hypothetical coin sale.

[halfpint]

 

...suppose you have a coin that you paid 1000 dollars for and sold it for 1100 dollars. how do you work this into the income tax filing? does one owe on the profit of 100 dollars? just curious how this is done when a coin is sold. please elaborate and thanks.

[DirtyGoldMan]

...suppose you have a coin that you paid 1000 dollars for and sold it for 1100 dollars. how do you work this into the income tax filing? does one owe on the profit of 100 dollars? just curious how this is done when a coin is sold. please elaborate and thanks.

Yes, your cost basis is $1000, and your selling price is $1100. You owe tax on $100, the difference.

[newprepper]

Minus your expenses, travel to purchase or internet fees, home office, supplies, loupes, flips, numismatic references. etc if that was my only sale I wouldn't worry about it

[physics-fan3.14]

I reserve the right to invoke the Fifth Amendment in this particular circumstance.

[coinman_23885]

DirtyGoldMan is correct. You would have $100 that is taxable as capital gains. Interestingly, you can also offset capital losses up to a certain amount. I would advise you to consult an accountant or tax preparation service for more information.

[cpm9ball]

What is income tax?

 

Chris

[newprepper]

I reserve the right to invoke the Fifth Amendment in this particular circumstance.

 

You can't, you are not on trial for a criminal offense, you are being compelled to state your opinion, haha

[newprepper]

What is income tax?

 

Chris

 

Don't know, haven't paid in years

[TomB]

Minus your expenses, travel to purchase or internet fees, home office, supplies, loupes, flips, numismatic references. etc if that was my only sale I wouldn't worry about it

 

Be very careful if you attempt to be cute with the IRS. If this is a hobby and not how you derive your primary income then the above is a good method to be flagged for an audit.

[Keigwin]

A question I have never gotten a straight answer on is are you able to offset gains against losses?

 

I've been told that if you're running a business then yes, you can. But if you are a hobbyist, then no. You must pay the tax on all gains, and losses are just too bad.

 

Anyone have better information?

Lance.

[wheat'swheats]

according to my accountant you can, but the documentation is almost impossible,and will often cause the computer to trigger an audit.

wheat

[skippy]

A question I have never gotten a straight answer on is are you able to offset gains against losses?

Lance.

 

Why not? Capital gains are capital gains. You don't have to be a professional stock trader to offset gains and losses on stock trades.

 

Where I think the difference is is that unless you are professional coin dealer, you can't deduct expenses related to your coin hobby to reduce capital gains from your coin hobby.

 

JMO. Not an accountant.

 

[PerryHall]

...suppose you have a coin that you paid 1000 dollars for and sold it for 1100 dollars. how do you work this into the income tax filing? does one owe on the profit of 100 dollars? just curious how this is done when a coin is sold. please elaborate and thanks.

 

Was it a cash transaction between friends?

[Old Pueblo]

Trading new money for old money is what I call it cause the new stuff ain't worth near what the old stuff is or was.

 

 

 

 

 

 

[newprepper]

Minus your expenses, travel to purchase or internet fees, home office, supplies, loupes, flips, numismatic references. etc if that was my only sale I wouldn't worry about it

 

Be very careful if you attempt to be cute with the IRS. If this is a hobby and not how you derive your primary income then the above is a good method to be flagged for an audit.

 

I'm not trying to be cute, that is classified as a small business, it doesn't matter the amount, everybody here is always buying, selling and trading, its a matter of how much record keeping you want to keep. Like I said though, for 100 bucks, I wouldn't worry about it.

 

I'm a truck driver, I can write off paper towels, windex, car washes, armor-all, pencils, pens, paper, if I can use it in my truck, I can write it off, I'm able to reduce my taxes very low, I keep EVERY receipt through the year, January is very busy getting my taxes prepared. And I've never been audited......yet

[halfpint]

 

...answers made me think this: (also hypothetical) what if you didn't buy the coin? let's say that you found a 72 lincoln cent DD and was able to sell for 600 bucks?

 

you made a profit but you did not buy the coin, even though you made a profit of 599 dollars and 99 cents, then what?

