There is some advice that must come from a tax professional, there is others that best comes from those that have been in the business. My tax accountant doesn't know enough about precious metal refining, and it would be odd to have one that did.
My understanding of tax law is that capital gains, whether short or long term, are realized on any jewelry or investment grade precious metal. The tax is only applied to the change in value from time acquired in relation to cost basis.
What cost basis is used though, cost basis at acquisition, or basis at time of refinement?
Lets say I buy a lot of sweeps for $400. I don't have time to get to it for six months. After six months, I refine it and find that at a gold market of $1350, my $400 purchase has a refined value of $600. I log it in to inventory, and sell for $622 at a $1400 gold market.
Now, if my understanding is correct, I have a regular "profit" of $200, and income subject to capital gains taxes of $22, for change in value from the time it became the equivalent of investment grade material.
OR
At the time of purchase I must record gold market (lets say a market of $1250), and then after refinement, figure cost basis on gold market at acquisition?
OR
Is none of it "investment grade" because it's not stamped bullion or finished jewelry, so capital gains would not apply??
From the antiques side, I know that in an audit, the IRS absolutely wants to see lot by lot accountability, so that say, a gram of gold, can be traced from acquisition to disposition, I'm just not sure where capital gains comes in on the refinement side.
My understanding of tax law is that capital gains, whether short or long term, are realized on any jewelry or investment grade precious metal. The tax is only applied to the change in value from time acquired in relation to cost basis.
What cost basis is used though, cost basis at acquisition, or basis at time of refinement?
Lets say I buy a lot of sweeps for $400. I don't have time to get to it for six months. After six months, I refine it and find that at a gold market of $1350, my $400 purchase has a refined value of $600. I log it in to inventory, and sell for $622 at a $1400 gold market.
Now, if my understanding is correct, I have a regular "profit" of $200, and income subject to capital gains taxes of $22, for change in value from the time it became the equivalent of investment grade material.
OR
At the time of purchase I must record gold market (lets say a market of $1250), and then after refinement, figure cost basis on gold market at acquisition?
OR
Is none of it "investment grade" because it's not stamped bullion or finished jewelry, so capital gains would not apply??
From the antiques side, I know that in an audit, the IRS absolutely wants to see lot by lot accountability, so that say, a gram of gold, can be traced from acquisition to disposition, I'm just not sure where capital gains comes in on the refinement side.