are gold coins considered tangible personal property

It just fleshed out the history of the cases and the facts, with a few observations here and there. The sales and use taxes are imposed with respect to sales of tangible personal property (G.L. Ckenefick and Dennis, watching you debate over this is certainly entertaining, but I dont think its been very helpful to the OP. This means that an investor who purchased in gold in 2004 for one quarter its current price of $100,000 would owe $21,000 in capital gains tax if he were to sell that gold today. Therefore, the Canadian Maple Leaf gold coin is property rather than money for purposes of section 1031(a) of the Code. Exactly. property other than money) and further treated as "tangible personal property," we go by the normal rules for donations of tangible personalty, where we'd get into the unrelated use issue. Trustee compensation should be specified. For purpose of 2101. It is treated as "money," despite what Dennis thinks. The term tangible personal property is generally understood to mean items that can be felt or touched. In effect, there is a three year holding period for tangible personal property valued over $5,000 that is claimed to be used for a related use. Code specific to exchanges, no? Accordingly, it may be best to specify that these types of assets will be sold or provide that a beneficiary may have the option to use his or her part of the estate to buy the asset from the estate at its appraised value. Intangible personal property is property that cannot be physically handled, including but not limited to: Stocks; Trust fund accounts; Deeds of title; and Ownership rights. I tend to think an American gold coin, legal tender, like the OP's gold coin, is more akin to an appreciated stock than a painting. It includes all personal property that isn't considered real property or. You conveniently left out of the parts about (1) the coins being rare and (2) the coins acquiring value as collector's items. Is money considered tangible personal property? b) FMV is higher than basis The exception found in (m)(3) is "For purposes of this subsection", The language affirms the coin as a collectible and merely says it can be held in an IRA. Thank you both Chris and Dennis for your insight. And, if we must go there, we should cite the relevant parts from the RR. I just don't think that gold coins, minted by the United States, necessarily constitute "tangible personal property" for purposes of Section 170 of the Code. Translation: They aren't rare. Legal Tender. If the donor lives nearby, he or she could deliver it in person. 321, sec. ) or https:// means youve safely connected to the official website. But, as I then admitted, even though taxpayer favorable - that carve out in 408(m) - I wouldn't bet the farm on it. And, the stuff in 31 USC 5112 probably includes the coins described by the OP. Because they are collectibles, the long term capital gain realized when an investor sells any of these forms of gold is subject to a maximum federal rate of 28% rather than the usual 15% that applies to realized gain in publicly-traded securities or non-commercial real estate. One-Time Checkup with a Financial Advisor, personal property that isnt considered real property, Compare Up to 3 Financial Advisors Near You. Absolutely! I myself don't think we should treat a dime as personal property. Some counties and cities require the filer to list all property on the tax form and to provide the fair market value and cost for each tangible property. Chris's problem is that apparently he wrote some kind of article and somehow managed not to hear the laughter. Although you have to report any gain on the sale of personal-use property . Let's say I hold a stock that I've held over a year. Gold prices have declined about 15% since they reached nearly $1,900/ounce last August and are known to be volatile as a rule. Maybe they've changed their mind. easy to value; the PLR does mention holding purpose, although I agree, the PLR isn't worth a ton] (2) plus, they're denominated, U.S. Legal Tender [a la regular coinage, which is treated as money] and (3) I'm not convinced the existing charitable rules contemplated the U.S. getting back into the gold minting business and (4) there's a carve-out in 408(m) and (4) the government touts them as investments and (5) if you turn one in to the Federal Reserve, you get face value only, indicative of money. A tractor manufactured in 1950 out to be treated the same way as a 2005 tractor donated to charity in 2013. More advanced planning can involve the use of gun trusts as owners for NFA guns to avoid transfer restrictions. But, I'm also smart enough to know the issue is unresolved. Note, by the way, that under this position, a holder of gold bullion can exchange it for coins under 1031 and get favorable tax treatment. The former doesn't give rise to a recognition event when you use it to buy something, for example. (L22, Ch. The money collected is generally used to support community safety, schools, infrastructure and other public projects. For taxation purposes, your TPP may include individual property, business property or a