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$10,000 Cash Rules, And Taxes Related To Gains/losses


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7-11

 

Thanks for the insight into something I know nothing of, but is the response:

 

"As long as the buys or sells are under $10,000, there's no reporting."

 

specifically mean you can buy or sell gold coins with transactions under $10,000 and never have to worry about the government getting any of the details of the transaction?

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7, the $10,000 is not a per year limit, it is a per transaction limit. The rule was designed to uncover money laundering. Also it is not only cash that is tracked , but also any cash equivalents such as money orders etc. I occasionally run into in this in my business as I deal in big ticket items.

 

As to the taxing of any trades as a capital gain or income, I'm really unclear over the rules regarding a "commodity". This is something we all should get clarified and damned soon. I also need to know if I trade one commodity for another whether there is a taxable gain.

 

I seriously doubt there is a tax loophole regarding transactions of less than 25 coins as the poster suggests, but it bears investigating.

 

The only way to keep your privacy is to deal in cash only and under $10,000 at a time. All other methods will leave a paper trail. If you sell and receive a check, you are traceable.

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Gold up $4.30.

 

Here is who I buy my physical from. The only shop with better prices is Tulving, but I prefer these guys for the extra couple of bucks they charge; but excellent prices nonetheless and they among the nations largest.

 

Their website is www.GoldDealer.com . Here is what they say about reporting to the feds....

 

"....The following is the best The Industry Council For Tangible Assets has to offer about what the I.R.S. wants in the way of paperwork. They are describing the paperwork provided by bullion dealers which relate to what you purchase or sell.

 

First: You can place any size order and pay for it with a check. No one cares, not even the government. The only time they want to hear from us is if you invest more than $10,000 in cash. Then you must fill out I.R.S. Form 8300. There is nothing wrong with large cash transactions, but the government wants to know about them. And, by the way, you can't spend $5000 today and $6000 tomorrow, for Uncle Sam does not like to be fooled.

 

Second: There are rules which apply only to bullion and only when you sell. They have nothing to do with your purchases, and do not apply to rare coins. Kilo bars are 32.15 troy ounces of gold and are subject to reporting. Concerning 1 troy oz. gold coin transactions: If you sell 25 coins or more of the Krugerrand, Maple Leaf or Mexican Gold Onza we are required to report them on I.R.S. Form 1099B. Such reporting is not required on transactions involving the U.S. Gold Eagle or Australian Kangaroo. There is no reporting on any small gold bullion coins.

 

Third: We are required to report $1000 face 90% silver bags and 1000 ounce silver bar transactions only when you sell to us. We are not asked to report the sale of 40% bags, less than $1000 face 90% bags or 10 and 1 ounce silver bars.

 

Fourth: Platinum bars in quantities of 33 ounces or more are reportable, but platinum bullion coins like the Canadian Maple Leaf, the U.S. platinum Eagle, or the Australian Koala are exempt. If these rules seem arbitrary we don't blame you. We believe our government based their decisions on what was traded on the nation's commodity exchanges and had little to do with what was happening in coin stores across America.

 

------------------------------------------------------------------------------

California Numismatic Investments

Dealers in Quality Rare Coins And Precious Metals

525 West Manchester Blvd.

Inglewood, CA. 90301-1627

PH: 1-800-225-7531 ? FAX (310)330-3766

24-Hour Toll Free Recording 1-888-443-GOLD

Email: [email protected]

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7, the $10,000 is not a per year limit, it is a per transaction limit.  The rule was designed to uncover money laundering.  Also it is not only cash that is tracked , but also any cash equivalents such as money orders etc.  I occasionally run into in this in my business as I deal in big ticket items.

 

As to the taxing of any trades as a capital gain or income, I'm really unclear over the rules regarding a "commodity".  This is something we all should get clarified and damned soon.  I also need to know if I trade one commodity for another whether there is a taxable gain.

 

I seriously doubt there is a tax loophole regarding transactions of less  than 25 coins as the poster suggests, but it bears investigating.

 

The only way to keep your privacy is to deal in cash only and under $10,000 at a time.  All other methods will leave a paper trail.  If you sell and receive a check, you are traceable.

I have to disagree with paragraph 1 yb, the $10K cash law IS cumulative over a 1 year period regarding the same two entities involved.

 

You're right about money orders, bank wires, etc..

 

Trades - interersting subject. If you're doing a personal transaction and walk into a coin shop with 10 eagles and want to trade for silver - you should NOT be taxed and if you are I'd make a few phone calls because a lot of dealers know the loopholes and will mum up and pocket the difference. In fact, a lot of coin dealers will charge taxes yet pocket the difference on all cash transactions (insist on a signed receipt and watch how nasty they get). On trades, don't expect to get 1:1 spot prices. I certainly wouldn't do that as a business and wouldn't expect it - there's no money in that and, as said, profits are paper thin (which is probably why there are so many crooked small time dealers in this business).

