Note that if you dug the coin more than 12 months ago, sell it in 2012, and are in one of the lowest two tax brackets no capital gains taxes are due. This is a loophole available this tax year (as well as 2010 and 2011 which have already passed).
The OP coin owner has posted several questions and concerns regarding the tax effects of the sale of this coin on his income tax. Therefore, the subject is relevant. If you don't like the direction of the thread you are free to interject elsewhere.
How do you think the eventual winner will pay for this coin? With a credit card - the credit card processor will send a 1099-K to the IRS in the name of the coin seller. It will be reported. If the winner pays with cash/check or cash equivalent (anything over $10,000 will absolutely be reported.)
Any expense involved with the acquisition & sale of an item is tax deductible. It is called a 'write off' and they are perfectly legal and designed to reduce the tax effect on said income.
My tax returns are proof of my above statements. All information was posted at the request of the OP coin owner.
*Personal Advice 'coin1024': It is not good form to tell people they are wrong just because you have a different opinion.
Your opinions are wrong and are unsupported by the law. Your personal tax returns are not proof. I cited to particular IRS references. And you're changing your language by now mentioning write-offs instead of COGS. The deductibility of expenses in general is much broader than COGS.
Perhaps the lesson is that the OP shouldn't put much credence in tax advice over the internet - from anyone.
Quote: fenton: Note that if you dug the coin more than 12 months ago, sell it in 2012, and are in one of the lowest two tax brackets no capital gains taxes are due. This is a loophole available this tax year (as well as 2010 and 2011 which have already passed).
Unfortunately collectible gains are not subject to that "loophole" and are still taxed at 28% for long-term or as ordinary income for short-term. See http://www.irs.gov/publications/p17/ch16.html (search for "Table 16-1").
Hey Flip, just a comment here, but just because your tax returns do this does not constitute proof. The IRS isn't all that good at catching errors from what I can tell.
The discussion of tax liability is completely relevant to this topic, as the OP requested it. Furthermore, it's a subject we don't see often and as such a very interesting read.
Ok, now I have a question. Lets say the OP gets it certified by pcgs. Would it be better to sell it at Stacks/Heritage or to put it up on ebay. If he ebayed it this is one of the coins that we would see the "mad" money people bidding on.
IMHO the problem with ebay is you never know if you are hitting the right people. I have seen things go for crazy high prices and then the same item is a steal from the next seller. I would think that Heritage / Stacks would have better marketing and a more predictable outcome.
I think it would also depend on exactly how it grades. I personally would start with the conservation from NCG, depending on how it looks after that, decide on which TPG to go with, and then depending on how it grades, decide which venue to sell it in.
coin1024 - thanks for the info. I think the best route for this poster would be to just declare it as a cap gain and offset it with his personal exemption and standard deduction. Assuming no other income, seems to be the case, he should not have any tax liability.
For any sale over a couple k, strongly advise reporting it. The IRS offers bounties to people who report tax evaders - I have heard about people being sold out by their friends, neighbors, family members, etc... not worth risking it.
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Posted 05/23/2012 11:01 pm
