Selling gold via family member - tax implications?

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Topic Author
Doodadooh
Posts: 19
Joined: Thu Sep 20, 2018 12:04 pm

Selling gold via family member - tax implications?

Post by Doodadooh » Sat Aug 01, 2020 2:25 pm

I want to offload a few of my gold coins to pay for my son's college costs. He needs the money sometime later this month but, to cut a long story short,
he has physical access to the gold so it would be way easier for him to cash in the coins. All these coins were bought a few years back when the price was around $1200 per oz.
I know that any purchase or sale is recorded and the info is probably sent to the IRS. If there is a tax liability, who pays it and how?
Any advice or suggestions welcome.
TIA
Last edited by Doodadooh on Sat Aug 01, 2020 3:37 pm, edited 1 time in total.

Minty
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Location: NorCal

Re: Selling gold to family member - tax implications?

Post by Minty » Sat Aug 01, 2020 2:40 pm

I am not a tax lawyer, but based on what I have learned on Bogleheads: I believe that there is no tax implication of the gift, except that if you (or you and your spouse) give more than the annual limit (15K each), you will have to file a gift tax return. (So pay tuition directly to the school when possible because that is an exception to the limit.) Physical gold is subject to capital gains tax at the collectibles rate, which is the taxpayer's marginal tax rate but capped at 28%. Your son's basis in the gold after the gift will be your basis. Since he would own the gold, is selling it, and retaining the proceeds, your son would report the difference between your basis and the sale price as income on Schedule D. It may well be that his marginal tax rate is less than yours; if so, giving him an appreciated asset and having him sell it works out well.
Core Four with nominal bonds and TIPS.

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SB1234
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Location: Laniakea

Re: Selling gold to family member - tax implications?

Post by SB1234 » Sat Aug 01, 2020 2:44 pm

Doodadooh wrote:
Sat Aug 01, 2020 2:25 pm
I want to offload a few of my gold coins to pay for my son's college costs. He needs the money sometime later this month but, to cut a long story short,
he has physical access to the gold so it would be way easier for him to cash in the coins. All these coins were bought a few years back when the price was around $1200 per oz.
I know that any purchase or sale is recorded and the info is probably sent to the IRS. If there is a tax liability, who pays it and how?
Any advice or suggestions welcome.
TIA
As far as I know nothing is reported to irs for the sale of
Bullion. The tax due paid is only on honor system.
anecdotes are not data

student
Posts: 4957
Joined: Fri Apr 03, 2015 6:58 am

Re: Selling gold to family member - tax implications?

Post by student » Sat Aug 01, 2020 2:50 pm

SB1234 wrote:
Sat Aug 01, 2020 2:44 pm
Doodadooh wrote:
Sat Aug 01, 2020 2:25 pm
I want to offload a few of my gold coins to pay for my son's college costs. He needs the money sometime later this month but, to cut a long story short,
he has physical access to the gold so it would be way easier for him to cash in the coins. All these coins were bought a few years back when the price was around $1200 per oz.
I know that any purchase or sale is recorded and the info is probably sent to the IRS. If there is a tax liability, who pays it and how?
Any advice or suggestions welcome.
TIA
As far as I know nothing is reported to irs for the sale of
Bullion. The tax due paid is only on honor system.
I think it depends on the amount in the transaction. https://goldsilver.com/blog/irs-1099-go ... r-bullion/

Gill
Posts: 6454
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Location: Florida

Re: Selling gold to family member - tax implications?

Post by Gill » Sat Aug 01, 2020 2:56 pm

SB1234 wrote:
Sat Aug 01, 2020 2:44 pm
As far as I know nothing is reported to irs for the sale of
Bullion. The tax due paid is only on honor system.
Of course, that doesn't change a thing. All income is reported on the honor system, whether or not it is reported by the payor to the IRS. :wink: :wink:
Gill
Cost basis is redundant. One has a basis in an investment | One advises and gives advice | One should follow the principle of investing one's principal

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dodecahedron
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Re: Selling gold to family member - tax implications?

