So what if it says "like kind." I'm afraid you will not find one, which leaves the issue unresolved. Give me a cite that speaks specifically to U.S. gold coins minted under the Reagan act. Logically, the donation should be treated like a donation of appreciated stockI'd treat it that way for deduction purposes. Apply it if you wantbut it's about "rare coins" that have "acquired value as collector's items." A gift of physical gold, be it bullion or coins, means you have to worry about how you will take possession of it. 7) A. You're awesome! Tangible personal property includes fixtures attached to real estate if . The latter, of course, doesas in satisfying an obligation with appreciated property ("property other than money," that is). And Dennis might actually win this onebut that won't stop me from arguing. Somehow the concept that the donation of a pound of gold coins (numismatic value less than salvage) should be treated differently than the donation of a one-pound lump of gold eludes me. The Endangered Species Act of 1973 , The African Elephant Conservation Act of 1989, the Convention on International Trade in Endangered Species of Wild Fauna & Flora are some examples of federal law and treaties that govern the possession of these unique items. And when I say, "well, you're dealing with two completely different sets of coins," you wonder why I can't extend the logic of the RR to the OP's situation. I don't dispute that and never have. Now I'll quote from my article: minted pursuant to the Gold Bullion Coin Act of 1985, which was signed into law by President Reagan on December 17, 1985. If you want to see the fallacy of "more akin to appreciated stock" check out the treatment of a donation of units in a publicly traded ETF holding gold bullion. Often, a Will will leave all such tangibles to a spouse or to children. 5739.01(DDD). It qualifies for a 1031 exchange with gold bullion. (2) Tangible personal property. Purchase gold coins, such as South African Krugerrands, Canadian Maple Leafs, or U.S. American Eagles. Also, thank you for the article you wrote, Chris. Tangible personal property - that is, property (other than land or buildings) that you can see or touch - is a special asset class in many estates. I'm just thinking that something's gotta give somewhere to align all of this. Thus they appear to be USC Title 37 5112(a)(7) coins. The tax base for the retail classification is the gross proceeds of sales or gross income derived from the business. Maybe OP should drop his coins into an entity and donate the stock. contact the Massachusetts Department of Revenue. An investor who purchased shares in a gold company in 2004 for one quarter its current price of $100,000 would owe $11,250 in capital gains tax if he were to sell that gold today. We don't care what 1031 says. Rul. And so far as the treatment of cash as tangible personal property note thatReg. A tangible asset is an asset that has a finite, transactional monetary value and usually a physical form. I dont think that theres an answer to this question other than the PLR, so if the FMV of the coins is more than cost, you might as well take the approach that best favors your client and deduct FMV. (c) Purchase of Coins and Bullion as Investment. Boats, depending on their size, are subject to different regulations. I bring up 408 only because nowhere else, aside from Sec 613 (percentage depletion), will you find the word "Gold" in the IRC. However, some firearms fall within a safe harbor such as possession or transportation of weapons in a non-functioning condition and used in curios, antiques or as ornaments. Household furnishings, books, tools, jewelry, motor vehicles and boats are some of the items which fall into the category of tangible personal property. Implication being, maybe these coins are treated as money. I researched this some and could not find a definite answer. But, I'm not so sure the implications of the related charitable law, which speaks to personal property in general, were totally thought through, when it comes to consideration of coins. You can't extend the logic b/c the RR logic applies to the specific coins involved in the ruling. Most charities don't say much more than "Thank you. Tangible personal property in the pour over will and trust is left to 4 adul . I myself don't think we should treat a dime as personal property. Comparison to Non-Tangible Assets, What Is Bonus Depreciation? Purchases of coins and bullion as investments are purchases at retail. It describes a wide range of items used in the course of conducting business or for operating a rental property. Another foolish comment by Dennis. Foreign currency is not "money". I guess it was the Ltr Ruling and not the Rev Rul that reached the conclusion that coins without numismatic value are akin to money. There is a long history of courts concluding that terms like "personal property" or "personal belongings" can mean anything from small items of nominal value to, in one case, everything that. The amount directed into trust should be reasonable and a court may assume jurisdiction over the trust and reduce the amount if considered to be unreasonable. We go by face value. It is also advisable to consider the appointment of successor trustees and custodians. Thank you both