5 votes

Gold and Silver American Eagles

I realize there have been quite a few new gold and silver posts in the forums lately. I am still new to the game and had a few questions for you guys if you don't mind answering.

I plan on buying gold bullion coins from places like goldsilver.com, apmex.com, ebay, and local dealers. What my concern was is reporting this to the IRS. I have read on a few websites that anything over $10,000 has to be reported to the IRS, but the IRS doesn't consider gold and silver eagles to be currency therefore you don't have to report purchasing them. I'm really not sure how truthful this is so I figured I would ask you guys what the low-down is on buying and selling eagles and what steps you take as far as dealing with the tax collectors.

http://www.spe1031.com/types-of-exchanges/precious-metals/ex...

Also, I read that there was a guy in Nevada that owned a business and began paying his employees with Gold and Silver Eagles and that because there is a monetary value of $50 on the gold eagles and $1 on the silver eagles that it lowered the employees tax brackets to where they paid low taxes etc. Is this true and how legal/illegal is this? Actually found this link here on the DP from 2008:

http://www.dailypaul.com/45182/nevada-man-paying-in-gold-irs...

Thanks for taking the time to answer.




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Here you go from the Silver Bear...

http://www.silverbearcafe.com/private/03.12/1099.html

"Necessity is the plea for every infringement of human freedom. It is argument of tyrants. It is the creed of slaves." William Pitt in the House of Commons November 18, 1783
"I have one word for you...predator drones. Oh, you think I'm kidding?" Obombya

I would suggest looking at

http://www.providentmetals.com, THEY HAVE RON PAUL COINS! Fair prices and excellent shipping

Correction

The $600 reporting requirement that WOULD HAVE gone into effect in January of this year was removed by this bill:
http://www.opencongress.org/bill/112-h4/show
last year.

HERE ARE THE FACTS

http://everhedge.blogspot.com/2011/04/selling-gold-selling-s...

Privacy is very important to physical silver and gold investors. For some bullion investors, ensuring themselves a private sale is their most important objective.

The question always asked is - When I sell my gold bullion or silver bullion, is it a private transaction, or is it reported to the IRS?

When an investor sells their gold bullion or silver bullion to a dealer, some of these trades are private, some are not. If privacy is of the utmost importance to you as an investor, you should know your facts and act accordingly.

The powers that be require dealers to fill out something called an IRS 1099 Form, more accurately for silver and gold bullion dealers, it is the IRS 1099 B Form.

When you sell your bullion back to a dealer, the pertinent questions are:

What form of gold and or silver bullion you are selling?
What quantity of silver bullion and or gold bullion are you selling?

If the sale is of a reportable form of bullion, yet the quantity you are selling doesn't meet today's IRS 1099 B Form reporting requirements then... When was the last time you sold this small amount and form of silver and or gold bullion to that specific dealer?

Let us tackle the simple questions first, numbers 1 and 2. What form and quantity versus IRS 1099 B Form reporting requirements.

Remember, this is private investor sales (your sale) of gold and or silver bullion to dealers.

Private gold bullion, 1099 Form not required on sale, any quantity:

US Gold Eagle Coins 1 oz - 1/2 oz - 1/4 oz - 1/10 oz
US Gold Buffalo Coins 1 oz
Austrian Gold Philharmonics 1 oz - 1/2 oz - 1/4 oz - 1/10 oz

Reported gold bullion, 1099 Form required on sale, foreign coins sold in quantities of:

Canadian Gold Maples 25 oz +
South African Krugerrands 25 oz +
Mexican Onza Gold Coins 25 oz +
Chinese Gold Pandas 25 oz +
Etc, etc.

Reported gold bullion, 1099 Form required on sale, fine gold bars sold in quantities of:
One kilo in total (32.15 troy oz ) or more per transaction
--------------------

Private silver bullion, 1099 Form not required on sale, any quantity:

US Silver Eagle Coins
Canadian Maple Leaf Silver Coins
Austrian Philharmonic Silver Coins
Mexican Libertad Silver Coins
Chinese Panda Silver Coins
Etc. etc.

