28% Collectables Tax Avoidance Strategies

1

1969chevynova

New Member
This is something that I have been spending a lot of time thinking about. At some point, everyone must have some kind of exit strategy. There will eventually be a time where precious metals are no longer undervalued and it will be time to transfer the wealth into other undervalued assets. For someone who has a large amount of physical precious metals, what are some creative (legal) ways to get out of precious metals without taking the 28% tax hit? Obviously there is the 1031 exchange but the options of what you can exchange into are very limited. For this example lets assume this person wants to buy a small apartment building to generate monthly income.

Let's hear some of you ideas.



Here is one idea so far, however I am not sure of the legality and or what the tax consequences would be. If anyone knows please feel free to comment.


So someone decides one day that silver and gold are no longer undervalued and it is time to get out of physical gold and silver and into another asset class. They decide to sell their PMs to Apmex (or other online bullion dealer), so they box everything up and send them in via insured overnight mail. You choose to receive payment in a different currency than USD (we will use CAD for this example). The check comes in the mail for $XXX,XXX CAD and you deposit the money into your Forex account. Once the CAD is in the Forex account, you then trade your CAD for USD. You then transfer the total balance of USD in the Forex account into your personal bank account thru wire transfer. You now have the complete value of all of your PMs in liquid USD ready to be invested in the next asset class.

What this idea is trying to accomplish in theory: Because you sold your PMs for a foreign currency you cannot pay the 28% gain tax in the foreign currency. Once the CAD are traded for USD (maybe even at a slight loss) that is it's own separate transaction/trade/tax consequences. Does this legally avoid paying the 28% tax on collectables?
 
I don't get something.
State wants a tax paid by an end-user.
A dealer is a middleman, a business with a tax registration, and just passes the tax through (aside of paying tax on his profit).
When the dealer buys / imports, he does pay tax, but he can subtract it later, and get refunded.
Now, when you, as a stacker/end-user, no tax registration and no tax refund, buy collectibles from a dealer, then you pay that tax.
Then, if you, as a stacker/end-user, sell collectibles to another end-user, or back to a dealer, why would you have to pay that tax on collectibles again?
It would mean that you would be taxed twice on a same product?
 
I know it is stupid, but the US does charge a 28% tax on gains for collectibles (similar to a capital gains tax). So yes, we have to pay taxes twice... sales tax when we purchase, and capital gains tax when we sell (if we sell for a profit)
 
Ah, it's a tax on gains, I had read it as a sales tax (sales of collectables, as opposed to sales of legal tender currency minted coins/bars).
That isn't taxing the same twice, the first is tax on consumption by end-user, the latter is tax on the "extra" when sold, not on the value of the item itself.
Well that's what State does: taxing profit.
And they even measure it mathematically, ignoring general price changes in meantime. And even if they would take these into account, they manipulate that CPI already since they created it.
Sometimes (case ebay), they even just tax on value of total sold. If you sell more than X a year, so purely on quantity/total amount, they tax you on the surplus, while making sure that that X is low enough to render the remainder to a peanut / inflation compensation failure.

What can one do? Make it as hard as possible for them to measure it, I would say. If you weren't after profit in terms of purchasing power, with inflicting the buyer a loss due to a price drop afterwards, I would have said try to sell to other stackers instead of to state monitored entities like dealers. For the rest, there isnt really much to say.
And btw, I'm not sure if asking this publicly is a good idea. There are thieves out there, they declared themselves legal, they have eyes, and they do not care if your sole goal with silver or anything merely was to be able to buy back what you produced, earnt from, and saved.
A more subtile question maybe heh.
 
1969chevynova said:
This is something that I have been spending a lot of time thinking about. At some point, everyone must have some kind of exit strategy. There will eventually be a time where precious metals are no longer undervalued and it will be time to transfer the wealth into other undervalued assets. For someone who has a large amount of physical precious metals, what are some creative (legal) ways to get out of precious metals without taking the 28% tax hit? Obviously there is the 1031 exchange but the options of what you can exchange into are very limited. For this example lets assume this person wants to buy a small apartment building to generate monthly income.

Let's hear some of you ideas.



Here is one idea so far, however I am not sure of the legality and or what the tax consequences would be. If anyone knows please feel free to comment.


So someone decides one day that silver and gold are no longer undervalued and it is time to get out of physical gold and silver and into another asset class. They decide to sell their PMs to Apmex (or other online bullion dealer), so they box everything up and send them in via insured overnight mail. You choose to receive payment in a different currency than USD (we will use CAD for this example). The check comes in the mail for $XXX,XXX CAD and you deposit the money into your Forex account. Once the CAD is in the Forex account, you then trade your CAD for USD. You then transfer the total balance of USD in the Forex account into your personal bank account thru wire transfer. You now have the complete value of all of your PMs in liquid USD ready to be invested in the next asset class.

What this idea is trying to accomplish in theory: Because you sold your PMs for a foreign currency you cannot pay the 28% gain tax in the foreign currency. Once the CAD are traded for USD (maybe even at a slight loss) that is it's own separate transaction/trade/tax consequences. Does this legally avoid paying the 28% tax on collectables?
Click to expand...

I don't think that transaction escapes taxation any more than bartering does. If you were paid in chicken feet, it would still be a taxable transaction. Are you by chance a former Enron employee? :lol:

Edit, I don't think 1031 will work with coins as the like for like rules are fairly strict. Different bonds issues by the same company don't even qualify.

