I have collected coins for over 50 years'The
coins are different ones, there are no perfect sets'If I sell them, do I have
to report them on my income tax return, and if so, how do I report this because
I have no idea what I paid for them.
I know, it seems unfair'You did all the work of collecting the coins 'purchasing them, storing them, caring for them 'and now that you want to sell them the IRS steps in and holds out its greedy hand.
The sad fact is that, the way our tax laws are written, your profit on your coin collection belongs in part to the IRS and to your state government'Until citizens vote for federal and state representatives who feel a person is entitled to do what he wants with the money earns and does not have to report back to the government authorities about the success or failure of the financial risks he takes, that is the way it will be.
So yes, you must report the income from the sale of your coins on your tax return'The income is the difference between what you paid for the coins and the price for which you sell them'Although the IRS wants a part of the profit, figuring out the profit is your job'Somehow you will have to determine how much you paid for the coins.
If you didn't pay anything extra for the coins 'if these coins were part of the change in your pocketbook over the years 'the cost of the coins is the same as the face value of the coins'If you purchased the coins from dealers or from collectors and paid more than the face value, the amount you actually paid is the cost'You may not remember how much you paid for coins purchased decades ago, but if you know some of the coins were purchased and you have a pretty good idea of when they were purchased, you can check published records of coin values from the time of purchase to determine a fair estimate of the cost.
First, make a list of the coins you know were purchased, including a description of each coin and the approximate date on which it was acquired'You will then search for the price the coin was selling for at the time you think you made the purchase'You can begin your search at the library, or you can try contacting coin dealers or coin collecting organizations for advice on how to find price information from years ago.
Coin World magazine has been publishing for 40 years and
may be available as a research tool at your local library'The American
Numismatic Association has organizations all over the country and several clubs
in Indiana, including the Central States Numismatic Society, which covers
Indianapolis'They can be reached at 219-753-2489 or by email at [email protected] , and they may be able to direct you to other sources for checking prices.
The cost of coins you received as gifts is considered to be the same as the cost to the person who gave them to you.
When you sell the coins, you will report the sale on Schedule D, which will accompany your Form 1040'Since you have owned the coins for more than a year, you will describe the sale in Part II of Schedule D'You can describe the sale as 'Coins'and enter 'Various'as the date of purchase.
The gain from the sale of your coins gets reported in column (g) of the Schedule D, a special column for reporting gains on collectible objects such as artwork, stamps, and coins'The rate of tax you will pay on this gain will be no higher than 28%'If your income tax rate on your regular income is 28% or lower, you will just pay tax on this gain at your regular rate'If the tax on your regular income is higher than 28%, you will still pay 'just'28% federal income tax on the profit from your coins.
Although you don't need to attach the detailed listing of the cost of each of your coins to your tax return, you should keep this list with your tax records and hold on to it for at least three years after you file your tax return.
If you don't plan to sell the coins just yet, or if you plan to save some of your coins for a sale in the future, you can still start gathering information about the cost of your coins now so you will have that information available when you eventually sell the coins'Unless there is some drastic change in the philosophy of taxation of profits from investment, you will need this information some day.
copyright Â© 2000 Gail Perry - Fun with Taxes