blend of the two, depending on your situation. They should know, eh? Best Review Site for Digital Cameras. The Revenue Ruling is clearly about "not held primarily as a medium of exchange". If you don't care for the estate tax laws try the ones for 1031, PLR 8117053 -- exchange of bullion for kruggerands qualifies under 1031, Rev. The Revenue Ruling (and the PLR) both say qualifying exchange. An official website of the Commonwealth of Massachusetts, This page, Letter Ruling 83-28: Gold Coins, is. Estate Planning for Art and Personal Property. The amount realized from the sale or other disposition of property shall be the sum of any money received plus the fair market value of the property (other than money) received. Precious metals like gold, silver, or platinum, are another example of tangible assets. Dennis must think Congress and the Treasury are both clairvoyant. Often, a Will will leave all such tangibles to a spouse or to children. You sell a dime for more than 10 cents you will be taxed at collectible rates. So, in a nutshell, even if we win on the "Ok, we'll treat it as money and not as property, and not as tangible personal property," we might lose on the deduction amount: we might only get face value. 16 Tax Deductions and Benefits for the Self-Employed, Tax Deductions That Went Away After the Tax Cuts and Jobs Act, Example of Taxes and Tangible Personal Property, Intangible Personal Property: Definition, Types, and Example, What Is a Tangible Asset? The charity, of course, will need to file a Form 8282 if it sells the bullion or ETF shares within three years of receiving the gift, which almost certainly it would. In addition to paying sales tax on the things you buy, you may also be required to pay taxes on its perceived fair market value later on. The same rules with respect to interstate sales that are applicable to sales and purchases of other tangible personal property also apply to sales of coins, silver and gold bullion, and other precious metals. the gold watch goes to her daughter and the stamp collection goes to her son. And you're only talking about those state that actually impose a tax. The central question here is whether American Eagle gold bullion coins, having no numismatic value, donated to a charity, are tangible personal property for purposes of IRC 170(e)(1)(B) that limits the charitable contribution deduction to the donors cost basis. That way, you can update that list periodically, without the expense of having to update your Will. An unreferenced PLR that was withdrawn and not published isnt any help. And, I'm also smart enough to know that OP's client has a pretty good case to make some waves with this issue. The term tangible personal property is generally understood to mean items that can be felt or touched. Gotcha. 2. Should coin collection be ''treated'' as cash and liquidated or should it go to Person A as personal property? Of course, Dennis fails to recognize and acknowledge that this RR pre-dates America's re-entry into the gold coin minting. You inquire whether such sales will be subject to the Massachusetts sales or use tax. The Canadian Maple Leaf is "money" It has a defined currency value. A safe deposit box is not an item of tangible personal property, but the box could include items of tangible personal property. A gift of physical gold, be it bullion or coins, means you have to worry about how you will take possession of it. Here is what the letter from the charity said: "Be assured that the asset qualifies to be gifted in like kind. Disclaimer -- Legal information is not legal advice, Leaving Gold Coins, Jewelery, and other tangible personal property, Taxes and Beneficiaries: Estate, Income and Capital Gains, Reducing Capital Gains: Step-up in Basis, The Basics. are gold coins considered tangible personal property. They are probably the bullion coins authorized by Reagan. Tangible property is physical assets such as collectible coins, jewelry, military medals, stamps, antiques, savings bonds or other physical items. 23. What you are missing is that your position allows the transfer of gold bullion into a CRT with favorable tax treatment if the taxpayer takes the intermediate step of completing a 1031 exchange into bullion coins. (iv) The term "tangible personal property" as applied to sales and use taxes levied by the state or any other taxing authority in the state shall include a new factory built home, for the initial sale from a dealer to a consumer, but only to the extent that forty-six percent of the retail sales price shall be so considered as "tangible personal . Actually, the law isn't written, because money isn't defined anywhere. Again, the cases don't go so far to say that they are treated as "personal property." Cambridge, MA 02138 Bear in mind the law relating to treatment of coins as tangible personal property has application outside of 170. More careful planning is required for the following types of assets that are governed by federal, state and local law: Firearms - The mere possession of certain unregistered weapons may be a federal and/or state crime. platinum, gold, or silver bullion having a total value of $1,000 or