If the donor lives nearby, he or she could deliver it in person. Comparison to Non-Tangible Assets, What Is Bonus Depreciation? They didn't acquire any added value as "collector's items." Some counties and cities require the filer to list all property on the tax form and to provide the fair market value and cost for each tangible property. To claim the deduction, the tax must only apply to personal property owned and bought for the business operation, be based on its fair market value, and be charged on an annual basis (as opposed to a one-time basis). (2) Tangible personal property. They would be valued as what they could have been sold for to a coin dealer. The charitable deduction is computed using Decembers 1.6% IRS discount rate. 3)Is the donation still reported in Section B of the 8283 and does the client still need an appraisal and the 8283 signed by the appraiser, or is it considered a cash donation? (L22, Ch. Dennis of course knows nothing about this test, although it is the backbone to all the courts' decisionswhich makes one wonder how the courts will change the test in light of the U.S. now minting coins again. New interpretations abound. the deduction is not limited to face value)? (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. These are items that you own, but that dont have a title document (like a deed, or a pink slip). Often, a Will will leave all such tangibles to a spouse or to children. 5739.01(DDD). In effect, there is a three year holding period for tangible personal property valued over $5,000 that is claimed to be used for a related use. The value of these coins lies in the value of the gold contained within them rather than in their face value. They are still tangible personal property. 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. Special valuation of a wine collection or alcohol by other spirits may require the use of a qualified appraiser. Real property, or real estate, is tangible property that is immovable. (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 . 321, sec. Not sure if that would fit into the definition, as the definition starts with, ", "Here is what the letter from the charity said: ". Tangible personal property is always depreciated . Your "check" is twenty times the size of my coin. Couldn't have anything to do with recognition of the fact that it's tangible personal property, could it? All personal property located in residence. One option is to itemize such specific bequests in a Will. In addition, Dave was speaking to DAJ's comment, which immediately preceding his: I had found a few of the articles linked herein. One of the many reasons a person creates a Will is to specify who is to receive or what should happen with their tangible personal property when they die. If the issue is unresolved it would be only because no-one wants to try your method and face the preparer penalties. The central question here is whether American Eagle gold bullion coins, having no numismatic value, donated to a charity, are tangible personal property for purposes of IRC 170(e)(1)(B) that limits the charitable contribution deduction to the donors cost basis. 408(m)(3)(A)(i)(i) a gold coin described in paragraph (7), (8), (9) , or (10) of section 5112(a) of title 31, United States Code. They have no numismatic value. The client must also complete Form 8283 (including Section B) and attach it to the return. Estate Planning for Art and Personal Property. and there is no way you can either make a currency distinction between US and Canadian coins. 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. You're awesome! 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. Pets Ones pets are considered to also be tangible personal property. Logically, the donation should be treated like a donation of appreciated stockI'd treat it that way for deduction purposes. Phone: 888-497-4970info@pgcalc.com, Calculate and illustrate all planned gifts, Create gift annuity proposals and agreements, Help with bequest administration software, Report service and actuarial verification, Illustrations for clients without software, Our commitment to diversity, equity, and inclusion, Capital gains tax savings (28% x $130,500), Net cost of gift ($161,500 - $10,850 - $36,540), Capital gains tax savings (28% x $50,501), Net cost of gift ($161,500 - $4,199 - $14,140), Net cost of gift ($161,000 - $6,003 - $36,540). Thank you for your website feedback! 1.170A-13(c)(2). 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). I dont think youre going to find any relevant guidance on this issue other than the PLR. I get it. You know, an actual ruling - or case - involving U.S. legal tender gold coins given as a donation. Ckenefick and Dennis, watching you debate over this is certainly entertaining, but I dont think its been very helpful to the OP. Precious metals can be bought in coins or bars and are evaluated based on their weight. International trade would hardly work if they weren't. A properly drafted Will that helps your Executor deal with these items appropriately will make their job easier and be appreciated by your beneficiaries. If you sell the timber, the sale is treated as a capital gain and not ordinary income. 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. 