Thursday, December 29, 2011

Guest Post: Tips for Staying Under the Grid With Gold & Silver Purchases

SD reader AGXIIK presents helpful info on PM dealer reporting requirements, and tips for purchasing gold and silver under the grid.

The present US tax laws are very loose with buying and selling of phyzz.
Check with your CPA before doing anything. This is what my phyzz dealer and CPA told me

1. Sales of less than 1,000 oz of silver does not compel a dealer to issue a 1099.

2. Sales of 25 or more gold coins that are non US such as Krugerrands, Canadian Maple leafs etc will produce a 1099

3. You can sell unlimited amounts of American eagle 1 oz coins with no 1099

4. You can buy with check, bank wire or credit card (yes there will be a paper trail) But this is considered a normal transaction. I have tested that before.

5. Long term capital gains for some bullion, like gold, is taxed at 28%. Bastards! Watch for tax traps like this and selling phyzz that you have held for less than a year. Then it could be ordinary income tax rates.

6. Trading gold for silver or vice versa is a non taxable event My dealer didn't ask for a thing on that trade. GTSR is about 57 so this could get more silver on your table.

7. Buying for cash in small amounts of less than $10,000, $5,000 or even $2,500 should not kick off a treasury form. But I would not want to test that theory. Know your local PM dealer just as you should know your banker. Cash transactions of $10,000 or more forces a treasury report. A nervous dealer or banker is not someone you want watching your actions.

The banker can get fined, fired or jailed if they fail to do report large cash transactions. Unless the banker knows your business or personal finances normally involve cash just to be safe, buy in small amounts. Not only is there less paperwork on $2-4,000 buys, the PM might be more available in small amounts.
I don't give tax advice since what I do is only for my account. Most of us are on safe ground. We are, for the most part, buyers. Sellers are probably selling for less than their costs so they may take a loss.
A quick thought, however. If you sell PMs for a loss and report this loss on your returns you may be able to buy back in at a lower price. If you use the 30 day wash rule then you can buy back in and have a loss against your taxes. Your refund might allow you to buy more PMs.
Make sure you are on safe ground in any case. If you give a large check to a dealer who has to hedge the prices and their futures action works against them, they may go broke. This latest crunch in PM prices may have affected some dealers. Check around.
Doc's Law holds true. If you hold it you own it
Doc's Law II If you pay for it and don't hold it, you don't own it.
If the dealer cashes your check and can't deliver your phyzz or goes broke, call Gerald Celente for a refund.