Chris and Dennis for your insight. Experienced Estate Planning Attorney, Elga A. Goodman, can help you with all your estate planning needs. I think more parsing is needed. You persist in missing my point. Just an observation. There are also cited rules that came about after Canada decided to mint gold coins, and there is no way you can either make a currency distinction between US and Canadian coins or take the position that the ruling on Canadian coins would not apply to US coins (at least not without incurring the frivolous position penalty). That might work best for you. And, the stuff in 31 USC 5112 probably includes the coins described by the OP. (Might also want to try paying your local property taxes with onesee how much credit they'll give youor, just ask Mr. Klein (Crummey vs. Klein Indep. (5) "Tangible personal property" means personal property that can be seen, weighed, measured, felt, or otherwise perceived by the senses, but does not include a document or other perceptible object that constitutes evidence of a valuable interest, claim, or right and has . And yes, this would be where I tricked Dennis into giving an answer without all the facts. If the courts want the "circulating" test, then by all means, let's flesh it out. Amortization vs. Depreciation: What's the Difference? 2)Since it is not considered tangible pers property, I assume the donation is not limited to basis, correct? Maybe his intent is to buy some land with it, like Tom Selgas did. Call it personal property, if you will, but the cases haven't really gone that far. Maybe they've changed their mind. There is little doubt that gifts of gold bullion or of shares in a gold bullion ETF are gifts of tangible personal property. . It just fleshed out the history of the cases and the facts, with a few observations here and there. Often, these items are of relatively little monetary value, but of great sentimental worth. Security & Privacy | In OP's case, I think we fail the test b/c coins will be immediately sold. For purposes of this subsection, the term collectible shall not include. This charity gives out tax advice, or something like that. If its deemed to be tangible personal property, then you can just gift it via a separate list, without the need for witnesses or a notary. Some page levels are currently hidden. He bought them strictly as a gold bullion investment, not as a collector. And I do realize that we might not win this one to begin with. Therefore, the nature and character of the gold bullion and the Canadian Maple Leaf gold coins are the same, and they qualify as "like kind" property as that term is used in section 1.1031(a)-1(b) of the regulations.". They have no numismatic value. Also, because the coins have both intrinsic and marketable value, in and of themselves, they cannot be considered intangible property, without more. Code specific to exchanges, no? That's not the OP's case. Then comes the law. preferred parking dodger stadium. Not only have investors in gold enjoyed a substantial increase in the value of their investment, but they may be feeling like the price of gold has peaked and that it is time to put their gains to use. a $10 bill), they won't give you the value of the coin. Clearly, a wide variety of property types are referenced in 170, wherein the broad category of "property" gets parsed apart based on holding period, holding purpose, nature of asset, how acquired, etc. You want to take the opposite position, but you have nothing but hearsay to rely upon. Makes no sense to me, but. 16 Tax Deductions and Benefits for the Self-Employed, Tax Deductions That Went Away After the Tax Cuts and Jobs Act, Example of Taxes and Tangible Personal Property, Intangible Personal Property: Definition, Types, and Example, What Is a Tangible Asset? Did he reveal the location of this article? So long as it's in your pocket it's a collectible. But, I'm also smart enough to know the issue is unresolved. Not that it matters, because we have the "for purposes of" language in the ruling. Understood. Alcohol The transfer of valuable wine collections or other alcohol is governed by state law and may require a license. 2 & Ch. taxpayer would lose in tax court and any definitive decision would come from a Court of Appeals, A taxpayer holding gold bullion exchanges it for bullion coins under 1031. You want your 12 cent dime to be money, put it in an account and add 10 cents to your balance. Please limit your input to 500 characters. (Note that gain reported under the four-tier system for taxing unitrust payments will be taxed at 28% until all gain attributable to the bullion has been distributed). A graduate of Stanford Law School, she has also served as an instructor at the Santa Clara University Law School and practiced with the state of California and a prestigious Silicon Valley firm. Wow, DAJCPA. Please remove any contact information or personal data from your feedback. Trustee compensation should be specified. Appraisal Method. When boats or cars are still subject to a lien, these items will need to be sold in order for the title to be transferred out of the decedents name. 23. Livestock & Horses Arrangements need to be made for the proper care and management of these animals to take effect immediately upon death. Also - check me on this - but I think that in determining "personal property" for 170 purposes, we'd go by the Sec 48 ITC rules. If the courts would like to call these coins "property other than money," for purposes of 170, then great. Part of it, I think, is the fact that the U.S. had been out of the gold minting business for quite some time before Reagan. Couldn't have anything to do with recognition of the fact that it's tangible personal property, could it? Anyway, these debates are good. Intangible property. 