Reported silver bullion, 1099 Form required on sale, silver bars/rounds .999 sold in quantities of:

1000 oz or more per transaction

Reported junk silver, 1099 Form required on sale, bags sold in quantities of:

$1000 face value bag or more of 90% silver coins

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

These are the IRS 1099 B Form reporting requirements as they stand March 2012.

Things can always change, so if privacy is critical to you as a bullion investor, you will want to keep on eye on any new changes to dealer reporting requirements.

Lots of bullion investors know current reporting requirements and try to play slick selling in small quantities to dealers in the hopes of liquidating positions without a 1099 B Form.

This brings me to the important 3rd question a dealer asks themselves when buying bullion from private investors: When was the last time you sold this small amount and form of silver and or gold bullion to that specific dealer?

If the dealer notes a habitual pattern in your sales (timing/form/size), where it appears you may be attempting to avoid a 1099 B Form and reporting requirements, the dealer or broker is required to fill out and file a Suspicious Activity Report.

For example, if you sold me back 20 gold maples 5 days in a row, what do you think I'm thinking? In this case, it's my ass or yours? I'm not getting taken from my desk in handcuffs.

So anyone out there holding reportable forms of bullion, if you want to make your sales back to dealers as private as possible. Use your head!

Next topic, the all important question of what form of gold and silver bullion should you buy and in what percentage mix.

In order to best answer this question, you've got to know what are your objectives for buying bullion in the first place.

Why are you interested in silver and gold bullion?

Answer this question thoroughly, and the correct choices will become obvious... Stay tuned!

"Freedom on this Earth can only be found within oneself. All the power you'll need is inside - embedded within you."

Here are some other facts, maybe

The 1099 link in that article didn't spell out the requirements, but here are the instructions:
http://www.irs.gov/instructions/i1099b/index.html
Here's the requirement, clear as mud:

A sale of a precious metal (gold, silver, platinum, or palladium) in any form for which the Commodity Futures Trading Commission (CFTC) has not approved trading by regulated futures contract (RFC) is not reportable. Further, even if the sale is of a precious metal in a form for which the CFTC has approved trading by RFC, the sale is not reportable if the quantity, by weight or by number of items, is less than the minimum required quantity to satisfy a CFTC-approved RFC.

So I went looking for something that spelled out what that meant. Here's an article that says the rules changed recently, after the article you cited was written:

http://www.spe1031.com/types-of-exchanges/precious-metals/ex...

Effective January 2012, all sales of precious metal of any kind in excess of $600.00 will be reported on Form 1099B.

But I can't find anything to back that up.

Here's another site:
http://about.ag/reporting.htm
that explains in more detail the CFTC/RTC thing. It points out that there are no longer futures contracts for gold coins, so (going by the IRS instructions) the 1099B isn't required except for over 1000 ounces of silver or 33.2 ounces (1kg) of gold.

support your local coin dealer

I have established relationships with the coin dealers in Atlanta. A few of them will sell my bullion at spot. A much better deal than the internet.

The Red Coats are coming!

I have a question for those more knowledgible as well:

If one were to buy a $1000 bag of constitutional junk silver, can I sell it for it's silver value, or only face value? And am I allowed to have it smelted or is that illegal? Also, when buying a $1k bag of junk silver is it the same as simply swapping paper dollars for pre '65 coins at their denominal value? Thanks.

“When a well-packaged web of lies has been sold gradually to the masses over generations, the truth will seem utterly preposterous and its speaker a raving lunatic.” – Dresden James

Coins

If one were to buy a $1000 bag of constitutional junk silver, can I sell it for it's silver value, or only face value?

You can sell it for whatever you can get for it. If the question is about taxes, then the gain (if any) is the difference between how much you paid for it and how much you sold it for. It's taxed at the higher "collectibles" rate on capital gains, not the rate that would apply to a capital gain on stocks for example.
http://www.irs.gov/publications/p17/ch16.html

And am I allowed to have it smelted or is that illegal?