Post by dodecahedron » Sat Aug 01, 2020 2:57 pm

Minty wrote:
Sat Aug 01, 2020 2:40 pm
I am not a tax lawyer, but based on what I have learned on Bogleheads: I believe that there is no tax implication of the gift, except that if you (or you and your spouse) give more than the annual limit (15K each), you will have to file a gift tax return. (So pay tuition directly to the school when possible because that is an exception to the limit.) Physical gold is subject to capital gains tax at the collectibles rate, which is the taxpayer's marginal tax rate but capped at 28%. Your son's basis in the gold after the gift will be your basis. Since he would own the gold, is selling it, and retaining the proceeds, your son would report the difference between your basis and the sale price as income on Schedule D. It may well be that his marginal tax rate is less than yours; if so, giving him an appreciated asset and having him sell it works out well.
If the OP´s son is under 24 and a full-time student, any gain he is required to report on his return could well be taxed at Kiddie Tax rates. If he is getting any financial aid (or plans to apply for aid for future years), the consequences of his recognizing the gain rather the OP could jeopardize financial aid eligibility.

If I were the OP, I would be inclined to sell the gold myself, report it on my return, pay the college tuition bill myself and simplify the paperwork and reporting all around.

If he has easier physical access to the gold than you do, you could sign a document authorizing him to sell your gold as your agent (so he is never the owner of the gold) and forward the sales proceeds to you immediately. You then use the proceeds to pay his tuition directly as suggested in the first paragraph above. (He may have temporary physical custody of the gold coins but does not ¨own¨ them. In particular, any change in gold value during the time it takes to complete the transaction is yours, not his.)

Gill
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Location: Florida

Re: Selling gold to family member - tax implications?

Post by Gill » Sat Aug 01, 2020 3:10 pm

OP, please change your subject heading. You're not selling gold to family members, are you?
Gill
Cost basis is redundant. One has a basis in an investment | One advises and gives advice | One should follow the principle of investing one's principal

Topic Author
Doodadooh
Posts: 19
Joined: Thu Sep 20, 2018 12:04 pm

Re: Selling gold via family member - tax implications?

Post by Doodadooh » Sat Aug 01, 2020 6:33 pm

Thank you everyone. Your advice is much appreciated.

UpperNwGuy
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Re: Selling gold via family member - tax implications?

Post by UpperNwGuy » Sat Aug 01, 2020 6:37 pm

OP, why don't you sell the gold yourself (to a dealer) and pay your son's tuition directly to the university? That's the easiest and best solution.

Topic Author
Doodadooh
Posts: 19
Joined: Thu Sep 20, 2018 12:04 pm

Re: Selling gold via family member - tax implications?

Post by Doodadooh » Sun Aug 02, 2020 5:53 pm

UpperNwGuy wrote:
Sat Aug 01, 2020 6:37 pm
OP, why don't you sell the gold yourself (to a dealer) and pay your son's tuition directly to the university? That's the easiest and best solution.
Because I'm over a thousand miles distant from both my son and the gold coins (which are hidden in one of those twelve step wooden Japanese trick boxes in our winter home) and living, by design, away from any population center. We're planning to slide homeward hopefully after the BLM riots settle down but before the post November general election riots start up!!

UpperNwGuy
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Re: Selling gold via family member - tax implications?

Post by UpperNwGuy » Sun Aug 02, 2020 6:34 pm

Doodadooh wrote:
Sun Aug 02, 2020 5:53 pm
UpperNwGuy wrote:
Sat Aug 01, 2020 6:37 pm
OP, why don't you sell the gold yourself (to a dealer) and pay your son's tuition directly to the university? That's the easiest and best solution.
Because I'm over a thousand miles distant from both my son and the gold coins (which are hidden in one of those twelve step wooden Japanese trick boxes in our winter home) and living, by design, away from any population center. We're planning to slide homeward hopefully after the BLM riots settle down but before the post November general election riots start up!!
Good grief! You've been watching too much of the wrong brand of TV news. Just go to your home now and do what needs to be done.

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