 

I don't know about the 25 coin limit. I do know that there are many little legal ditties regarding gold and silver if you can manage to find them. And many states have their own little specific laws like California and it's tax exempt 'California Gold' bullion coins. Somewhere there's a law that specifically deals with tax on trades that is dead specific about 10oz Engelhard silver bars. All kinds of that for the person who likes to dig or has a universal legal talmud handy...

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Re: 10K limit. I have to disagree, but I'll have to dig out my guide to cash transactions to confirm that.

 

The problem may stem from the definition of what a transaction is defined as. If you buy 20 Eagles on day one and then go back the next day and buy another 20 Eagles, I could see how that might be construed as one transaction. If you bought 20 eagles on day one and then on day two bought 20 Krugs, I would interpret that as two distinct transactions. In my business if a customer bought a fifth wheel one day and then turned around the next day and bought a camper, that would be two distinct transactions.

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Re: 10K limit. I have to disagree, but I'll have to dig out my guide to cash transactions to confirm that.

 

The problem may stem from the definition of what a transaction is defined as. If you buy 20 Eagles on day one and then go back the next day and buy another 20 Eagles, I could see how that might be construed as one transaction. If you bought 20 eagles on day one and then on day two bought 20 Krugs, I would interpret that as two distinct transactions. In my business if a customer bought a fifth wheel one day and then turned around the next day and bought a camper, that would be two distinct transactions.

It's a "cash" + "customer" thing - nothing to do with what's bought. You're running up a slap-me tab for an entire year on multiples with the same dealer (not sure if it's fiscal or calendar).

 

See the post just before mine regarding the same issue - I $hit you not - it's the truth. There's only a couple of dealers that really dig me hard on it - I can go in months apart and they remember and they do keep a tally. Most probably don't and won't until an audit :grin: which tends to make anyone follow every nit pick and snit rule ever writ for about ten years in the gold biz (they slam people VERY hard in this business when caught).

 

If you want I an give you the number of one of those shops (the one that would probably be able to explain it without having to say 'call you back when I find that book somewhere...').

 

Charm's right - we should probably start a thread with all the tax info on transactions. Unlike oil or wheat, many who trade in the PM stocks also trade in the metals so they go hand in hand. At least I don't know of anybody storing barrels of crude for trade under their house :lol:

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7, I can tell you the dealers I have dealt with have not "kept" a tally. They don't even know my name. According to my receipts my name is Mr. Cash

 

Quoting from the IRS book on form 8300:

If you receive more than one cash payment on a single transaction or on related transactions, you must report the multiple payments any time you receive a total amount in cash payments that exceeds $10,000 within any 12 month period.

 

I think this is where you got the impression that it was $10,000 per year, when in fact that only applies to any individual transaction. Therefore as long as there is 24 hours between purchases, you can do as many cash transactions as you want below $10,000 without any reporting on form 8300 necessary.

 

Just because you are buying the same type of item over and over again, you are not invoking the related transaction clause as long as there is 24 hours between purchases.

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7, I can tell you the dealers I have dealt with have not "kept" a tally. They don't even know my name. According to my receipts my name is Mr. Cash

 

Quoting from the IRS book on form 8300:

If you receive more than one cash payment on a single transaction or on related transactions, you must report the multiple payments any time you receive a total amount in cash payments that exceeds $10,000 within any 12 month period.

 

I think this is where you got the impression that it was $10,000 per year, when in fact that only applies to any individual transaction. Therefore as long as there is 24 hours between purchases, you can do as many cash transactions as you want below $10,000 without any reporting on form 8300 necessary.

 

Just because you are buying the same type of item over and over again, you are not invoking the related transaction clause as long as there is 24 hours between purchases.

Uh... that's not how I'm reading it yobob - looks to me like they're saying it's cumulative. "you must report multiple payments" and "within any 12 month period" pretty much sums it up.

 

Here's a large coin dealership's phone number out here in CO. They're the ones who tally me and they're also the ones that pushed the dual tax for lower rates on bullion through legislation here (e.g. they've dabbled a lot more in tax law than I). Maybe they can explain or be corrected (you never know - if you're right and we're wrong they'll get off my back about it :lol: )

 

719.634.3313 (Ask for Chad Krause or Thom Hallenbeck)

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7 it's only cumulative if it is a single transaction or related transaction.

 

If you order $20,000 worth and then make it in 3 payments over any 12 month period, you have violated the $10,000 barrier. If you order $8,000 worth, 24 hours later another $7000 worth and then 24 hours later another $5,000 you have not triggered the reporting clause. An example of a related transaction would be a boat and trailer, purchased from the same dealer. If the boat is $9,000 and the trailer is $2,000, even if you bought those two items 24 hours apart you have invoked the related transaction clause.

 

Savy? Your coin dealers are wrong unless you are paying for one order over $10,000 in multiple payments. I have the full IRS book for form 8300 right here in front of me.

 

Sorry about this Charmin.

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7 it's only cumulative if it is a single transaction or related transaction.