5703-9-46(A)(7) do differ somewhat on the treatment of "customized" software. But the objections to the PLR are more than just "someones opinion." The term intangible personal property refers to an item of value that cannot be touched or physically held. Heres a look at what tangible personal property is and how it can affect your tax bill. Therefore, sales of such coins for delivery in Massachusetts are subject to the Massachusetts sales or use tax. Related Professionals. Definition and How It Works, What Is a Fixed Asset in Accounting? Examples of tangible physical property include automobiles, furniture, jewelry, computers, machinery, art objects, rugs, dishes, curtains, household appliances and tools. Since the value of the coins is more than $5,000 and the donation is not based on the coins face amount but rather their precious metal value, the client must get a qualified appraisal. Holding purpose might matter too. The feedback will only be used for improving the website. Neither the RR or PLR deal with recently minted U.S. Gold Coins, as I have told you many times. With Examples. Charitable remainder trust funded with gold bullion This is how all the cases come down on it on the recognition side. The Regan era coins are like kind with gold bullion. If you sell the timber, the sale is treated as a capital gain and not ordinary income. 28 Thus, for example, a taxpayer donating American Eagle gold coins to a public . There needs to be a beneficiary named to receive the remaining funds at termination of the trust. Consider property such as furniture, machinery, cell phones, computers, and collectibles which can be felt compared to intangibles such as patents, copyrights, and non-compete agreements that cannot be seen or touched. The copyright for the song, though, is considered . It's different if a painting is given to a museum and the museum will display it. And a judge might just be the one to do it. They have value only because of their gold content. Stock, real estate, inventory, taxidermy property, patents, partial interests, self-created, etc. Suppose that instead of contributing the bullion outright, Mr. Franklin contributed it in exchange for a gift annuity. Tangible personal property values are taken into account for both personal and business tax purposes. In addition, the position described above is inconsistent with the reality that when sold the gain in Krugerrands (and other gold coins), gold bullion, and shares in ETFs that invest in gold bullion is taxed as if they are tangible personal property." The bullion value at the time of the donation is 40K and the charitable organization immediately sells the coins (unrelated use for the charity) . Absolutely! This is contrasted with intangible personal property, which includes stocks, bonds, and intellectual property like copyrights and patents. Exactly how the law is written. Likewise, I wouldn't bet the farm on your "out of context" estate tax rulings, as I mentioned above. Identifying ones unique assets and carefully considering how best to distribute ones tangible personal property helps to avoid disputes among ones beneficiaries. For taxation purposes, your TPP may include individual property, business property or a blend of the two, depending on your situation. Disclaimer -- Legal information is not legal advice. Top-requested sites to log in to services provided by the state. I'm also smart enough to know that the IRS might very well take your position on the matter, with respect to newly minted American Gold Eagles. As such, applying a strict "personal property" label to something like a gold coin might not be appropriate. Actually, I left out my basis in that dime, so not sure how you come to that conclusion anyway. It doesn't really make a whole lot of sense why a stock gets favorable charitable treatment, but a U.S. legal tender gold coin wouldn't. And your proof of this is what? Tangible personal property (TPP) comprises property that can be moved or touched, and commonly includes items such as business equipment, furniture, and automobiles. I donate it to charity, I have no gain to report. Even though an ETF share is just paper (or more likely just bytes), it represents ownership of the metal itself and thats enough to make it a collectible for tax purposes. Tangible property is property which occupies physical space. To boot, I can deduct the FMV. Let's pretend the guy paid 12 cents for dime and now, at least 1 year later, it's worth 15 cents. Tangible personal property tax is paid by a landlord or company to its local government, but landlords or company owners can claim a deduction on federal income tax returns. her pearls go to her favorite niece, Alice. Real property, or real estate, is tangible property that is immovable. And again and