[wheat'swheats]

A question I have never gotten a straight answer on is are you able to offset gains against losses?

Lance.

 

Why not? Capital gains are capital gains. You don't have to be a professional stock trader to offset gains and losses on stock trades.

 

Where I think the difference is is that unless you are professional coin dealer, you can't deduct expenses related to your coin hobby to reduce capital gains from your coin hobby.

 

JMO. Not an accountant.

That is true but from that point forward you better have paper on everything, and if you sell out you better be able to show every coin you bought and sold. If a dealer keeps good records the IRS computer can match his sales to your purchases. Been there and done that.

wheat

[mailman1959]

Why would I tell anyone I sold my coins? MAILMAN

[Conder101]

you made a profit but you did not buy the coin, even though you made a profit of 599 dollars and 99 cents, then what?

Cost basis would be the face value one cent and if you held it for a year then you would pay 28% capital gains tax on the $599.99 profit or $167.99 in tax. This is assuming you are being honest and reporting everything. If you held it for less than a year then it would probably be considered straight income of $599.99 and taxed at your marginal tax rate.

[coinman_23885]

A question I have never gotten a straight answer on is are you able to offset gains against losses?

 

I've been told that if you're running a business then yes, you can. But if you are a hobbyist, then no. You must pay the tax on all gains, and losses are just too bad.

 

Anyone have better information?

Lance.

 

This statute, should directly help you in answering your question, 26 U.S.C. § 1211, available at http://www.law.cornell.edu/uscode/text/26/1211.

 

http://www.irs.gov/taxtopics/tc409.html - Explanation of Long Term and Short Term Capital Gains and Loses with information about tax rate (note it is different for coins).

 

 

Disclaimer: This obviously only applies to federal taxes and does not address state income tax considerations. For any poster relying this information, this is not to be construed as tax advice and no warranty, express or implied, is made to the accuracy of any of the government materials cited herein.

[wheat'swheats]

A question I have never gotten a straight answer on is are you able to offset gains against losses?

 

I've been told that if you're running a business then yes, you can. But if you are a hobbyist, then no. You must pay the tax on all gains, and losses are just too bad.

 

Anyone have better information?

Lance.

 

This statute, should directly help you in answering your question, 26 U.S.C. § 1211, available at http://www.law.cornell.edu/uscode/text/26/1211.

 

http://www.irs.gov/taxtopics/tc409.html - Explanation of Long Term and Short Term Capital Gains and Loses with information about tax rate (note it is different for coins).

.

 

 

Disclaimer: This obviously only applies to federal taxes and does not address state income tax considerations. For any poster relying this information, this is not to be construed as tax advice and no warranty, express or implied, is made to the accuracy of any of the government materials cited herein.

In 2010 I lost $10000 in a bank failure. If I had earned $10000 I would pay tax on it all in that year. However, since it is a loss I can only claim $3000 a year for 3 years and $1000 in the 4th year. The same would be true on any capital loss you might incurr, but if it appears to the IRS that you have been running a black market business and are only claiming it now due to a substantial loss, I promise you they will audit you for the last 3 to 7 years depending on what they find in the first year.

wheat

[johnny9434]

I reserve the right to invoke the Fifth Amendment in this particular circumstance.

ill drink errrr plead the fifth as well.

[jom]

Minus your expenses, travel to purchase or internet fees, home office, supplies, loupes, flips, numismatic references. etc if that was my only sale I wouldn't worry about it

 

Be very careful if you attempt to be cute with the IRS. If this is a hobby and not how you derive your primary income then the above is a good method to be flagged for an audit.

 

Exactly. If you don't have a business in coins you can't take those write-offs. Then if you establish the business they'll coming looking for other income and you will no longer be able to claim "cap gain"...it'll be business income....

 

jom

 

PS: If you do claim "cap gain" the rate is based on 28%, not the going cap gain rate for selling stocks, real estate etc etc which is 15% (for now).

[timo16]

You do have to think about related expenses. I wouldn't worry about it too much but if it makes you feel better just list $100 profit on "other income" on your tax form. Also you have to consider the rate of inflation when you bought and sold the coin.