Central Ohio Refinery - expert opinion appreciated!!!

[doushe_baggery]

Hey guys(Gals too),

Long time lurker, first time poster here. I'll just give you the cliffs:

1. Bought some gold 10 odd years ago, pretty good amount.

2. I feel like golds only going to downhill from here, thought I would look into unloading it.

3. Got it tested at a pawn shop, they said over 10K and under 14K, which goes hand in hand with my personal assessment of about 40%.

4. This is where I'm getting overwhelmed. I keep hearing like 10 different things about the regulation on gold, you are allowed to own bullion, you aren't, reporting must occur over 600, reporting must occur over 10,000, blah blah, etc, etc, etc. Just like any other red blooded American, I want Uncle Sam in my business as little as possible, but I don't want to break the law.

5. What to do community? I am at a loss. Should I pay a refinery to assay and melt, or do it myself? I just don't even know where to go from here.

 

[kkmonte]

Well I'm no tax expert, but from what I read, anything you sell in the US for a "gain" you are supposed to pay taxes on the profit. If you bought your gold 10 years ago for 5k, and sell it now for 10k, you would owe capital gains tax on the difference 5k (about $1400). However, as long as you aren't selling 25+ ounces of mexican, canadian or south african gold coins, the gold dealers are not required to report individual sale of gold. It's left up to the individual (just like the rest of our tax system) to be honest and pay the taxes.

If it were me, i'd probably break it up into smaller lots, sell some here and there, and not worry about it (assuming it's not 20k+ I was talking about).

Ken

 

[philddreamer]

Are you in Ohio or the UK?

Phil

 

[griptheweasel]

As far as owning bullion, I'm pretty sure that gold bullion was once again legal for US citizens to own in 1974, so you don't need to worry there unless you're outside the US. As far as reporting, I don't know of any such requirements, but then again I've never had to deal in large quantities of gold. And if reporting is required, I'd go with what @kkmonte said and break things up into small transactions.

If you just want the cash then sell your stuff to a refiner if they'll take it. If not, refine it yourself and try to enjoy if the experience.

 

[doushe_baggery]

Are you in Ohio or the UK?

Phil

Ohio.

...And if reporting is required, I'd go with what @kkmonte said and break things up into small transactions.

If you just want the cash then sell your stuff to a refiner if they'll take it. If not, refine it yourself and try to enjoy if the experience.

I would do that, are you allowed to break it up like that on purpose? Also, I have no problem refining it myself should that mean I get a much higher return. If the difference is negligible, I suppose I should take it somewhere..

 

[Lou]

No, you cannot break it up into smaller transactions--the net result is the same as the tax is still owed. You'll have to pay the tax.


I'm in Ohio and really despise the sales tax on bullion (which is several times what I make for processing any physical metal).

 

[kkmonte]

Well no, what i meant was breaking it up into smaller transactions will be easier to "hide" from the IRS if you are going to go that route. You are still supposed to pay the tax on it, doesn't mean you have to though. In the end, you are the one who is taking the chance whether you decide to report the gain or not.

 

[doushe_baggery]

No, you cannot break it up into smaller transactions--the net result is the same as the tax is still owed. You'll have to pay the tax.


I'm in Ohio and really despise the sales tax on bullion (which is several times what I make for processing any physical metal).

What is the tax? Is it treated as a capital gain? Are you you saying we pay the 5-7% sales tax and then we have to report that as income? That's a double dip lol

 

[griptheweasel]

Oh, when you mentioned "reporting", I thought you were talking of some requirement of the gold purchaser to report to the government how much gold they purchased from you; similar to the way banks report to the government if you withdraw over a certain amount of money (might be $10,000). If you were talking about reporting your "income" from the sale of your gold, I'm pretty sure that needs to be reported as capital gains. Now whether or not that is "income" in the classical sense of the word is up for debate, but when it comes to going to jail for several years over a couple thousand in income taxes, I'd rather pay the cash.

Now, if you wanted to trade your gold for gold or silver American Eagles (which are legal tender), then your tax burden would go way down. That's probably another debate.

 

[doushe_baggery]

Silver Eagles you say? I'll look into that. I agree it's not worth going to jail over some cash, but I just want to explore my options to make an informed decision. I really appreciate the responses guys!

 

[MiguelRosas]

There are a few legal option to consider when dealing with gold.

It is my understanding that when you do an exchange from gold into bullion, this is a non income taxable event, however, depending on your state you either have to pay a sales tax (or not). I would recommend taking your scrap and melting it down into dore bars, then talking with your accountant (as I am no tax expert) AND a refinery to see what (and IF) they report. Any transaction above $10,000 is recorded according to the Bank Suspicious Act for money Laundering - but even several transactions under the $10,000 limit are often reported, should they write you a check and you deposit it into an account.

Gifting or placing the gold under a trust (or non-profit) can also be an option, taking advantage of current tax laws.

 

[doushe_baggery]

That is most likely the best course of action. Just make it into bars myself, talk to a qualified professional, and a refinery service. What is the point of having it in a dore bar if the refiner that buys it from you is going to melt it down anyway? Wouldn't that be an un-necessary step providing the refinery wants it, as (I think?) a lot of them do?