Charmin Posted February 9, 2003 Author Report Share Posted February 9, 2003 Mind? kinda healthy discussion. So, I'll copy over the discussions one by one from Friday Feb. 7. $10,000 tax loophole in selling gold coins 7-11 replies: I may just be missing something in your text or the associated link itself, but the $10K reporting requirement is a 'cash' regulation and has nothing to do with gold, silver, or any other materials being purchased. I know for a fact that if I buy from or sell to my local coin dealer (in a personal transaction - when I do business purchasing there ain't no tax until merchandise is resold retail) they always warn me when I'm close to the $10K per year cash mark. If you buy with a check or receive a check - the $10K reporting rules don't apply, so that in itself is a decent way around the problem. An accountant does our taxes and I never see of any of it unless there's problems so - again, if I'm off track here - my mistake. ============ Yobob replies to 7-11: 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. ============ Hadjin: 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] ============== 7-11: 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... =========== Yobob: 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. ======== 7-11: 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 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. =========== Yobob: 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: QUOTE 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. ============= 7-11: 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 ) 719.634.3313 (Ask for Chad Krause or Thom Hallenbeck) ============ Yobob: 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. ========== 7-11: 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!). ============ Link to comment Share on other sites More sharing options...
Charmin Posted February 9, 2003 Author Report Share Posted February 9, 2003 Who would ever think of trying to avoid a paper trail and be a gold bug :grin: IRS reference: http://www.irs.gov/irm/page/0,,id%3D21542,00.html As for the American Eagles and 25 limit exemption I copy this from: http://www.amergold.com/vault/americangoldeagles.shtml Private and non-reportable ? Unlike most gold bullion, American Gold Eagles are non-reportable the IRS by brokers. They offer complete financial privacy and the security of the world?s oldest and safest financial asset. Other modern issue world bullion coins like Canadian Gold Maple Leafs, South African Gold Kruggerrands, Austrian Gold Philharmonics, and Chinese Gold Pandas are reportable to the IRS when you sell them to gold dealers in increments of 25 ounces or more. American Eagles are exempt from this reporting requirement. 25 Eagles at $370 would be $9250 Link to comment Share on other sites More sharing options...
SevenOfEleven Posted February 9, 2003 Report Share Posted February 9, 2003 Who would ever think of trying to avoid a paper trail and be a gold bug :grin: IRS reference: http://www.irs.gov/irm/page/0,,id%3D21542,00.html As for the American Eagles and 25 limit exemption I copy this from: http://www.amergold.com/vault/americangoldeagles.shtml Private and non-reportable ? Unlike most gold bullion, American Gold Eagles are non-reportable the IRS by brokers. They offer complete financial privacy and the security of the world?s oldest and safest financial asset. Other modern issue world bullion coins like Canadian Gold Maple Leafs, South African Gold Kruggerrands, Austrian Gold Philharmonics, and Chinese Gold Pandas are reportable to the IRS when you sell them to gold dealers in increments of 25 ounces or more. American Eagles are exempt from this reporting requirement. 25 Eagles at $370 would be $9250 Huh... I'll be darned. I won't mention any names but I've known dealers to sell hundreds of oz's of all kinds of gold to all size dealers and refineries, including the largest wholesalers in the US and guess what? Nothing reported. Not even by the big kids. Very weird. Maybe that's a dealer to dealer exemption or something? Everyone, naturally, reports on request. Tax time is a grand old time to be a coin dealer. Everyone and their uncle Tom wanting to show a loss - and by golly we're more than happy to make that as big a loss as they like Okay - so, the parts I miss are estates AND tax time Link to comment Share on other sites More sharing options...
