Federal Taxes Paid On Coin And Stamp Sales

You should always set up your coin endeavors as "investments" rather than
has
a hobby, or else the IRS will try and tax any profit you make while refusing
to let you
take any losses.

--
Helen Wallace
R.E. Wallace Stamps & Coins
Fort Worth, Texas
"Since 1948"

On Feb 18, 11:50*pm, "Robert Dibbell"
wrote:
You make a good point. *Unless you are in the business of buying and selling
coins, you can treat each purchase and sale the same as you do stocks and
bonds. *Record keeping in both cases is about the same except that the date
acquired is important if you go the Capital Gains route in order to prove
short or long term gains/losses.

The advantage to buying and selling coins as a business is additional
deductions from legitimate business expenses. *Losses are not limited to
$3,000 as in capital losses (anything over $3,000 has to carry over to
future years). *But, as you pointed out, there are no self-employment taxes
on capital gains income. *And capital gains are taxed at a lower rate than
ordinary income.

Tax law can be very complicated and we're being very simple here. *Thanks
for pointing out an alternative. *I will keep that in mind if I end up with
any tax clients who buy and sell coins.

Bob

"clarkent" wrote in message

.. .

You can also treat each sale as a Capital Gain or Loss. You must establish
a
cost basis , which includes any fees to acquire or dispose of the asset.
This has advantages to filling a schedule C , business form. You then have
to pay 15% self employment tax on any profit over $400. No self employment
tax on capital gains, but it is a hassel to keep records of each
individual
coin bought and sold, if you do enough volume.

Actually, Bob, the IRS taxes gains for coins and other collectible at
the ordinary income rate, not the lower capital gains rate. More
reason to let your coin assets remain in your estate. This way your
heirs get the stepped up value free of ordinary income tax rates.
Depending upon your tax bracket and the total value of your estate,
estate txes may or may not be due.

Ira

Correct Helen. Hobby income is taxable. No such thing as losses from a
hobby. It's a business or an investment. Good record keeping is a must.
With the IRS, good recordkeeping is a must anyway...

Bob

"Helen Wallace" wrote in message
...
You should always set up your coin endeavors as "investments" rather than
has
a hobby, or else the IRS will try and tax any profit you make while
refusing to let you
take any losses.

--
Helen Wallace
R.E. Wallace Stamps & Coins
Fort Worth, Texas
"Since 1948"

I would agree that for almost everyone, the business of buying and selling
coins is taxed as ordinary income. It is the wise businessman who sets up
his business in such a way as to minimize the tax bite. Paying taxes is
inevitable but no one says we should pay as MUCH tax as possible. We always
want to pay the least. Why pay retail when there are ways to pay
wholesale...

People who dabble in the high priced coins, though, could make a case for
capital gains income as opposed to ordinary income. But then they have a
high priced CPA working for them rather than a little guy like me.

Some day, though, www.bobstaxsvc.com will be among the big guys...

(I know--cheap shot at showing off my new website)

Bob

"Ira" wrote in message
...

Actually, Bob, the IRS taxes gains for coins and other collectible at
the ordinary income rate, not the lower capital gains rate. More
reason to let your coin assets remain in your estate. This way your
heirs get the stepped up value free of ordinary income tax rates.
Depending upon your tax bracket and the total value of your estate,
estate txes may or may not be due.

Ira