimized by investing for the long term and using tax-advantaged retirement accounts, and offsetting capital gains with capital losses.
To calculate capital gains, first establish your basis. This could include anything from purchase price plus commission or fees paid, to commission fees owed or fees collected as commission. Subtracting this figure from realized amount results in profit calculation.
Long-term capital gains are subject to lower tax rates than ordinary income; short-term gains, however, are taxed at your regular income tax rates. Therefore, it’s advisable that you seek advice from a financial professional regarding which rules apply in your unique situation.