iTulip endorses the Fair Treatment for Precious Metals Investors Act

[ThePythonicCow]

Re: iTulip endorses the Fair Treatment for Precious Metals Investors Act

There are no in depth discussions of these things extant.

One of the problems you might be running into is that those who hold physical gold don't want to describe in too much detail how they do so (unless perhaps the gold is in some highly secure and heavily guarded vault -- in which case go for it -- good luck.)

Especially those who are in the public eye as long standing gold bugs need to be coy about giving out details of how much gold they hold or by what specific means they hold it.

[globaleconomicollaps]

Re: iTulip endorses the Fair Treatment for Precious Metals Investors Act

can anyone here explain to me why 9347 gold bug sites didn't notice & don't promote this legislation? it's languished in the laps of our congresscritters for over 1 yr & not a peep from the usual suspects.

too busy chasing gold & silver manipulators.

what about losing $6600 bucks out of every 10K to anti-gold & silver taxes invested in 2001 vs same gains on stocks & mutual funds?! talk about manipulation.

how come there's no gold anti-tax action committee? where's mish? jesse? sinclair? on this?

I want to address this. I have been trying to buy a good chunk of gold here in France for a couple of weeks. I am running into lots of trouble with storage companies, gold dealers and banks. I read gold bug web sites in vain for suggestions on exactly how to buy, transport, store and sell gold. There are no in depth discussions of these things extant. My conclusion is that all of these men and women ( are any of them women?) are lying. They don't have any significant amounts of gold. The dirty secret is that all these gun toting, bearded uni-bomber types are telling us to do something that they themselves would not consider doing. It makes me wonder if I am doing the right thing.

Incidentally the tax on gold held for very long term ( greater than 12 years ) is essentially zero in France.

http://www.loretlargent.info/guides/...es-pieces-dor/

http://translate.google.com/translat...n&hl=&ie=UTF-8

[rogermexico]

Re: iTulip endorses the Fair Treatment for Precious Metals Investors Act

Does it make sense to do a round trip sell / buy in order to get a paper trail to establish a cost basis?
I have bought a lot of u.s. silver coins for cash at flea markets etc. If my word does not count as cost basis, what will the IRS accept? Face value of the coin by assuming I have had them in a mason jar since the 50s.

No that would be a wash sale and would not re-set your basis. The IRS depends on your word - although keep in mind the burden is always on YOU to prove what your basis is if you are audited.

[thriftyandboringinohio]

Re: iTulip endorses the Fair Treatment for Precious Metals Investors Act

...Face value of the coin by assuming I have had them in a mason jar since the 50s.

Hmm. I think you want the purchase price to be high, so the gain is small.

I personally prefer the honor system for declaring the purchase price of my gold.

[charliebrown]

Re: iTulip endorses the Fair Treatment for Precious Metals Investors Act

Does it make sense to do a round trip sell / buy in order to get a paper trail to establish a cost basis?
I have bought a lot of u.s. silver coins for cash at flea markets etc. If my word does not count as cost basis, what will the IRS accept? Face value of the coin by assuming I have had them in a mason jar since the 50s.

[thriftyandboringinohio]

Re: iTulip endorses the Fair Treatment for Precious Metals Investors Act

The basis is whatever you paid for the coins. For now, it works on the honor system. The IRS trusts you to report your basis accurately, just as you have to report your basis on stock and other asset sales on schedule D when you file your 1040. The IRS has no record of stock basis either, but that will change starting in 2011 or 2012, IIRC. At that point, your broker will start reporting to the IRS the basis on securities you have sold.....

Whether the infamous "1099 for every transaction" law sticks (part of the health care abomination), and what effect that will have remains to be seen.

Thanks, that's what I'd hoped the answer was.
A form 1099 won't establish a purchase price for any physical we hold today.

[rogermexico]

Re: iTulip endorses the Fair Treatment for Precious Metals Investors Act

I did my part and contacted my congress critters (I wrote my own letter, no offense to the gifted author above)

A question about this tax: How do we establish the basis for calculating the gain?
My physical is all coins, bought with cash, with no records in place of the purchase price.
Who gets to say what I paid for it when I sell?