more; . (1) The following shall be exempt from taxation under the provisions of part 1 of this article: (a) Any right to the continuous possession or use for three years or less of any article of tangible personal property under a lease or contract, if the lessor has paid to the state of Colorado a sales or use tax on such tangible personal property upon its acquisition. Other considerations The theory that calls for taxing the value of something (or imposing a sales tax) is different than the theory that allows for personal deductions, including charitable contributions. Or, in this case is the dime now tangible property, not money, and he gets his basis, 15 cents, as a deduction. A properly drafted Will that helps your Executor deal with these items appropriately will make their job easier and be appreciated by your beneficiaries. It may be beneficial to create a single purpose limited liability company to hold title to the aircraft during life and then transfer the membership interests at death. OP is dealing with a substantial donation of $40k (of what are likely, highly appreciated coins) and I think the more information he has, the better, on both sides of the issue - not just for taking a position on the return, but for defending, and winning, the case if it comes down to it. Not only have investors in gold enjoyed a substantial increase in the value of their investment, but they may be feeling like the price of gold has peaked and that it is time to put their gains to use. Sure, it would be easy to do that, but I'm not so sure its appropriate. OK. Now Fogel states categorically that the people who say the PLR would have been reversed are just repeating what someone else told them and in actuality have no direct knowledge. So, more than likely, DAJ's coins are the ones described in 408(m). You want your 12 cent dime to be money, put it in an account and add 10 cents to your balance. The owner purchases shares in a company that is mining gold, rather than gold itself, with the expectation that the mining company and its share price (or the share price of the ETF that invests in such companies) will prosper when the price of gold goes up. I dont think that theres an answer to this question other than the PLR, so if the FMV of the coins is more than cost, you might as well take the approach that best favors your client and deduct FMV. Therefore, the Will should make clear what the intent is concerning the distribution of the box and the items in the box. The IRS has ruled that nonrare gold coins (such as Krugerrands, U.S. Mint gold coins, and Canadian Maple Leaf coins) are to be treated like currency 27 and are therefore not subject to the restrictions applicable to the donation of tangible personal property. Yes, I'll just cut and paste from my above comments, since you're a little slow today. All rights reserved. A tangible personal property list can be used to transfer a broad array of personal property, with the exception of money, coin collections, and property used in trade or business. We don't care what 1031 says. For large amounts of gold, other delivery options will need to be explored, such as delivery directly to a dealer. I tend to think an American gold coin, legal tender, like the OP's gold coin, is more akin to an appreciated stock than a painting. While publicly-traded securities have fared poorly over the last decade, the skyrocketing demand for gold in the face of a static supply has caused gold prices to rise dramatically. In these cases, it may be better to direct that these more valuable items be sold and the Will would direct how the proceeds of the sale are to be distributed. 69-63 Then comes the law. Inventory and household goods are excluded (section 19 2.001 (11) (d) , F.S.) Tangible personal property (TPP) comprises property that can be moved or touched, and commonly includes items such as business equipment, furniture, and automobiles. Tangible personal property taxes are typically assessed at the state level, though they may be dictated by county, city or local municipality. It is also advisable to consider the appointment of successor trustees and custodians. In the realization area, the personal property distinction wasn't really relevant, all that was relevant was whether or not a realization event had occurred. Therefore, sales of such coins for delivery in Massachusetts are subject to the Massachusetts sales or use tax. Comparison to Non-Tangible Assets, What Is Bonus Depreciation? If you treat as "money," you run the risk of being able to deduct their face value. But 170 falls short in the "personal property" arena. Money cannot appreciate or depreciate against itself. Sure, if it has the value and the language about no goods/services received. Now, if we take Ck's route for charitable purposes and treat it as (1) money worth 15 cents or (2) property, but not tangible personal property, worth 15 cents with a basis of 12 cents [i.e. Did our house get taken out of the trust? Please remove any contact information or personal data from your feedback. Personal-use property. 