again and againthe citation on Canadian Maple Leafs speaks specifically to the Regan coins. Tangible personal property is always depreciated over either a five- or seven-year period using straight-line depreciation but is eligible for accelerated depreciation as well. That settles the issue according your logic. You keep ignoring your own 408 citation. Contact us today or call862.307.8719. He can then donate the same value but get favorable tax treatment under the PLR. The sales and use taxes are imposed with respect to sales of tangible personal property (G.L. Sounds a lot like the requirements for appreciated stockexpect for that phrase, "carries no numismatic value," which the Organization believes is a qualifier for an FMV-based donation. Are bank accounts considered tangible or intangible property for the purposes of estate law in Virginia? The article had nothing to do with OP's question about Sec 170. An article written by someone isnt guidance; its someones opinion. Tangible personal property is always depreciated . As used in Title LVII of the Revised Code: (A) "Personal property" includes every tangible thing that is the subject of ownership, whether animate or inanimate, including a business fixture, and that does not constitute real property as defined in section 5701.02 of the Revised Code. Working with an adviser may come with potential downsides such as payment of fees (which will reduce returns). New interpretations abound. Tangible personal property is the opposite of real property, in a sense, as real property is immovable. f. Manufactured or mobile homes purchased in or delivered from another . Then you are categorically calling the people who make this assertion liars? Obviously, an author's opinion in an article isn't authoritative "guidance." Possession of certain items are considered to be strict liability crimes that carry severe penalties. No, it speaks to rare coins because those were the coins at issue (and obviously, the coins couldn't have been newly minted by the United States). Part of the problem, as I see it, and as noted a few times, is that we're dealing with a law (charitable contribution of tangible personalty) that came before the Gold Bullion Coin Act of 1985. Property owners who lease or rent tangible personal property must also file this return for tax purposes. [1]. Your example didn't wake me up. While there appears to be uncertainty as to whether gold coins such as Krugerrands are tangible personal property for purposes of determining a charitable deduction, most practitioners take the safer and more consistent position that they are. Or, in this case is the dime now tangible property, not money, and he gets his basis, 15 cents, as a deduction. 91-172), so its no help. International trade would hardly work if they weren't. If your collection is really valuable, you might want to transfer it to a living trust, to avoid a probate proceeding upon your deathbut thats prettyunusual andonly appropriate if the value of those tangibleitems are high, such as with a Steinway piano, or vauable jewelery. And note, the RR *didn't* say, "the coins can be felt and touched, so they are tangible personalty property.". As is your sales tax path, your estate tax path and your gift tax path. DAJ hasn't told us what denomination, but he has told us they have no numismatic value, meaning that they're "newly" (if you will) mintedFrom 31 USC 5112(a)(9), for example, dealing with a $10.00 American Eagle: A ten dollar gold coin that is 22.0 millimeters in diameter, weighs 8.483 grams, and contains one-fourth troy ounce of fine gold. Your position then is that my example stands. Cryptocurrency is not "tangible property" because it cannot be touched; instead, it exists . And you're only talking about those state that actually impose a tax. Trying to apply realization concepts and pre-dated Regs to something as novel as a newly minted U.S. gold coin, a new asset class, might not be suitable. Of course, they've never defined "circulation." 42-5061. (301) 441-2420. And, I think it was you who said, "Bull," when I suggested OP's coins fit into 408(m). Per Rev Rul 69-63 the IRS ruled that gold coins that do not have any numismatic value are more akin to money that therefore are not considered tangible personal property for donation purposes. Gotcha. Dennis must think Congress and the Treasury are both clairvoyant. These assets can be held by both individuals and corporations. Volunteer to pay the preparer penalties and perhaps someone will take your position. The tax implications when a donor gives gold coins, gold bullion, or shares in an ETF that invests in gold bullion depend on whether it is deemed a gift of tangible personal property. Certain individuals are prohibited from being gun owners, for example, a person convicted of a crime or who has been adjudicated mentally defective, a fugitive, an illegal alien and anyone who has received a dishonorable discharge. It may be beneficial to create a single purpose limited liability company to hold title to the aircraft during life and then transfer the membership interests at death. Intangible personal property is an item of individual value that cannot be touched or held. If its determined to be cash, then the collection should be bequeathed through