Do I have to Report My Gold and Silver Coin Sales to IRS?
For many of our clients at Atlanta Gold and Coin Buyers, investing in precious metals serves as a passive form of income that often will generate profits or losses simply through the sales or market activity of their coins or bullion. However, as with any other sources of income, passive or otherwise, we want our clients to be aware of the tax implications associated with their transactions. One of the questions we get from new buyers or sellers is, “Do I have to report my gold and silver coin sales to the IRS?”
According to the IRS’s policies, there are two conditions under which precious metals dealers are legally obligated to report your transactions:
- When a customer sells large quantities of specific coins or bullion
- When clients pay $10,000 or more in cash
Failure to report can result in fines, penalties, or criminal charges, so being aware of the instances in which the purchase or sale may qualify as a reportable transaction is important for both the coin dealer and the customer. When reporting either of the previously mentioned transactions, there are specific forms that precious metals dealers are required to fill out. These forms are a 1099-B and an 8300.
Form 1099-B for Reporting Precious Metal Transactions to the IRS
The 1099 series is a set of forms used to report any profits made by non-corporate sellers. They allow the IRS to prevent many instances of tax evasion. Keeping track of individuals who may be selling items as a source of income is one key focus. In the context of precious metal transactions, dealers are required to fill out a 1099-B form. This is done when a customer sells any of the products mentioned in the IRS’s Reportable Items List in specific amounts, which we’ll discuss further in this piece.
The reporting criteria varies according to the coin or bullion piece sold. Reporting criteria for bars and rounds sales by clients is primarily determined by the purity and quantity of each item. However, this criterion differs for each kind of precious metal.
For sales of gold bars and rounds to be considered reportable, every individual piece of bullion must have a fineness of at least .995 and the total purchase quantity must be 1 kilo (32.15 troy ounces) or more. Similarly, for sales of silver bars and rounds to warrant reporting, each silver piece needs to possess a fineness of at least .999 with a total purchase quantity of 1,000 troy ounces or more.
Lastly, sales of Palladium and Platinum bullion also have reporting requirements. A coin dealer is required to issue a 1099-B for purchases of 100 troy ounces and 25 troy ounces, respectively. In addition, the fineness restriction for both metals is .9995. When compared to bars and rounds, the reporting criteria for coin sales by clients is slightly more straightforward since the restrictions are so specific.
Chart: Coins Eligible for Reporting
Minimum Reportable Amount
any size bars totaling 1 kilo (32.15 troy oz.) or more
any size bars totaling 1000 troy oz. or more
any size bars totaling 25 troy oz. or more
any size bars totaling 100 troy oz. or more
Gold 1 oz. Maple Leaf
25 1-oz. coins
Gold 1 oz. Krugerrand
25 1-oz. coins
Gold 1 oz. Mexican Onza
25 1-oz. coins
U.S. 90% Silver Coins
|as minted||any combination of dimes, quarters, or half dollars totaling $1,000 face value or more|
See more information related to the above chart on our AML page HERE.
Similarly, there are several bullion products that are exempt from reporting, regardless of the quantities that a customer may sell. Such pieces include, but are not limited to:
- Fractional Gold Coins
- Gold or Silver American Eagle Coins
- Any pieces of foreign currency that were not explicitly mentioned in the IRS’s Reportable Items Chart
- Pieces of US currency that were created after the list’s creation in the 1980’s do not need to reported to the IRS
To learn more about or download the 1099-B form, you can find that information directly from the IRS.
According to federal tax laws, precious metal dealers are required to report certain sales by their clients. In addition, they are under legal obligation to report any cash payments they may receive for a single transaction of $10,000 or more. Created by the National Treasury in the 1980’s, these laws are a way to monitor large commodity exchanges within the US. In addition, by reporting these significant cash payments, the IRS can prevent any potential money laundering schemes.
To report the receipt of such payment, precious metal dealers must fill out an 8300 form. As with the 1099-B form, precious metal dealers are required to disclose the payment details of their transaction, as well as some information about the paying customer. Please be advised that while clients have the option of withholding some of this information, precious metal dealers are still required to file this form.
With regards to precious metal purchases, the term “cash” is defined as the use of the following payment methods for purchases of $10,000 or less:
- Cashier’s checks
- Money orders
- Bank drafts.
- The term “cash” can also refer to any payments made with US or foreign currency.
It is important to note that any of the previously mentioned forms of payment for purchases exceeding $10,000, with the exception of US currency, does not constitute as cash. Therefore, will not be reported to the IRS.
Other forms of payment that are exempt from reporting include personal checks, bank wires, payment apps, such as CashApp, Venmo, Zelle, and ACH transfers.
Capital Gains Tax
As previously mentioned, selling precious metal coins, rounds, and bullion can serve as an additional source of income for many clients. Therefore, in the eyes of the IRS, any profits a customer acquires through the sale of their precious metal assets is considered taxable and is therefore subject to a form of tax. This taxation is known as “capital gains” taxes. Therefore, “capital gains” refers to any profits that resulted from the sale or exchange of personal stock or assets. In terms of precious metals, capital gains occur when a particular coin or bullion piece increases in value and is then sold at that higher price. In conclusion, capital gains are one of the primary parts of a large transaction report that the IRS is looking for.
This price difference between the initial price of the precious metal and its final sale price is considered capital gain. There, any such profits are subject to the capital gains tax.
Tax Basis (aka Cost Basis)
We always recommend that our customers maintain copies of their receipts from their transactions, as this can help to determine what, if any, tax liabilities are associated with their dealings. Capital gains or losses are typically straightforward if the same individual purchased and sold the exact items that they’re claiming on their taxes. However, gifts and inherited coins and bullion can sometimes be confusing.
While we’re not tax experts, generally speaking, the date on which you receive a gift establishes your cost basis. For example, if your parents gift you a 1 oz gold eagle when the spot price of gold is $1,800, you will use $1,800 as your purchase price for tax purposes. We also regularly purchase estate coin collections and receive tax liability questions. In situations where a coin collection has been inherited, typically the date of passing is the date used to establish a cost basis in the collection.
Depending on when you received the coins or bullion, you may sell at a profit or loss. However, when selling at a profit, keep in mind that you should use the value of the coins or bullion on the date the items were gifted or the date of passing as your cost basis. This should greatly reduce your tax liability, as the full value of the coin or bullion sale is not subject to taxation – only the realized profit.
In conclusion, transacting in precious metals can be confusing enough without taking into account IRS required information. Most of us are not CPAs or Tax Accountants, however, Atlanta Gold and Coin Buyers are happy to answer any questions you have. That being said, very few of our dealings qualify as reportable transactions. In the event they do, we always notify our customers in advance. Don’t hesitate to reach out to us about our buying or selling rates, our location, selling or purchasing your Coins, Rounds, or bullion, or anything else! Call, email, or fill out a form today to schedule an appointment with us at Atlanta Gold and Coin Buyers.
**Disclaimer: Nothing on this blog constitutes investment advice, performance data or any recommendation that any security, portfolio of securities, investment product, transaction or investment strategy is suitable for any specific person. From reading this blog we cannot assess anything about your personal circumstances, your finances, or your goals and objectives, all of which are unique to you, so any opinions or information contained on this blog are just that – an opinion or information. You should not use this blog to make financial decisions and we highly recommended you seek professional advice from someone who is authorized to provide investment advice.