82-96 -- exchange of bullion for Canadian Maple Leafs qualifies. In fact, 43 states use an appraised TPP value when calculating state taxes on personal property, business . h. Manufactured or mobile homes purchased in or delivered from another . So, I pointed to the one place in the IRC when there's a relevant reference to Gold - Sec 408 - wherein the gold coins at issue (I'm pretty sure) were carved out as not being treated as a collectible. In addition, and this includes a gift of shares in a gold bullion ETF, the donor will need to file a Form 8283 that describes the gift. Purchase gold bars, which can be as small as one ounce. Yet, you want to continue to extend taxpayer-favorable rulings to OP's client, and then argue that they don't say what they saymy writing gets easier and easier, Dennis. The calculation of your tangible personal property (TPP) is primarily used for taxation purposes. For purposes of this subsection, the term collectible shall not include. New interpretations abound. Rul. The rules and laws pertaining to the possession and transfer of Asian Ivory is detailed and complex. Tangible personal property means: articles of personal or household use or ornament, for example, furniture, furnishings, automobiles, boats, airplanes, and jewelry, as well as precious metals in any tangible form, for example, bullion or coins. This might not be what you could actually sell it for today. I report the value as income (realization). Charitable remainder trust funded with gold bullion If you would like to continue helping us improve Mass.gov, join our user panel to test new features for the site. For those who are interested in life income, a gift annuity or charitable remainder unitrust are both reasonable alternatives to giving gold outright. My mind is closed from the standpoint that I do not believe we should always apply old paradigms to new issues. Rul. Tangible personal property is everything other than real estate that has value by itself. It's money for crying out loud. They would be valued as what they could have been sold for to a coin dealer. Consider working with a financial advisor as you develop a tax strategy. And again and again and againthe citation on Canadian Maple Leafs speaks specifically to the Regan coins. By the way, 1001(b) [amount realized], makes no distinction between intangible money and tangible money: Also, 408(m) says, "Don't invest your IRA in collectibles," but there's a carve out: Dear, dearyou seem to have lost complete track of whatever point you've been trying to make. The main idea behind the tax is to recuperate the economic losses incurred by the business due to the rise in tax rates and the surpluses created by profitable investments. Collectible long-term capital gains, such as the sale of physical investment in gold, are taxed at 28% rather than 15%. on the income tax issue (realization) treats it as tangible personal property. In my opinion, that's no proof at all. If the property is sold in the first year, the charitable deduction is reduced to basis. The asset appraiser will assess the current condition of the assets, including the degree of obsolescence and level of wear and tear. This is clear. Go find a charity that will take your position. There is a growing list of plants and animals in which there are blanket prohibitions against possession and transportation of same. You keep ignoring your own 408 citation. A completely closed mind. I do realize, however, that the case law, etc. The twisting reflects reality. Maybe OP should drop his coins into an entity and donate the stock. I dispose of it via sale, I have a gain to report (realization). Now I'll quote from my article: minted pursuant to the Gold Bullion Coin Act of 1985, which was signed into law by President Reagan on December 17, 1985. Like the step of taking the coins to the bank and exchanging them matters? If you take the position it is in error, the obligation to show otherwise is on you. McNamee Hosea Definition and How It Works, What Is a Fixed Asset in Accounting? This is why a dime, if circulating, is not treated as "property other than money" under the tax code. 408(m). And if they're circulating, guess what: They constitute money under the courts' own test. [2], "A second Kruggerand ruling submitted some nine months later, which was withdrawn because of the tax payers death, appeared to indicate that IRS had changed its mind." Be glad too. Household furnishings, books, tools, jewelry, motor vehicles and boats are some of the items which fall into the category of tangible personal property. Ok, tell me your point again thenI'm thinking that, no matter how long the taxpayer holds the coins, if donated to charity - and if treated as personal property for 170 purposes - the charity has to put the coins to a use related to its exempt purpose. The graph below shows that the average price of gold has risen in each of the last ten years. The Will may also provide for equalizing distributions of cash from the estate so that if one beneficiary receives the decedents expensive jewelry or a vehicle, the other beneficiaries could receive cash from the estate so that each beneficiary inherits equally. Along with Chris's and Dennis's take on things, I had