Good question. In 2007 it became illegal to melt pennies or nickels.
http://www.usmint.gov/pressroom/?action=press_release&ID=771
If melting coins had been illegal all along then presumably they wouldn't have needed to pass a special law about pennies and nickels. And FWIW dealers sometimes melt coins and don't make any secret of it:
http://coins.about.com/b/2008/03/12/coin-dealer-ethics-melti...

So I suspect you're okay doing it. But why would you want to? As junk silver it's in a readily-sold form. If you melt it down you've got some silver with impurities and nobody is going to be able to tell whether it's genuine or not so it's going to be hard to sell.

EDIT: This site:
http://www.coinflation.com/is_it_illegal_to_melt_coins.html
says it's legal as long as you aren't doing something fraudulent, and they site the law to explain that and precedent for people doing it legally.

Also, when buying a $1k bag of junk silver is it the same as simply swapping paper dollars for pre '65 coins at their denominal value?

The same in what sense? For tax purposes? I don't see how doing that would make any sense, but the answer from the IRS is no. And not just no, it's no with a $5,000 penalty attached if you try.
http://www.irs.gov/irb/2008-04_IRB/ar12.html
See number 13 on that list of things that will get you a $5k automatic penalty.

The IRS site helped

with knowing what is liable to get me fined and what not. I appreciate it, and you fully answerd my questions. I have 20 silver round oz's, and another 10 constitutional silver. I am trying to preserve my wealth, and after some research I think it is time I invested in some gold while still affordible. Silver is great, but gold seems to be more secure as to market swings. If you know of a good site that doesn't over charge for 1/10 oz double eagles, give me a holler.

Thanks for the info.

“When a well-packaged web of lies has been sold gradually to the masses over generations, the truth will seem utterly preposterous and its speaker a raving lunatic.” – Dresden James

It is not illegal in the U.S. to melt U.S. coinage

It is illegal to deface it and reduce the metal content but that is only if the purpose is fraud/passing the altered coin off as legal tender. A good example are penny flattening machines. They are legal because the result is a token not a coin by any stretch of the imagination.

Although people buy "junk" silver coins, pre 1965 silver coins for melt value (spot value).

You cannot buy them on ebay for a steal any longer those days are over.

The term "junk" should be completely discarded because silver is not junk and it misleads people.

And no you cannot buy $1000 bag of silver quarters at the same price as you would $1000 bag of non-silver quarters. Check prices online but they are much more or go to coinflation.com for individual coin values (I am not affiliated any way with that website).

www.coinflation.com

*I edited this post

History does not long entrust the care of freedom to the weak or the timid.
Dwight D. Eisenhower

Thanks for the info, and site

It is much appreciated.

“When a well-packaged web of lies has been sold gradually to the masses over generations, the truth will seem utterly preposterous and its speaker a raving lunatic.” – Dresden James

thanks

makes much more sense now...I figured as much as what you guys have explained but just wanted clarification before diving in.

The God who gave us life, gave us liberty at the same time.
Thomas Jefferson

Where liberty is, there is my country.
Benjamin Franklin

Firearms are second only to the Constitution in importance; they are the peoples' liberty's teeth.
G. Washington

Good luck

And I have bought off of ebay before from reliable sellers with no problem. You will know silver when you have it there is a distinct ring to a silver coin and it is the shiniest metal of them all so a .999 will have mirror-like luster.

Get a testing kit if you need to be certain.

And if there are local coin shows you can get to go to those and talk to some of the dealers or buy from them it's a good learning experience and they can provide valuable insight. Plus you can get a feel for how the market is at the time.

Also, if you go to some precious metals forums/community websites they do "buys" where they buy in bulk among several members of a community to get the best price they can.

Basically it's like a a buying club that can get you a nice discount at or under spot because of the bulk purchase.

The bonus to purchasing the pre-1965 coins is that they remain legal tender and maintain the silver value - they are dual purpose.

History does not long entrust the care of freedom to the weak or the timid.
Dwight D. Eisenhower

$10,000 or more

in a CASH transaction has to be reported, as I understand it.
http://www.irs.gov/businesses/small/article/0,,id=148821,00....