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. Software as a Service. First, here is what you wrote: Rev. Purchases of coins and bullion as investments are purchases at retail. The Regan era coins are tangible personal property subject to gift tax. Go find a charity that will take your position. Thanks in advance for your help! The IRS has ruled that nonrare gold coins (such as Krugerrands, U.S. Mint gold coins, and Canadian Maple Leaf coins) are to be treated like currency 27 and are therefore not subject to the restrictions applicable to the donation of tangible personal property. Dear Liza: I collect estate jewelry, and ancient and antique coins. By the way, 1001(b) [amount realized], makes no distinction between intangible money and tangible money, Mot one that changes the definition of the coins as collectibles. But I think everyone is laughing at you. Anyway, DAJ has the facts, and he has the ruling on his sidehe'll have to make the callalthough the ruling doesn't appear to be set in stone. I think we can do so with a great many things. This is contrasted with intangible personal property, which includes stocks, bonds, and intellectual property like copyrights and patents. Tangible personal property is a term most often used for tax purposes. How Much Do I Need to Save for Retirement? In most places there is a sales tax added to the purchase of your 12 cent dime. The Regan era coins are tangible personal property that can included in the Estate of a Non-Resident Alien. I think more parsing is needed. Go find a charity that will take your position. Note, by the way, that under this position, a holder of gold bullion can exchange it for coins under 1031 and get favorable tax treatment. And that is the position of every state that imposes a sales tax. Also, because the coins have both intrinsic and marketable value, in and of themselves, they cannot be considered intangible property, without more. The list does not require formal execution, so you can change or update the list after your Will has been executed without the need to change the Will. 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. I'm also smart enough to know that OP's client has a pretty good case to make some waves with this issue. Therefore, the Canadian Maple Leaf gold coin is property rather than money for purposes of section 1031(a) of the Code. For planning purposes, it is best to condition the gift of the firearm to a beneficiary who can establish his or her right to receive and carry a weapon. The only states that exclude tangible personal property from taxation altogether are: The process of levying taxes on tangible personal property varies wildly from one state to the next, and may even vary between different counties and local municipalities. 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. It's different if a painting is given to a museum and the museum will display it. 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. 1. This shouldnt be an issue for gold bullion, which is readily marketable, except perhaps when funding occurs at the very end of the year). You take the position that there is no problem treating bullion and coins differently for purpose of 170. If there is value other than as a medium of exchange the coin is tangible personal property. When investors become skittish about the economy, many of them sell their publicly-traded securities and buy gold. Photo credit: iStock.com/Artur, iStock.com/Pete Martin, iStock.com/vm. OK. Now Fogel states categorically that the people who say the PLR would have been reversed are just repeating what someone else told them and in actuality have no direct knowledge. Each evidences something else. No net deduction. Your position then is that my example stands. And the term is used in different ways in the numismatist world. Consider a stock held long-term. I report the value as income (realization). As is your sales tax path, your estate tax path and your gift tax path. This list may be revised by the testator (the person bequeathing his/her estate) as often as desired during his/her lifetime, and does not require an attorney, witnesses, or notarization. Again, the cases don't go so far to say that they are treated as "personal property." But, as things stand now, you're right. 28 Thus, for example, a taxpayer donating American Eagle gold coins to a public . Alcohol The transfer of valuable wine collections or other alcohol is governed by state law and may require a license. If your city or county assesses personal property taxes, they may require that you submit a disclosure of your property. 5739.01(DDD) and O.A.C. It does not include copyrights, patents, and other intellectual property that is generated or developed (rather than acquired) under an award. 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. 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. But, as I then admitted, even though taxpayer favorable - that carve out in 408(m) - I wouldn't bet the farm on it. ******************** ("Company") intends to sell gold coins for delivery to Massachusetts purchasers. 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 . $0.00. This means that an investor who purchased in gold in 2004 for one quarter its current price of $100,000 would owe $21,000 in capital gains tax if he were to sell that gold today. And, I've already told you what I think about your gift and estate tax references. This compensation may impact how and where listings appear. Also, thank you for the article you wrote, Chris. If you need assistance, please contact the Massachusetts Department of Revenue. Purchase gold bars, which can be as small as one ounce. Property taxes in America are collected by local governments and are usually based on the value of a property. But I don't think that it's all that relevant in the donation context. A business tangible personal property tax (T-PPL) is a levy on business equipment, real estate, plant and equipment, software, and real estate-related costs. 