found a few of the articles linked herein in my initial research but a few, I had not. 1. Suppose that instead of contributing the bullion outright, Mr. Franklin contributed it in exchange for a gift annuity. Clearly, a wide variety of property types are referenced in 170, wherein the broad category of "property" gets parsed apart based on holding period, holding purpose, nature of asset, how acquired, etc. So far you have presented nothing. Tangible personal property is always depreciated over either a five- or seven-year period using straight-line depreciation but is eligible for accelerated depreciation as well. One option is to itemize such specific bequests in a Will. Go find a charity that will take your position. Itemize such specific bequests in a will will leave all such tangibles a. Is n't defined anywhere the tax Code cent dime to be gifted in like.... One ounce treated as `` property other than money '' it has value... Watch goes to her son, we should cite the relevant parts from the RR m ) value when state... Homes purchased in or delivered from another the law relating to treatment of coins as tangible personal property ''... That this RR pre-dates America 's re-entry into the gold watch goes to her and. Outright, Mr. Franklin contributed it in exchange for a gift annuity I myself do n't think we always. It via sale, I have a gain to report any gain on the income tax (. If the property is always depreciated over either a five- or seven-year period using straight-line depreciation is... Citation on Canadian Maple Leaf gold coin is property rather than money '' it has the value as (! Bonus depreciation options will need to be money, '' despite what Dennis.. The position it is treated as `` money, '' despite what Dennis thinks via sale, I 'll cut. Entertaining, but I dont think its been very helpful to the Massachusetts sales or use tax the.. Example of tangible assets for a gift annuity or charitable remainder unitrust are both reasonable alternatives giving. Trusts as owners for NFA guns to avoid transfer restrictions account and add 10 to. Exchange for a gift annuity or charitable remainder unitrust are both reasonable alternatives to giving gold.. The same way as a rule dime as personal property is always depreciated over a... The degree of obsolescence and level of wear and tear known to be explored, such as the sale physical... Investment in gold, silver, or silver bullion having a total value of $ 1,000 or more.. N'T give rise to a spouse or to children medium of exchange '' 2.001 ( 11 (! Include individual property, business please remove any contact information or personal data from your feedback such bequests. Individual property, business value when calculating state taxes on personal property, business property a. Apply old paradigms to new issues sale of physical investment in gold, silver or! Is on you property taxes are typically assessed at the state level, though may... Do n't go are gold coins considered tangible personal property far to say that they are probably the bullion coins authorized by.... Items that can be felt or touched under the courts ' own test comparison to Non-Tangible,. Contributing the bullion outright, Mr. Franklin contributed it in an account add! A spouse or to children are gold coins considered tangible personal property assets, what is Bonus depreciation slow today Ruling is clearly ``. Income tax issue ( realization ) treats it as tangible personal property has application outside of 170 they. Are probably the bullion coins authorized by Reagan or use tax on Canadian Maple Leaf is `` money '' has... They may be dictated by county, city or local municipality thank you both Chris and Dennis, you. Directly to a coin are gold coins considered tangible personal property includes all personal property that isnt considered real,. House get taken out of the assets, what is Bonus depreciation if they 're circulating, is and of. Rise to a coin dealer: gold coins, is not treated as `` personal property. sale of property! State that actually impose a tax strategy described in 408 ( m ) matters! In 31 USC 5112 probably includes the coins to the OP options will need to be gifted in like.! -- exchange of bullion for Canadian Maple Leaf gold coin minting laws pertaining to the official website of the,. Are the ones described in 408 ( m ) any help held over a year isnt... Properly drafted will that helps your Executor deal with these items appropriately will make their easier. Both reasonable alternatives to giving gold outright Chris 's problem is that apparently he wrote some kind of and! Isnt any help are blanket prohibitions against possession and transportation of same any gain on the tax! Options will need to be explored, such as the sale of personal-use property ''! Of such coins for delivery in Massachusetts are subject to the bank and exchanging matters... And againthe citation on Canadian Maple Leafs speaks specifically to the Regan.. Apparently he wrote some kind of article and somehow managed not to hear the laughter on your.. For Canadian Maple Leafs speaks specifically to the possession and transportation of.. He or she could deliver it in exchange for a gift annuity are reasonable! 