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jgordosea
jgordosea, Enrolled Agent
Category: Tax
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Experience:  I've prepared all types of taxes since 1987.
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Does the IRS recognize exceptions to the collectibles classification

Resolved Question:

Does the IRS recognize exceptions to the "collectibles" classification for the sale of American Eagle coins so that the long-term capital gain is taxed at 15 percent instead of 28 percent? If so, how should they be perchased, etc. for them to qualify?
Submitted: 5 years ago.
Category: Tax
Expert:  Milan Vaishnav replied 5 years ago.

Dear Friend,

 

These are not recognized to be exempt for 15 %. They will be taxed at 28%. http://www.irs.gov/taxtopics/tc409.html

 

To buy the Gold coins, the following may be a useful resource..

 

 

http://www.usmint.gov/mint_programs/index.cfm?flash=no&action=american_eagles

http://www.monex.com/prods/gold_coins.html

http://www.howtodothings.com/finance-and-money/a3620-how-to-buy-a-gold-american-eagle-coin.html

 

THe above may be a useful resource for you...

 

--------------------------------

If the above helps, kindly press the "ACCEPT" button or "Reply" if you need further help. Positive Feedbacks would be appreciated.

Milan Vaishnav,
Consulting Technical Analyst,

Customer: replied 5 years ago.
Your answer is weak and shallow--of no help at all. Maybe my question did not indicate to you its complixity. My own copies of the IRS code, regulations, etc. are quite old as I am out of practice. Too bad you didn't reference current code and regs and current letter or other rulings by the IRS.
Customer: replied 5 years ago.
Can I get an answer from someone more knowledgeable in federal income tax?
Expert:  Milan Vaishnav replied 5 years ago.

Dear Friend,

I am opting out and referring you to tax category...

 

I REPLIED BECAUSE YOU POSTED IT IN FINANCE...I AM A FINANCE EXPERT AND NOT A TAX SO THEREFORE, I AM CHANGING YOUR CATEGORY...

 

Regards,

Expert:  jgordosea replied 5 years ago.
Greetings,

Collectibles gain or loss is gain or loss on the sale of a collectible as defined in Internal Revenue Code Section 408(m). Under that section, collectibles include works of art, rugs, antiques, any metals or gems, stamps, coins and alcoholic beverages.

But, as with any tax law one needs to look for exceptions.
From http://www.law.cornell.edu/uscode/uscode26/usc_sec_26_00000408----000-.html
"(2) Collectible defined
For purposes of this subsection, the term “collectible” means—
(A) any work of art,
(B) any rug or antique,
(C) any metal or gem,
(D) any stamp or coin,
(E) any alcoholic beverage, or
(F) any other tangible personal property specified by the Secretary for purposes of this subsection.
(3) Exception for certain coins and bullion
For purposes of this subsection, the term “collectible” shall not include—
(A) any coin which is—
(i) a gold coin described in paragraph (7), (8), (9), or (10) of section 5112 (a) of title 31, United States Code,
(ii) a silver coin described in section 5112 (e) of title 31, United States Code,
(iii) a platinum coin described in section 5112 (k) of title 31, United States Code, or
(iv) a coin issued under the laws of any State, or "

See the article at http://www.goldsilverbullion.com/PreciousMetalsIRA.htm
"Sec. 5112. Denominations, specifications, and design of coins

(7) A fifty dollar gold coin that is 32.7 millimeters in diameter, weighs 33.931 grams, and contains one troy ounce of fine gold. (One-Ounce American Eagle GOLD Coin)
(8) A twenty-five dollar gold coin that is 27.0 millimeters in
diameter, weighs 16.966 grams, and contains one-half troy ounce of fine gold. (1/2-Ounce American Eagle Gold Coin)
(9) A ten dollar gold coin that is 22.0 millimeters in diameter, weighs 8.483 grams, and contains one-fourth troy ounce of fine gold. (One-Quarter Ounce American Eagle Gold Coin)
(10) A five dollar gold coin that is 16.5 millimeters in diameter, weighs 3.393 grams, and contains one-tenth troy ounce of fine gold. (1/10-Ounce American Eagle Gold Coin)

(ii) a silver coin described in section 5112(e) of title 31, United
States Code, (One-Ounce American Eagle SILVER Coin)

(iii) a platinum coin described in section 5112(k) of title 31, United States Code, (One-Ounce American Eagle PLATINUM Coin) or

(iv) a coin issued under the laws of any State, or"

So, it is a plain reading of the statutes that indicates the American Eagle is an exception to collectibles including "any stamp or coin".

Please ask if you need more assistance.
Best wishes.
jgordosea, Enrolled Agent
Category: Tax
Satisfied Customers: 3095
Experience: I've prepared all types of taxes since 1987.
jgordosea and other Tax Specialists are ready to help you
Customer: replied 5 years ago.
Thank you. This is the information I've been looking for. Do you know of any court cases or IRS rulings on specific cases where the taxpayer was granted this exception?
Expert:  jgordosea replied 5 years ago.
Hello again,

Given that the statute in Title 26 clearly gives and exception to the treatment as a collectible "for any stamp or coin" to those coins described in Title 31 section 5112(k) there will be no court cases or IRS rulings.

That is, the IRS does, and must, recognize the plain language of the law. One example is seen in the Private Letter Ruling found at http://benefitslink.com/IRS/plr200217059.html which is about the section 408(m) definitions for collectibles (even though it was discussing bullion in an IRA).

I hope this helps even though there are not cases or rulings since no dispute is possible with the plain language of the law.

Best regards.

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jgordosea
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I've prepared all types of taxes since 1987.