Precious metal dealers must report customer purchases that involve payments of $10,000 or more made with cash as part of a preventative measure against money laundering activities.
Certain transactions must be reported and the specific reporting criteria differs based on which bullion pieces you sell. Below are guidelines that can help you assess if your gold coin sale falls into this category:
Coins
Customers that sell gold coins or precious metals to coin dealers usually receive a 1099B form from their dealer to report profits made on personal stocks or assets to the IRS and help prevent instances of tax evasion.
Bullion gold coins are composed of mostly or entirely pure, high-grade gold (XAU). Each one has a specific weight in troy ounces and often come with a legal tender face value which often falls far short of the actual bullion price.
Many investors who purchase coins with the intention of holding onto them for future gains hope they will increase in value over time, acting as a safe haven in case of economic collapse or just to diversify their investment portfolios. Buyers should be mindful, however, that sales of certain amounts exceed certain thresholds; to avoid having any additional tax obligations it is advised to use a trusted dealer and consult a tax advisor beforehand.
Bars & Rounds
Precious metal premiums don’t simply reflect the weight of bullion; rather, they also account for minting costs, shipping and handling charges and storage. All expenses related to selling precious metals must be included when reporting profits made to the IRS.
What determines whether a sale should be reported depends on several factors, including its type and quantity of metal being sold, its method of payment (cash or money order), and how much cash the dealer is exchanging for bullion. For instance, dealers must notify the IRS about sales of silver coins with face values over $10,000 paid for cash.
However, sales of 1-oz gold Maple Leaves, Krugerrands and Mexican Onzas in quantities of 25 or more do not need to be reported to the IRS; as a result bars are the go-to choice for investors looking to avoid reporting requirements and keep their transaction private.
Purity & Fineness
Fineness or purity is an important metric for investors when purchasing gold. Investment grade pieces usually have a purity level of 995.0 parts per thousand, which is known as four-nines gold or four-figure gold. Reaching such purity standards may prove both challenging and expensive; thus it’s vital that buyers purchase from dealers with proven track records.
Fineness standards may differ between collectible coins and bullion bars, which serve different functions for buyers. Coins often offer durability alongside historical significance while bars prioritize maximum intrinsic value.
No matter their standards, both coins and bars sold to dealers must meet federal reporting guidelines when sold through them. Precious metals dealers play a vital role in helping ensure sales adhere to these regulations while providing valuable guidance during every step of their transactions. Their expertise makes this transactional experience smoother for buyers while decreasing hassle and stress levels significantly.
Exemptions
There are certain circumstances when precious metals dealers must notify the Internal Revenue Service (IRS) about customer sales of precious metals, which is why investors must stay up-to-date with current reporting regulations. Examples include sales exceeding certain thresholds or payments made with cash.
Example: Any dealer selling coins and bullion that falls into the IRS’s “Reportable Items List” must issue a 1099-B form when their customer sells these products at amounts exceeding certain thresholds. Furthermore, payments made using cash or traveler’s checks require dealers to file reports; payments made using personal checks, bank wires, credit/debit cards, or PayPal don’t.
That is why it is vital to choose a trustworthy precious metal dealer and make wise financial decisions when investing in gold and silver. By only purchasing those exempt from reporting requirements, capital gains taxes when selling will be minimized significantly.