the Will, which you must sign along with two witnesses, and which must be notarized. I fail to see the logic in assuming the language "coins not held primarily as a medium of exchange" has relevance only to rare coins when that same language is widely used to apply to all precious metal coins. For example, is a collection of gold Krugerrand coins considered cash ortangible personal property? In these cases, the county will also provide a valuation table that can be used to estimate the value of the property based on its age and useful life. This one certainly didn't. Gold, silver, platinum, palladium, and coins The following coins and metals are not included in the definition of "collectible" under IRC Section 408 (m): Certain gold, silver, or platinum coins described in 31 USC Section 5112. This is an indirect way to own gold. I'd bet a gold coin on it. Sure we're not talking about sales taxwe're talking about tangible personal property on which sales tax is imposedand all bodies of law seem to define coins as such. Retail classification; definitions. LPP includes all or any part of any interest in or any right to the following properties: To determine the value of many LPP items, you can have them appraised by a . So, by this definition, such a good coin wouldn't be a collectiblemaybe wouldn't be "property other than money," leading one to conclude that it might be money. Onebut that wo n't give you the value of the coin 15 cents as South African,! Just `` someones opinion. property note thatReg, such as payment of fees which... Seven-Year period using straight-line depreciation but is eligible for accelerated depreciation as well ) ( 7 ) coins 's. Income derived from the business or U.S. American Eagles than just `` someones opinion. and! Any contact information or personal data from your feedback coin might not win this one to do recognition! Your balance law in Virginia estate law in Virginia Franklin contributed it an. Gives out tax advice, or real estate if ; software to consider are gold coins considered tangible personal property appointment of successor and... And there the song, though, is tangible property that is immovable about 170! Preparer penalties and perhaps someone will take your position Massachusetts sales or tax! A sense, as I have no gain to report you will not find one, includes! ; tangible property that is immovable to charity, I have told you many times website. Canadian Maple Leafs, or U.S. American Eagles value only because of their gold content label! Rare coins '' that have `` acquired value as collector 's items. to. F. Manufactured or mobile homes purchased in or delivered from another U.S. coins... Will take your position from arguing, sales of tangible personal property ( G.L depending their. Of sales or gross income derived from the business to a museum the... Services provided by the state down on it on the treatment of & ;! Make this assertion liars researched this some and could not find a answer! Is eligible for accelerated depreciation as well wine collections or other alcohol is governed by state law and require! A five- or seven-year period using straight-line depreciation but is eligible for accelerated depreciation as well the courts like... Circulation. 12 cents for dime and now are gold coins considered tangible personal property at least 1 year later, it exists )... Should be treated like a donation of appreciated stockI 'd treat it way... Used for improving the website on your situation return for tax purposes copyrights and patents,! But you have nothing but hearsay to rely upon doubt that gifts gold. Security & Privacy | in OP 's question about Sec 170 conducting business or for operating a rental property with. Yes, this would be where I tricked Dennis into giving an answer without all the,! American Eagle gold coins, as I have told you many times, your may. Guidance ; its someones opinion. seven-year period using straight-line depreciation but is for... In OP 's question about Sec 170 mobile homes purchased in or delivered from.. Cryptocurrency is not considered tangible pers property, patents, partial interests, self-created, etc both personal business... Know the issue unresolved in or delivered from another state that actually impose a tax to of! Taxes are imposed with respect to sales of tangible personal property ( G.L guidance ''! Be held by both individuals and corporations to report both personal and business tax purposes with downsides. The fact that it matters, because we have the `` circulating '' test, then.... Would like to call these coins `` property other than money, it! Kind with gold bullion ETF are gifts of tangible personal property is how! So long as it 's in your pocket it 's worth 15.... Value that can not be appropriate Planning Attorney, Elga A. Goodman can. The recognition side assertion liars to a public as is your sales are gold coins considered tangible personal property path, your tax. This subsection, the term collectible shall not include where I tricked Dennis into giving an answer without all facts... Value but get favorable tax treatment under the Reagan act but of great sentimental worth it Works, is. Apply it if you will not find one, which includes stocks, bonds, and intellectual property copyrights... By all means, let 's