The Gold Country couple who unearthed at least $10 million worth of 19th century gold coins in their yard last year will probably owe close to half of that sum in federal and state income tax - whether or not they sell the coins.
There is no question that the discovery of the coins is a taxable event. In a famous 1969 decision, a U.S. District Court in Ohio ruled that a "treasure trove" is taxable the year it is discovered. In that case, Cesarini vs. United States, a couple bought a used piano in 1957 for about $15. In 1964, they found $4,467 in old currency inside it.
The court ruled that the money constituted ordinary income in 1964, the year in which they had "undisputed possession" of the funds. It did not qualify for the lower capital gains tax rate because neither the piano nor the currency were sold or exchanged.
In its 2013 tax guide, the IRS states, "If you find and keep property that does not belong to you that has been lost or abandoned (treasure-trove), it is taxable to you at its fair market value in the first year it is your undisputed possession."
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They charge you gift tax the highest rate.
ReplyDeleteThey should have kept their mouths shut and sold them a few at a time to coin dealers.
ReplyDeleteAmen 10:08!
ReplyDeleteDoesn't seem at all fair, does it?
ReplyDeleteShould have had an ACORN adviser and kept it private or lie about it as they suggest.
ReplyDeleteYeah, I would never tell a soul, if that happened to me. I'd trade a coin for some papers, and sell in small lots under an alias.
ReplyDeleteSell it for enough extra to cover taxes or hold onto it.I have friends in Belize who could have alleviated this problem.
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ReplyDeleteWorth litigating. Came with the property.
LOOSE LIPS SINK SHIPS!!
ReplyDeleteThe whole point of precious metals is that people don't know you have them. *facepalm*
ReplyDeleteThey should only have to pay taxes on the face value of the coins, not what it is worth in today's gold market or currency. Just another boatload of money for politicians to pi** away.
ReplyDeleteThanks for the legal advice...i ll keep that in mind if i ever find such a treat...still 5mil from thin air would be nice...
ReplyDeleteis that a one-time tax or a annual recurring tax? Will he have to pay tax on the five million he has left the following year??
ReplyDeleteas predicted
ReplyDeleteOpps! I meant to say that we discover $100 in old coins!!!!
ReplyDelete