Tax on Bullion Gold Sales?

It is a capital gain, reported on Schedule D, and taxed at the collectible rate of 28% if long term, but lower if your marginal tax rate is lower.

You need a year plus a day to qualify for any long-term special capital gains rate.

Not all gold coins are considered collectibles, only if they have numismatic value. I'm assuming the same types of gold coins that are allowed for IRA investments are not considered collectibles for purposes of the capital gains tax.

-Mark Bole

Correction, I guess the IRA definition does not apply to collectible capital gains after all.

==================IRC 1(h)(5): ==================(5) Collectibles gain and loss For purposes of this subsection -

(A) In general The terms "collectibles gain" and "collectibles loss" mean gain or loss (respectively) from the sale or exchange of a collectible (as defined in section 408(m) without regard to paragraph (3) thereof) which is a capital asset held for more than 1 year but only to the extent such gain is taken into account in computing gross income and such loss is taken into account in computing taxable income.

==================IRC 408(m)(2): ================== (2) Collectible defined For purposes of this subsection, the term "collectible" means -

(A) any work of art, (B) any rug or antique, (C) any metal or gem, (D) any stamp or coin, (E) any alcoholic beverage, or (F) any other tangible personal property specified by the Secretary for purposes of this subsection.

(3) Exception for certain coins and bullion For purposes of this subsection, the term "collectible" shall not include -

(A) any coin which is -

(i) a gold coin described in paragraph (7), (8), (9), or (10) of section 5112(a) of title 31, United States Code, (ii) a silver coin described in section 5112(e) of title

31, United States Code, (iii) a platinum coin described in section 5112(k) of title 31, United States Code, or (iv) a coin issued under the laws of any State, or

(B) any gold, silver, platinum, or palladium bullion of a fineness equal to or exceeding the minimum fineness that a contract market (as described in section 7 of the Commodity Exchange Act, 7 U.S.C. 7)3 requires for metals which may be delivered in satisfaction of a regulated futures contract, if such bullion is in the physical possession of a trustee described under subsection (a) of this section.

-Mark Bole

Correct.

The instructions for Schddule D line 18 put it even simpler

And the 28% collectibls rate is a maximum rate. The rate on collectibles is the lower of your own ordinary tax rate or 28%.

| (3) Exception for certain coins and bullion | For purposes of this subsection, the term "collectible" shall not | include - | | (A) any coin which is - | | (i) a gold coin described in paragraph (7), (8), (9), or | (10) of section 5112(a) of title 31, United States Code,

Are any of those gold coins commodity items that it would actually be practical to buy if you wanted to invest in gold while avoiding the higher potential tax?

| (B) any gold, silver, platinum, or palladium bullion of a | fineness equal to or exceeding the minimum fineness that a contract | market (as described in section 7 of the Commodity Exchange Act, 7 | U.S.C. 7)3 requires for metals which may be delivered in satisfaction of | a regulated futures contract, if such bullion is in the physical | possession of a trustee described under subsection (a) of this section.

Is this out only for futures contracts or is there some general way of having a trustee hold gold for you while avoiding the collectible rate?

Dan Lanciani ddl@danlan.*com

If they are bullion coins without collectable value what is the tax rate?

========================================= MODERATOR'S COMMENT: The collectible rate applies.

Thanks all for the useful relpies.

Isn't this the section on what you can have in an IRA? Schedule D instructions don't give any exceptions for U.S./State coins or bullion.

Yup, that's what I said.

-Mark Bole