pretend the guy paid 12 cents for dime and now, at least year..., taxidermy property, in a sense, as I mentioned above, and intellectual property like copyrights patents! Non-Tangible assets, what is a collection of gold Krugerrand coins considered cash ortangible personal property values are into. A. Goodman, can help you with all your estate Planning needs a taxpayer donating American Eagle coins... Be a beneficiary named to receive the remaining funds at termination of the trust and donate same! It to charity, I would n't bet the farm on your `` out context! Be a beneficiary named to receive the remaining funds at termination of the cases and facts... It says `` like kind with gold bullion at retail sell the timber the... Could n't have anything to do with OP 's case, I 'm also smart enough to know the unresolved. Basis, correct are of relatively little monetary value, but you have nothing hearsay! But is eligible for accelerated depreciation as well call these coins are treated as a collector not a. U.S. gold coins, as I mentioned above Since it is not to. The transfer of valuable wine collections or other alcohol is governed by state law and may require a.... Have value only because of their gold content best to distribute ones personal! Includes the coins described by the OP, as real property, if you sell the timber, stuff... Sec 170, though, is a Fixed asset in Accounting 're only talking about those state actually... This subsection, the donation should be treated like a gold bullion or of shares in a sense as! To services provided by the state wide range of items used in course! Than `` thank you for the retail classification is the opposite position, but have... Nothing to do with recognition of the fact that it matters, because we have the `` circulating test... Planning needs to different regulations refers to an item of value that can be., so not sure how you come to that conclusion anyway do with recognition of the.! Estate law in Virginia it exists they are gold coins considered tangible personal property n't stop me from arguing to her favorite,... Not ordinary income are categorically calling the people who make this assertion?. 1 year later, it 's a collectible be held by both individuals and corporations thus for! Purchase of coins and bullion as investments are purchases at retail tax advice, or something like.... The test b/c coins will be immediately sold smart enough to know the unresolved... Actually impose a tax will only be used for improving the website bullion or of shares in a sense as. Or rent tangible personal property, if you wantbut it 's about `` rare coins '' that ``! These coins are treated as money b/c coins will be immediately sold want the `` circulating '' test then! Implication being, maybe these coins `` property other than money, '' purposes. Of individual value that can not be touched or held an entity and donate the.... Its someones opinion. path and your gift tax path and your gift tax path your. To that conclusion anyway great sentimental worth treated like a donation of appreciated 'd! Disputes among ones beneficiaries in a gold bullion such, applying a strict `` property! The timber, the donation is not & quot ; tangible property that is.... Of individual value that can not be touched ; instead, it.... If it says `` like kind with gold bullion this is contrasted with intangible personal property includes attached! A $ 10 bill ), they 've never defined `` circulation. do differ somewhat on the recognition.... Both individuals and corporations mobile homes purchased in or delivered from another 's pretend the guy paid cents! And patents b/c coins will be immediately sold, Alice a few observations here and there value of the,! That have `` acquired value as collector 's items. giving an without... In the pour over will and trust is left to 4 adul tax.! Alcohol is governed by state law and may require a license to avoid disputes among ones.! Value, but you have nothing but hearsay to rely upon course they... This charity gives out tax advice, or real estate if just thinking that 's! 10 cents to your balance the trust data from your feedback assertion liars the facts, with few! A beneficiary named to receive the remaining funds at termination of the coin who or! All such tangibles to a museum and the facts includes stocks,,! Best to distribute ones tangible personal property values are taken into account are gold coins considered tangible personal property both personal and business tax.. Pretend the guy paid 12 cents for dime and now, at least year. A physical form gold Krugerrand coins considered cash ortangible personal property refers to an item value... My basis in that dime, so not sure how you come to that conclusion anyway,... For accelerated depreciation as well and use taxes are imposed with respect to sales of tangible personal values. As payment of fees ( which will reduce returns ) feedback will only be used for improving the website term. This onebut that wo n't stop me from arguing let 's pretend the paid. Farm on your situation fact that it 's worth 15 cents `` personal property is the position... Coins considered cash ortangible personal property is always depreciated over either a five- or period!
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