SevenOfEleven Posted February 9, 2003 Report Share Posted February 9, 2003 Just found a link with pictures of this item. Pictures are crappy - in real life these things are gorgeous and struck in full cameo (frosty features against mirror background). Different bear scenes on different year strikes. Nice. Continental Coin Corporation California Revenue and Taxation Code Section 6354 "This program exempts from taxation the sale or use of commemorative "California Gold" medallions." Further down under "Comments" can be found: "This program gives California Gold medallions an advantage over bullion coins..." Which is the most assanine thing I've ever heard because these particular medallions are traded exactly like bullion. They come in 1oz, 1/2oz, 1/4oz, and 1/10oz sizes in sealed flips with mini certs and SN's, they're .999 fine and - people aren't usually given to buying 1oz pure gold souveneir's from the gift shop (where you won't find these - try the coins/bullion shop instead). Not that I should complain - hey - tax exempt is a good thing, but talk about flakey legal rationale... California Revenue and Taxation Code Section 6355 "This program exempts from taxation the sale or use of monetized bullion..." Link to comment Share on other sites More sharing options...
Guest Posted February 9, 2003 Report Share Posted February 9, 2003 Folks, folks. The moderation options of this board have great capabilities for splitting and merging topics; no need to cut-n-paste old messages. Here, I moved all the previouse tax-related messages into this new topic. Regards, Vesselin Link to comment Share on other sites More sharing options...
Charmin Posted February 9, 2003 Author Report Share Posted February 9, 2003 I actually got one more superpower to unpin a thread this weekend, but I don't think my superpowers as a moderator extend into splitting and merging topics. Maybe that's a dealer to dealer exemption or something? 7-11 I believe all this reporting has to do with retail and not wholesale Link to comment Share on other sites More sharing options...
Guest Posted February 13, 2003 Report Share Posted February 13, 2003 First post, how about that? Anyway, the regulations that set these rules are in 26 USC 6050I and its regulations. In those regulations the general rule is this: "Reporting requitement -- (1) Reportable transation -- (i) In general. Any person who, in the course of a trade or business in which such person is engaged, receives cash in excess of $10,000 in 1 transaction (or 2 or more related transactions) shall, except as otherwise provided, make a return of information with respect to the receipt of cash." Reg. 1.6050I-1(1)(1)(i). Under this general rule, there are some definitions that hopefully resolve the issue. The first definition is multiple payments. "The receipt of multiple payments (or other similar payments or prepayments) on or after January 1, 1990, relating to a single transaction (or two or more related transactions), is reported as set forth in [the general rule]." Reg. 1.6050I-1(. The big definition is the definition of the term "transaction." This definition is as follows. "The term transaction means the underlying event precipitating the payer's transfer of cash to the recipient. Transactions include (but are not limited to) a sale of goods or services; a sale of real property; a sale of intangible property; a rental of real or personal property; an exchange of cash for other cash; the establishment or maintenance of or contribution to a custodial, trust or escrow arrangement; a payment of a preexisting debt; a conversion of cash to a negotiable instrument; a reimbursement for expenses paid; or the making or repayment of a loan. A transaction may not be divided into multiple transaction in order to avoid reporting under this section." Reg. 1.6050I-1(c )(7)(i). This says to me that a dealer who is tracking your purchases on an annual basis is doing so wrongly, unless you directed him that you wanted to buy X amount of ounces and will pay for it over the year. Multiple purchases over a year's time that are fundamentally different transactions should not be reported as one transaction. I would regard the regulation as clear on this, as there are multiple underlying events that precipitate the transfer of cash to the seller. In addition, the defninition of related transactions may be useful. "The term related transactions means any transaction conducted between a payer and a recipient of cash in a 24-hour period. Additionally, transactions conducted between a payer and a cash recipient during a period of more than 24 hours are related if the recipient knows or has reason to know that each transaction is one of a series of connected transactions." Reg. 1.6050I-1(c )(7)(ii). Thus, I still stand by the notion that multiple purchases during any given year are not related and not subject to the reporting requirements. This is confirmed in Reg. 1.6050I-1(c )(7)(iii) Example 1. "A person has a tacit agreement with a gold dealer to purchase $36,000 in gold bullion. The $36,000 purchase