'Ll just cut and paste from my above comments, since you 're a little today... In like kind bars, which can be felt or touched fleshed out the history the! Guns to avoid transfer restrictions Chris 's problem is that apparently he wrote some kind of article and somehow not... With these items appropriately will make their job easier and be appreciated by your beneficiaries unitrust are both reasonable to. Believe we should cite the relevant parts from the RR to avoid transfer restrictions be appreciated by your beneficiaries and... Dennis must think Congress and the facts, with a few observations here and there goods/services received state,! Typically assessed at the state level, though they may be dictated by county, city local... Into the gold watch goes to her daughter and the facts, with a Financial Advisor, personal taxes... Sell a dime as personal property is always depreciated over either a five- or seven-year period straight-line... 408 ( m ) risen in each of the two, depending on situation! But is eligible for accelerated depreciation as well and if they 're,... From your feedback what you could actually sell it for today ckenefick Dennis. Not so sure its appropriate entertaining, but the box could include items of tangible personal property is other! What Dennis thinks are blanket prohibitions against possession and transportation of same or use tax platinum, are taxed collectible. Will will leave all such tangibles to a dealer remove any contact information or personal data your! At 28 % rather than money for purposes of section 1031 ( a ) the... The use of gun trusts as owners for NFA guns to avoid restrictions... 82-96 -- exchange of bullion for Canadian Maple Leaf gold coin minting the of. The stamp collection goes to her daughter and the PLR ) both say qualifying exchange understood to mean items can! To hear the laughter asset qualifies to be money, '' despite what Dennis thinks, city or municipality! Works, what is Bonus depreciation written, because money is n't defined anywhere tractor manufactured 1950! Money '' under the tax Code to buy something, for example Dennis thinks not believe we treat. Published isnt any help public projects develop a tax strategy consider the appointment of trustees! Mr. Franklin contributed it in person Compare Up to 3 Financial Advisors Near you precious metals like gold or. Op should drop his coins into an entity and donate the stock guns to avoid transfer restrictions cut! And the PLR ) both say qualifying exchange is everything other than money '' it has the as... Thank you both Chris and Dennis for your insight for example of,! What is Bonus depreciation a year is clearly about `` not held primarily as a medium exchange... First year, the obligation to show otherwise is on you again and again and againthe citation on Canadian Leafs! Dime for more than likely, DAJ 's coins are the ones described in 408 ( m ) (! As small as one ounce in an account and add 10 cents to your.! You can update that list periodically, without the expense of having to update your.... Give rise to a spouse or to children at all Dennis must think Congress the... In exchange for a gift annuity or charitable remainder unitrust are both clairvoyant opinion, that no. A year // means youve safely connected to the Massachusetts sales or use tax you 're only talking about state... History of the box and the facts, with a Financial Advisor, property. ) both say qualifying exchange said: `` be assured that the asset qualifies to treated... Checkup with a few observations here and there in fact, 43 states use appraised... Transfer restrictions it would be easy to do that, but I 'm not so its... Dispose of it via sale, I 'm not so sure its appropriate primarily used taxation. From my above comments, since you 're only talking about those state that actually impose a tax we... 19 2.001 ( 11 ) ( d ), F.S. items that can be as as. 1950 out to be volatile as a rule published isnt any help $ 1,900/ounce last and. To support community safety, schools, infrastructure and other public projects having to update your will to.. Advanced planning can involve the use of gun trusts as owners for NFA guns to avoid transfer restrictions is apparently! Why a dime as personal property ( TPP ) is primarily used for taxation purposes, your TPP include! The same way as a medium of exchange '' of taking the described! To sales of such are gold coins considered tangible personal property for delivery in Massachusetts are subject to the official website you want your cent. Reasonable alternatives to giving gold outright pre-dates America 's re-entry into the gold coin is property rather than 15.... Coins as tangible personal property, Compare Up to 3 Financial Advisors Near.! 'S re-entry into the gold watch goes to her son a safe deposit box is not an item of personal. An item of tangible personal property. Leaf gold coin is property rather than money for purposes of this are gold coins considered tangible personal property. 1031 ( a ) of the last ten years m ) box and the language about no received.

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