The basis is whatever you paid for the coins. For now, it works on the honor system. The IRS trusts you to report your basis accurately, just as you have to report your basis on stock and other asset sales on schedule D when you file your 1040. The IRS has no record of stock basis either, but that will change starting in 2011 or 2012, IIRC. At that point, your broker will start reporting to the IRS the basis on securities you have sold.....

Whether the infamous "1099 for every transaction" law sticks (part of the health care abomination), and what effect that will have remains to be seen.

[thriftyandboringinohio]

Re: iTulip endorses the Fair Treatment for Precious Metals Investors Act

I did my part and contacted my congress critters (I wrote my own letter, no offense to the gifted author above)

A question about this tax: How do we establish the basis for calculating the gain?
My physical is all coins, bought with cash, with no records in place of the purchase price.
Who gets to say what I paid for it when I sell?

Re: iTulip endorses the Fair Treatment for Precious Metals Investors Act

First, I applaud iTulip for supporting this legislation and promoting awareness. Clearly the thing to do, and probably the best avenue given what's politically possible.

But I can't help but observe that the title of the legislation is absurd. Surely it would be better named the Slightly less unfair treatment of Precious Metals Investors Act.

I mean really, stop and think about it. When you buy PM's you are foregoing ANY income whatsoever. And when you measure things in purchasing power, aside from trend effects, the buyer of PMs is writing off any potential for gains in purchasing power. Over the long haul, PMs are a store of value and nothing else. Yes, I do expect appreciation in real terms in coming years, but that's only because the world is going through a fiat crisis. In other times (like the '80s), holders of gold experienced losses in terms of purchasing power. Over the long haul, it all works out to an asset which, by its very definition, never produces gains in real terms. When it produces gains in nominal terms, it's only because of the reckless actions of the very same governments that seek to tax those gains!

Can you imagine if holders of cash in non-interest bearing accounts were charged a tax on their cash that experienced zero change in balance, under the rationale that because of deflation, the cash was somehow now worth more? Of course not! But when you stop and think about it, that would actually make sense. Someone who held cash through deflation ends up with more purchasing power, and one could frame an argument for why they should be taxed on that gain in real terms.

But when you buy PMs, you are basically making a bet that the government will breach its duty under the law to preserve the purchasing power of the dollar. When your gold is suddenly worth twice as many dollars, you probably didn't "make anything" in the sense of additional purchasing power. All you did was to preserve your previous purchasing power against devaluation as a result of the government breaking its own laws. And you should be taxed for that???

I don't have any fantasy about exempting PMs from capital gains tax entirely ever being politically viable. But I do challenge anyone here to make a persuasive argument for why capital gains on PMs should be taxed at all! All you are doing when you buy PMs is to exchange your USDs for real money, and you have to accept the bad news that instead of being paid interest on your balance, you'll have to pay storage fees instead. The value of your real money (PMs) never goes up or down - it only maintains its value as reckless government policy devalues the fiat currency of the land.

This brings to mind a really important discussion topic I haven't seen covered here on iTulip. Consider EJ's predictions of 20 - 40% annual inflation, and thus enormous devaluation of the USD in coming years, resulting in a price of $2500 - $5000 per oz for gold. In the ignorant reaches of the gold bug universe, people who hear such predictions believe they are going to make a killing. Here at iTulip where investors are more informed, they understand that they're not going to make a 5x profit in terms of purchasing power. Rather, they're going to keep their purchasing power pretty much as it was, as the USD loses 80% of its purchasing power. But guess what? You still get taxed on that 500% "gain", even when there really was no gain. And after paying the tax, the real return on (unleveraged) buying of gold is probably actually negative. If you look forward to the challenges the nation will face and factor in a doubling of all capital gains tax rates (gotta "tax the rich", don'cha know), you're looking at a significantly negative after-tax real return.