More likely scenario is that you exchange the coins for CAD. The CAD funds are stolen out of your account by the brokerage company. The IRS assesses the 28% capital gains tax rate and allows you an itemized deduction for your theft loss. Result, you have lost all your money and owe taxes too. :lol:
 
btw if you would dig your entry and exit strategy, your tax avoidance strategy may just have lost its reason.
This was Pirocco from the SS HaHa department.
 
I guess it just depends on how much you have. For me I just keep my purchases small enough that they don't show up on radar, and then when selling just sell on forums or person to person, or small amounts to LCS and you won't be hit with taxes, just don't deposit all that at once :lol:
 
Ya the problem is that it is a very large amount. The person in this scenario does not simply just want to sell and have the "cash" to spend on whatever, in small amounts here and there. Much bigger than this.

The person wants to exit his PM investments and legally transition into another asset class, while avoiding the 28% capital gain tax on collectibles.
 
Taking into consideration the current silver price being a low relative to 2011+, the tax avoidance wish is probably not to maximalize profits, rather the double inverted. The former are already long out.
Then that combination of very large amount and high share collectibles, suggesting high premium coins.
Maybe the person wanted alot freebies when they all were already given away.
With or without the tax chop off, I hope his intended new asset class won't be just another step on the same road.
Because it's a repeating story: what looks best at a time, has a tendency to turn out worst. And vice versa.
Based on "past performance is no guarantee of future performance".
If I was the tax collector I'd say Good Luck and now keep 5 eyes open.
 
As I understand it the IRS has total control and oversight (NSA type oversight) over your finances regardless of jurisdiction and provenance. No doubt some eager beaver has noted your post and its implications for the future such is the reach of their intelligence

I'd suggest talking to a reputable tax agent in the USA and keeping in mind the adage 'Render unto Caesar'. You'll avoid a lot of problems in the end. (and I don't mean 'Call Saul'! lol)

But that said, if I was in USA I'd be planning a second destination to move to. Quite a few places in South America are favoured by US expats apparently. Moving your assets to those jurisdictions might be prudent. www.sovereignman.com might be a first stop to look at options.
 
JulieW said:
As I understand it the IRS has total control and oversight (NSA type oversight) over your finances regardless of jurisdiction and provenance. No doubt some eager beaver has noted your post and its implications for the future such is the reach of their intelligence
Click to expand...
It doesn't even need NSA type, google, facebook, twitter, linkedln, etc, even without searching / twittering / etc, but embedded code in like the whole of the web, pass everything to a database (google analytics) that is then available at a price to advertisers, and windows operating systems are written in such a way (labmicrosoft) that it's hard to stop this continual passing through without rendering most sites useless. If you look up a web domains info now, you can (if you pay) get your visitors ranked according to their gender/education/location.
For ex. check this:
http://www.alexa.com/siteinfo/zerohedge.com
Anyone here having the View upgrade?
Can you gimme a hint? :D
 
1969chevynova said:
Ya the problem is that it is a very large amount. The person in this scenario does not simply just want to sell and have the "cash" to spend on whatever, in small amounts here and there. Much bigger than this.

The person wants to exit his PM investments and legally transition into another asset class, while avoiding the 28% capital gain tax on collectibles.
Click to expand...

Without researching anything, I plugged offsetting capital gains at 28% rate with an equal regular capital loss and they offset with no tax. That scenario was also my understanding of the law. So, if possible, your friend should realize any capital losses he/she has to offset the gain. Other than that, I don't know of a legal way to avoid the capital gains tax.
 
Some elements do not go together here.
A capital gains tax = paying % on what you gained.
If there is a loss, then there is a negative gain.
Does tax department pay you then 28%? :P
If a loss, then capital gains tax should just be irrelevant.
So I don't get your comparison with it.
What remains is that the person bought the collectibles more years ago and selling now would realize a gain.
"There will eventually be a time where precious metals are no longer undervalued "
That person is quite late.
Undervaluation already ceased in 2011's average of $35.
It's now $20.
It's like this topic and its question warped through time.
Everything okay there? :/
 
Pirocco said:
Some elements do not go together here.
A capital gains tax = paying % on what you gained.
If there is a loss, then there is a negative gain.
Does tax department pay you then 28%? :P
If a loss, then capital gains tax should just be irrelevant.
So I don't get your comparison with it.
What remains is that the person bought the collectibles more years ago and selling now would realize a gain.
"There will eventually be a time where precious metals are no longer undervalued "
That person is quite late.
Undervaluation already ceased in 2011's average of $35.
It's now $20.
It's like this topic and its question warped through time.
Everything okay there? :/
Click to expand...
If you make a loss you get credits to offset the next time you make a gain
 
DanielM said:
If you make a loss you get credits to offset the next time you make a gain
Click to expand...
How should I legally interprete those 'credits'?
That if you make a $100 loss, tax departement 'promises' you a $28 reduction next year?
The next year, if you make another $100 loss, total $56 reduction?
Until a year you do make profit, and the reduction means a lower or zero tax?
 
Pirocco said:
DanielM said:
If you make a loss you get credits to offset the next time you make a gain
Click to expand...
How should I legally interprete those 'credits'?
That if you make a $100 loss, tax departement 'promises' you a $28 reduction next year?
The next year, if you make another $100 loss, total $56 reduction?
Until a year you do make profit, and the reduction means a lower or zero tax?
Click to expand...
https://www.ato.gov.au/General/Losses/
 
I am new to investing in PM, thanks for posting this otherwise I would have never new this. It now seems harder to actually make a profit off gold and silver.. Even if they were to rise 28% in value, which is alot! You wouldn't make a dime because you would have to pay 28% tax lol. Love it....
 
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