 

If you order $20,000 worth and then make it in 3 payments over any 12 month period, you have violated the $10,000 barrier. If you order $8,000 worth, 24 hours later another $7000 worth and then 24 hours later another $5,000 you have not triggered the reporting clause. An example of a related transaction would be a boat and trailer, purchased from the same dealer. If the boat is $9,000 and the trailer is $2,000, even if you bought those two items 24 hours apart you have invoked the related transaction clause.

 

Savy? Your coin dealers are wrong unless you are paying for one order over $10,000 in multiple payments. I have the full IRS book for form 8300 right here in front of me.

 

Sorry about this Charmin.

What you're talking about would be a "single" transaction that's paid for in installments.

 

According to your own quote above with "related" transactions - they clearly make a point of stating that "more than one cash payment on a single transaction" (which is what you're talking about as singularly cumulative) "OR" (very important - it means either/or is considered the same thing) "on related transactions".

 

We could go 'round all day because we're having a difference of interpretation and our dealers are obviously doing the same.

 

I just know that since I've been dealing (or was - I quit several months ago) the 'tally the cash' concept has been consistent with two dealers in particular - larger shops that actually do their paperwork legally and we've been told by our accountant to tally the same way (which I don't deal with - I'm purchasing, not sales).

 

If I get a chance I'll see if I can find more info that would further the argument without ratholing (e.g. add new info rather than going 'round and 'round - we'll never reach agreement this way and it is an issue worth being sure about) and one of us can start a thread or we can add it to the thread I just saw on 'buying physical'. I don't know - perhaps info from a huge huge wholesaler or documentation from an IRS source (the documentation you have already we're both inerpreting differently) - whatever as long as it adds facts and not just more opinions (yikes!).

 

Okay - I'll leave my end of the discussion out of the daily threads now (just needed a final closure rebutal as you did) and we can go pester the buying physical thread (actually a good place for it don't don't you think? That's where it'd be most useful IMO).

 

Have a great weekend and don't go visiting the historic locations of the Ali Baba tales anytime soon...

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Charmin, I'm going to pin this one if you don't mind.

 

Anybody that has any specific knowledge of any IRS or other rules regarding tax issues on the gains/losses regarding the sale of bullion gold or silver. Please site references. We do not want heresay or secondary sources.

 

Now 7of11. I have been through the IRS guide book for form 8300 (reporting of cash transactions over $10,000) backwards and forwards. The only relevant question is whether purchases of gold made over 24 hours apart could ever be construed as a "related transaction". Related transactions do have a 12 month clause as outlined in the other thread.

 

Quoting from the IRS: (bolds are my doing)

Each person engaged in a trade or business who, during that trade or business, receives more than $10,000 in cash in one transaction or two or more related transactions, must file form 8300.  Any transactions conducted between a payer (or its agent) and the recipient in 24 hour period are related transactions.  Transactions are considered related even if they occur over a period of 24 hours if the recipient knows, or has reason  to know, that each transaction is one of a series of connected transactions.  This form may be filed voluntarily for any suspicious transaction (see Definitions) even if it does not exceed $10,000

 

Again from the IRS, Definitions:

Suspicious Transaction. - The term "suspicious transaction" means a transaction in which it appears that a person is attempting to cause form 8300 not to be filed, or a false or incomplete form to be filed, or where there is an indication of possible illegal activity.

 

Your coin dealers are doing you a disservice by interpreting the rules the way they are. If you were repeatedly going in, in 24 hour and 1 minute intervals, and buying $9,999 worth of product, that could easily be interpreted as a "suspicious transaction". However if you went in in January and bought $8,000 and then a few months later went in and bought $5,000 and three weeks later went in and bought $9,000 worth, I would hardly call that suspicious. Hell I'd call you a damn good and valued customer. Even if you were buying the same product, it is not a "related transaction". There is nothing related or suspicious about buying 10 Eagles a few times a year, months apart, anymore than there is about buying 10 cans of tomato soup a few times a year, months apart. I think this is especially true given that the price is extremely unlikely to be the same on any two purchases given the moving price of the underlying commodity. On the other hand if you went in and agreed on a fixed price for the next 12 months for a specified quantity, there could be grounds for calling it a related transaction. Your coin dealers' actions are groundless unless you are doing something that would make them "suspicious".

 

In doing some research on the taxation of gains or losses relating to gold/silver bullion on the IRS website, I can find no exclusions for individuals relating to gold/silver regardless of quantity. It appears to me that standard capital gains rules, as would be applied to any commodity, are applicable. That means short term (1 year or less), long term (1 to 5 years) and the over 5 year rules apply. There are too many variables (see your accountant) to give a specific guide as there are normal income tax rate thresholds that can vary the capital gain rates. However for general purposes, short term is 28%, long term 20%, and over 5 years could be as low as 8% if your normal income tax rate is lower than 27.5%.

 

There is a glaring exception. That involves anything that could be described as a "collectable", wherein coins are specifically mentioned. The capital gain rates for numismatic coins appear to be 28% with few exceptions.

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