69-63 Because (1) they're more like stock held for long term appreciation than they are like a painting [i.e. The Revenue Ruling (and the PLR) both say qualifying exchange. Your example didn't wake me up. The property appraiser places a value on the property, and the tax amount due is calculated by multiplying the property value by the tax rate set by the tax authorities in the state. Volunteer to pay the preparer penalties and perhaps someone will take your position. 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. Likewise, I wouldn't bet the farm on your "out of context" estate tax rulings, as I mentioned above. In this case, the donor could deduct the full fair market value of the coins. 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. The former doesn't give rise to a recognition event when you use it to buy something, for example. For reference, the unfavorable tax treatment can be found in. In most states, a business that owned tangible property on January 1must file a tax return form with the property appraisal office no later than April 1in the same year. These are newly minted coins. 82-96 -- exchange of bullion for Canadian Maple Leafs qualifies, But then, when you agreed with Fogel you didn't seem to notice that he dismissed all of your positions as irrelevant, "Because the Canadian Maple Leaf gold coins are bought and sold for their gold content, they are bullion type coins. Id like to step in and try to simplify this matter. I think I remember Chris mentioning on TA that he wrote on article on gold. For purpose of 2101. This is especially true if your total TPP value exceeds a specific number. Totally agree. Greenbelt, Maryland 20770 Purchase shares in a form of mutual fund that invests strictly in gold bullion. A coin evidences everything you could buy. Retail classification; definitions. The largest gold ETF owns gold bullion worth about $70 billion. If we did, Dennis, we have a realization event every time there was inflation or deflation - you know, as purchasing power changes. . 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). We don't care what 1031 says. You may have donors who have accumulated significant holdings in gold. 2 & Ch. If that's all you've got you are going to lose. Argument can be made that they're "money" under the tax code, since case law brings up "circulating" as a critical distinction between "money" and "property other than money." The Will may also provide for equalizing distributions of cash from the estate so that if one beneficiary receives the decedents expensive jewelry or a vehicle, the other beneficiaries could receive cash from the estate so that each beneficiary inherits equally. We refinanced. I see a charitable deduction here for 12 cents. (4) "Personal property" means property that is not real property. [1]. That which may be felt or touched, and is necessarily corporeal, although it may be either real or personal (eg ring or watch)." No exemption is available for distribution made in accordance with a Will or a Trust. Sure, if it has the value and the language about no goods/services received. Identifying ones unique assets and carefully considering how best to distribute ones tangible personal property helps to avoid disputes among ones beneficiaries. Possession of certain items are considered to be strict liability crimes that carry severe penalties. You keep ignoring your own 408 citation. Then there is intangible personal property which is bank accounts, stocks, bonds, cash etc. However, certain types require special attention because of laws regulating their ownership, registration, and possession: Firearms Alcohol Ivory, furs, and other artifacts made from endangered species They are the equivalent of gold bullion under the law. Like the step of taking the coins to the bank and exchanging them matters? 129 Mount Auburn Street The owner purchases shares in a company that is mining gold, rather than gold itself, with the expectation that the mining company and its share price (or the share price of the ETF that invests in such companies) will prosper when the price of gold goes up. 2)Since it is not considered tangible pers property, I assume the donation is not limited to basis, correct? Actually, I left out my basis in that dime, so not sure how you come to that conclusion anyway. Tangible personal property is anything other than real property (land and building) that is used in the operations of a business or rental property. This might not be what you could actually sell it for today. To avoid any confusion as to what a person considers to be the tangible personal property a Will should include its own definition of that term and specifically carve out of that definition any items that the person may want to leave specifically to one or more persons, or perhaps fall in the typically larger rest and residue provision of the Will. Tangible property is physical assets such as collectible coins, jewelry, military medals, stamps, antiques, savings bonds or other physical items. These assets can be held by both individuals and corporations. Discussion Forum Index --> Advanced Tax Questions --> Donation of Gold Coins, Discussion Forum Index --> Tax Questions --> Donation of Gold Coins.