Yes, I am well aware of the fact that gold investors who get in early will benefit from the mania effect that is sure to eventually take hold, and that those who also time their exit correctly will see a genuine gain in terms of purchasing power from their bullion investment. But for every investor who has that experience, another will get in too late and have the opposite experience of missing the big momentum move and seeing a negative real return in terms of purchasing power. Averaged over the long term for all investors, gold never produces a real return. All it does is store value at zero real return in exchange for insulation from the effect of depreciating fiat currency. As soon as you tax the gains in nominal terms, you're effectively taxing the average investor for a gain he never really realized.

xPat

[Sharky]

Re: iTulip endorses the Fair Treatment for Precious Metals Investors Act

wow. this thread is dead. guess no one but me & sean cares if pm cap gains taxes get cut in half. wtf?

Most people I know who own PMs have no plans to sell any time soon, if ever -- and those who do typically sell for cash, and pay no tax on the gain (if any). I know more than one person who has told me that there is "no way in hell" they will tell the gov that they used to own PMs, as they felt that would make them a mark for possible future confiscation efforts (those who used to own them are more likely to own them again in the future).

I don't agree with either view, but this line of thinking may well be a part of why more people aren't excited about a possible improvement in the tax law.

[rogermexico]

Re: iTulip endorses the Fair Treatment for Precious Metals Investors Act

The max long term rate on collectibles, which includes art, jewelry, gold silver and numismatic and bullion coins, is currently 28%, not 35%.

I believe the collectibles rate will stay at 28% even when (if) the Bush tax rates expire, and max ordinary income rate goes from 35% to 39.5%. The ordinary income rate applies to all short term capital gains. When Bush rates expire, LT cap gains rate for non-collectibles like shares will go from 15% back up to the clinton rate of 20%. I think the Obama proposal is the same in this regard.

So if the bill passes, LT gold sales will be taxed at 20% instead of 28%, so the savings are not as dramatic as in the original post. Nevertheless, I'll definitely be writing my congressmen about this, as I am all for lower taxes.

* You can get the LT rate treatment right now if you hold GTU or CEF - worth remembering these are the soundest paper PMs...

[rjwjr]

Re: iTulip endorses the Fair Treatment for Precious Metals Investors Act

wow. this thread is dead. guess no one but me & sean cares if pm cap gains taxes get cut in half. wtf?

ok, i get it.

off we go to zerohedge to whine & wring our hands.

The problem may be that I'm not seeing it on the iTulip main page. I found it only because Jesse linked to it. Is it posted improperly somehow or is it me?

And what's with the ZeroHedge hate speak? ZH is also an awesome source of infomation.

[Chris Coles]

Re: iTulip endorses the Fair Treatment for Precious Metals Investors Act

In the meantime, surely there is no reason why anyone cannot exchange their Gold as a bulk commodity for Gold coins and then, instead of selling them, simply remove them from storage and use them as currency? What would the tax implications be if, instead of selling the Gold for profit, producing a capital gain, you use them to purchase whatever you need at the time?

[metalman]

Re: iTulip endorses the Fair Treatment for Precious Metals Investors Act

So far the legislation is being tracked by:

http://coinlegislation.com/fair-trea...investors-act/
http://www.coinnews.net/coin-legisla...investors-act/
http://www.numismaticnews.net/articl...old_investors/
http://goldandsilverblog.com/preciou...ent-tax-rates/

see jesse is running a link to this story...

Fair Treatment For Metals Investors Act- iTulip

kudos to jesse! a 66% 43% tax by the irs on my principle investment in gold rams me infinitely harder than intraday manipulations in gold/silver that net out to nuthin.

[FRED]

Re: iTulip endorses the Fair Treatment for Precious Metals Investors Act

So far the legislation is being tracked by:

http://coinlegislation.com/fair-trea...investors-act/
http://www.coinnews.net/coin-legisla...investors-act/
http://www.numismaticnews.net/articl...old_investors/
http://goldandsilverblog.com/preciou...ent-tax-rates/