Capital Gains Tax Silver that has gained value should only be reported if you sold it. So, if the silver you've already bought is now worth more but you have no plans to sell it, it's not considered taxable. The Internal Revenue Service (IRS) considers physical holds of precious metals such as gold, silver, platinum, palladium and titanium to be capital assets specifically classified as collectibles. Holdings in these metals, such as bullion coins, ingots, rare coins or ingots, as well as a Gold Investment Account, are subject to capital gains tax. Capital gains tax is only due after the sale of such shares and if the shares were held for more than one year.
Simply selling silver ingots does not create a tax liability. You only pay taxes if you make a profit. To see if this is the case, first add up all your investment costs to find your tax base, also called the cost base. Include items such as dealer fees, storage costs and appraisal fees, not just the purchase price of silver bars.
Subtract the tax base from profits from the sale of silver bullion. If the proceeds from the sale exceed the tax base, the answer will be positive and will be the amount of your capital gain. Otherwise, you'll get a negative number and you'll have a loss. Holdings in precious metals such as gold, silver or platinum are considered capital assets and therefore capital gains may apply.
When it comes to taxes, the IRS classifies precious metals as collectibles and, therefore, could be taxed at the maximum collectible capital gains rate of 28 percent. The 1099 series is a set of forms used to report any benefits obtained by non-corporate salespeople. They allow the IRS to prevent many cases of tax evasion. Keeping track of people who may be selling items as a source of income is a key approach.
In the context of precious metal transactions, traders must complete a 1099-B form. This is done when a customer sells one of the products mentioned in the IRS's list of reportable items in specific quantities, something we'll discuss later in this article. This price difference between the starting price of the precious metal and its final selling price is considered capital gain. There, any such benefit is subject to capital gains tax.
The following describes how these investments are taxed, as well as their tax reporting requirements, cost base calculations, and ways to offset any tax liability for the sale of physical gold or silver. Unless you have invested using a tax-deferred account, such as an IRA, you must report investment gains to the Internal Revenue Service when you sell silver ingots or other forms of precious metals.
