Coin Dealer question

[JIM F.]

This may sound like a silly question, but what makes one a "Coin Dealer"? I assume it requires some sort of fees/registration, but I really don't know.

 

Second, what are pros and cons of being a dealer vis-a-vis a collector/hobbiest who buys and sells on a semi-regular basis?

 

Thanks

 

[DaveG]

I'm not a dealer, but. . .

 

Generally speaking, a dealer has a Tax ID number, which allows him to buy/sell to other dealers without paying sales tax (when he's buying/selling for resale).

 

A dealer may also need some sort of business license, depending on his state of residence.

 

A dealer has a whole bunch of tax filings - business expenses, inventory valuation, etc. - see your accountant/tax adviser for how to deal with that.

 

On the other hand, a collector/hobbyist/investor, I believe, just has to deal with capital gains taxes, if any, when he sells. I don't believe a collector can offset those capital gains with any expenses of his hobby (or capital losses), but check with your accountant/tax adviser for details

[BillJones]

When I was dealer, all I really needed was a resale number. From what I understood from a local show promoter, the local authorities were happy if he bought a blanket license from them for his show.

 

As for the pros and cons of being a dealer, when I was dealer - collector it was a lot of fun in many ways. When I upgraded a coin in my collection, I'd just stick the duplicate in inventory, and it seldom lasted for more than a single show. Call it bragging, but most of the stuff in my collection was choice for the grade, and I had no trouble selling it. I'll warn you though that as a dealer you have to sell coins you might want to keep. If you kept too many your business would go down the tubes.

 

The down sides to being a dealer is that you get tired of the show grind after a while. Bad shows can be boring. You also have to keep pushing to find coins to re-sell which not always easy when you are dependent on other dealers for stock. Buying from collectors is very hit and miss, at least it was for me.

 

Also security was always a concern. You had to keep your eyes open when you were driving home for crooks. You also had to watch your material at the shows because some bad people do come to coin show who are up to no good. I was lucky. Over a ten year period I only lost one $100 bill somebody palmed on me. All it takes is one lapse.

 

Being dealer is great if you really like coins. Once I was at show (hauling cases and material in and out of a show was not fun.) it hardly seemed like job, especially if it was a good show where I was buying and selling a lot of material.

[BillJones]

A dealer has a whole bunch of tax filings - business expenses, inventory valuation, etc. - see your accountant/tax adviser for how to deal with that.

 

I have an undergraduate degree in accounting so I did my own books. All I had to do was hand over my annual income statement and balance sheet to the guy who did my taxes and that was it. Doing your own taxes if not advisable, even if you have an accounting degree, because the laws change every year, and unless you are pro, it's hard to keep up with it.

[Kurtdog]

I don't think you have to be licensed beyond what's required for your form of business organization, if that's what you're driving at. If you do, that would be news to me. I'll leave the pros and cons up to somebody else, as I don't quite understand what you're driving at, there. If your business is buying and selling coins, to me, that makes you a coin dealer. If not, you're not a coin dealer. Take you. You're a rocket scientist. Thus, you're not a coin dealer.

[RWB]

Buying and selling coins is a completely free market with no qualifications of any kind – well, you do have to be alive---sort of.

 

All that is required is for you to say you are a "coin dealer." You can call yourself a "professional numismatist" or a "coin broker" or a "gerbil cleaner"...it's all the same. You can also be any adjective you want: expert, proficient, skilled, trained, qualified, practiced, career, authority, ad nauseam ….

[CSdot]

Good responses. Jimbucks, are you thinking of becoming a dealer?

[Conder101]

what are pros and cons of being a dealer vis-a-vis a collector/hobbiest who buys and sells on a semi-regular basis?

Some of the pros and cons,

 

As a dealer you can write off expenses (collectors can't), and income is treated as regular income for tax purposes and not capital gains which for coins is 28%. It is possible to declare a net loss, and carry a loss over to offset future income, collectors can't do that. On the down side if you are operating as a dealer you also have self-employment taxes 15% or so. You will often have to deal with collecting and remitting sales taxes. (Even if you live in a state that doesn't have sales taxes on coins, if you set up at a show in a state that does you are supposed to collect the tax and send it in.) There is a lot more paperwork that needs to be covered to make sure the IRS sees you as a business and not just a hobbiest.