represents a single transaction under paragraph (c )(7) [above] of this section and the reporting requirements of this section cannot be avoided by recasting the single sales transaction into 4 separate $9,000 sales transactions." This would seemingly lead to multiple conclusions. One could be easily persuaded that multiple purchases would not escape reporting requirements. However, this interpretation does not jive with the "underlying event precipitating the payer's transfer of cash" test. In the example, it is fundamentally one transaction. When I make 4 purchases during the year from California Numismatic, they are fundamentally different transactions. The other wrinkle of this set of rules is what is a reportable transaction. This is where we start getting into weird quantities and types of bullion. I'm not researching into it really far, but I can provide a trail to do so. Reg. 1.6050I-1(c )(1)(iii) provides that the reporting requirements apply to the retail sale of collectibles. The definition of collectible found in Reg. 1.6050I-1(c )(3) includes any item described in Section 408(m)(2)(A)-(D). Section 408(m)(2)(C ) specifically includes any metal or gem. However, Section 408(m)(3) provides exceptions for certain coins. I'm not following up on what the coins are, but here is where to look. Any coin which is a gold coin described in 31 USC 5112(a)(7)-(10). A silver coin described in 31 USC 5112(e) A platinum coin described in 31 USC 5112(k) A coin issued under the laws of any state Any gold, silver, platinum or palladium bullion of a fineness equal to or exceeding the minimum fineness that a contract market (7 USC 7) requires for metals which may be delivered in satisfactino of a regulated futures contract, PROVIDED, if such bullion is in the physical possession of a trustee described in Section 408(a) [iRA trustee] I'm not sure what to make of this, but I'll take a pass at it. I would say that my regular bullion purchases are classified as a collectible. This is because they are not in the physical possession of my IRA trustee. I hope that helps a bit. Link to comment Share on other sites More sharing options...
ThorAss Posted February 13, 2003 Report Share Posted February 13, 2003 Thanks SS and welcome aboard the board of boards. Unfortunately my brain short-circuited at the first Regulation Number but I hope it helps those less fortunate (ie those who pay tax.) :wink2: Link to comment Share on other sites More sharing options...
SevenOfEleven Posted February 13, 2003 Report Share Posted February 13, 2003 First post, how about that? Anyway, ... [blah blah blah blah... ] ... I hope that helps a bit. Thanks for the post SS. I've forwarded it on to the primary dealer who does tally my cash transactions and requested a response that I can post back here. Let's see what comes back. -Seven Link to comment Share on other sites More sharing options...
Guest yobob1 Posted February 13, 2003 Report Share Posted February 13, 2003 Probably a letter from Tom Ridgid questioning your patriotism followed by an angry IRS summons and a subpoena from Asscroft inquiring about your Al Quesadia ties. Link to comment Share on other sites More sharing options...
SevenOfEleven Posted February 13, 2003 Report Share Posted February 13, 2003 Probably a letter from Tom Ridgid questioning your patriotism followed by an angry IRS summons and a subpoena from Asscroft inquiring about your Al Quesadia ties. Last time I was tied to a quesadia, it was tied to a tecate, and well... rest of the night was a blur... Link to comment Share on other sites More sharing options...
SevenOfEleven Posted February 14, 2003 Report Share Posted February 14, 2003 I will try to explain next time you come in. Things have "changed" since we last spoke. That's what I received back. Greeeaaat - we're going to be relying on MY memory! Link to comment Share on other sites More sharing options...
Guest yobob1 Posted February 15, 2003 Report Share Posted February 15, 2003 You may have escaped your quesadia ties, but watch out for the fajita wrap when you go in. Jose Quervo is a friend of mine...........uh, on second thought, not after last time. Link to comment Share on other sites More sharing options...
crapax Posted February 17, 2003 Report Share Posted February 17, 2003 This question may seem a little lame, but anyways here goes: Do the dealers charge a tax (sales tax) for purchase of Gold Bullion? Is anyone aware of any states that actually do charge a sales tax on bullion? If they do, does anyone have an idea what it may be like? An approximation? Link to comment Share on other sites More sharing options...
bearometer Posted February 17, 2003 Report Share Posted February 17, 2003 this is from tulving.com: "California residents must add 7.50% sales tax on orders under $1,000.00 total. Orders over $1,000.00 are exempt from sales tax." so no tax if you are having it shipped out of state. I'm not sure about other states though... Link to comment Share on other sites More sharing options...
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