The dealer and/or bank would be responsible for reporting the transaction. Note that a bank wire doesn't count as a cash transaction, so it doesn't have to be reported but of course the bank wire itself makes it easy for the government to track the money. Tulving's FAQ says "11) Do you report any sales or purchases? NO. We are not aware of any reporting requirements and we do not accept cash, so we do not report sales or purchases of ANY amount."
http://www.tulving.com/New%20Pages/faq_frequently_asked_ques...

When it comes to selling them, or taking them in payment, the IRS says you can't treat bullion coins at their face value for purposes of tax calculations:
http://www.irs.gov/irb/2008-04_IRB/ar12.html
It's number 13 on the list of things that are automatically ruled invalid, with an automatic $5,000 penalty ($10,000 if filing jointly) tacked on for filing a frivolous return.

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“Let it not be said that no one cared, that no one objected once it’s realized that our liberties and wealth are in jeopardy.”
― Ron Paul

You get taxed on selling not buying

Is that what you are referring to? You can purchase anything over any amount without "reporting" it. If you buy a $20,000 car what do you report? You pay a sales tax and that is all. I think the $10,000 you are thinking about is bringing cash and valuables totaling that amount outside of the us but I'm pretty sure any woman who has a wedding ring over 10k and jewelry on top of that isn't reporting it every time they fly internationally.

The person that tried to pay employees with gold coins was arrested for tax evasion from what I recall...or went to court over it. That is from memory not fact.

History does not long entrust the care of freedom to the weak or the timid.
Dwight D. Eisenhower

right

but from what I've read purchases of $10,000 or more are "cause for concern" from Homeland Security I guess...maybe I'm misinterpreting it as when you sell more than $10,000 worth of bullion. Based on the website though do you have to report selling of american eagles to the IRS? What happens if you buy them at one price and sell them for below what you bought them for and don't make a profit? IS that still considered and "income" that is subjected to taxing?

The God who gave us life, gave us liberty at the same time.
Thomas Jefferson

Where liberty is, there is my country.
Benjamin Franklin

Firearms are second only to the Constitution in importance; they are the peoples' liberty's teeth.
G. Washington

SteveMT's picture

I got rid of a bunch of paper several years ago....

in a span of less that a year and nothing happened. Buying is not the issue. Selling however is as explained very well by the poster above.

The $10k figure is for taking cash directly out of an account

Perhaps that is what you meant. They report when someone withdraws that. The bank will probably fill out a form even if it's lower than that amount and consider it a "suspicious transaction" or something. You would not even be alerted to that. One option is to withdraw the cash at different times in different amounts eventually totaling what you want to ultimately purchase. Or pay credit card or money order, etc. which is acceptable.

If you take a loss on it it's a loss. You are taxed on any gains.

History does not long entrust the care of freedom to the weak or the timid.
Dwight D. Eisenhower

robot999's picture

I think the actual

number is $3500. I have made some recent cash transactions and was told that $3500 or higher (deposit or withdrawl) require a GOVT. FORM be filled out with a bunch of info - which is none of (#*$ business.

Thank the "War on Drugs" for this loss of freedom. WAR ON DRUGS = EPIC FAIL

"Government is the entertainment division of the military-industrial complex". - Frank Zappa

The "War on Terror" did more to stop bank transactions

than the war on drugs ever has and in a shorter amount of time.

Also, the $3500 amount is an arbitrary amount as I said before they can do any amount really it's up to the banker to determine what is "suspicious" to them.

And the coin shop that needs to report transactions was not the question from the way I understood it.

History does not long entrust the care of freedom to the weak or the timid.
Dwight D. Eisenhower

Not just banks

It's not just banks that have to report cash transactions of $10k or more. A business has to do that also.
http://www.irs.gov/businesses/small/article/0,,id=148821,00....
"Any persons who receive more than $10,000 while conducting their trade or business must file a Form 8300. The $10,000 may occur in a single transaction, or a series of related transactions."

One of the examples here:
http://www.irs.gov/pub/irs-pdf/f8300.pdf
is of a coin dealer accepting cash for gold coins.