Gold sold at a profit

[Snaggletooth]

A friend of mine (happy he is not a client) is heavy into investing in gold.

He claims he can sell gold at a profit, then wait a couple days and re-invest, and his profit on the sale is tax-free.
As in: He buys 2 oz @$1800 for $3600m then sells them @2000 for $4000 ($400 profit) on May 20th. Then reinvests the $4000 on Mar 22nd.

WHAAAAAAAAT? I wouldn't even bring this to the board, except he claims he has asked two CPAs the same question and they have assured him that the reinvestment will relieve him of taxable profit. If they are correct, I am so far behind the times I need to reboard Noah's Ark.

As I write, I'm thinking of exceptions, none of which have been acknowledged by this normally credible friend:

• The two "CPAs" are really people down at his barber shop.
• The sale and reinvestment are within a retirement fund.
• The transaction is part of a like-kind exchange.

I say no, no, no!!!

Am I losing it?? Everything in TTB leads me to believe I am correct, and does not mention any exception for collectibles. Only mentions that the LTCG ceiling is 28%.

[FEDUKE404]

I think your friend needs to pursue locating a new CPA for his investment advice. . .

[Rapid Robert]

Like Kind Exchange only applies to real estate (except property held for sale), under the Temporary Cuts and Job Act.(TCJA). And a minor point, your example trade dates don't make sense (but you did clearly say "a couple of days").

Here's a suggestion: print out page 49 of Pub 550 and highlight the following paragraph, then ask him to get his advisors to explain why it does not apply. Obviously there is no possibility of zero Long Term cap gains rate to apply on a short-term sale. Maybe he has a cap loss carryforward to use up? There might be specific factors that apply on his tax return that are not general rules.

"Gold, silver, stamps, coins, gems, etc. These are capital assets except when they are held for sale by a dealer. Any gain or loss from their sale or trade is generally a capital gain or loss."

[Anarchrist]

Always ask who the advisors were that made those claims. Ask him what code section exempts the income from tax.

He won't receive a 1099 for the sale of a couple ounces of gold as the 1099 reporting requirements on gold and silver are pretty high. Maybe they told him he won't get a 1099 (and didn't say anything about reinvesting proceeds) and he perceived that as it wasn't taxable. Things always get lost in translation.

[Snaggletooth]

as the 1099 reporting requirements on gold and silver are pretty high.

Interesting. How high are they? and are they in terms of dollars or in quantities?

Thanks.

[FEDUKE404]

Interesting. How high are they? and are they in terms of dollars or in quantities?

Thanks.

I have a similar interest.
A current client has been dealing in 2023 sales of gold and silver "bars," and perhaps some similar coins. (He prefers to take custody of the physical assets.)
What kind of Form 1099, if any, would he receive for the sale(s) of any such assets? There has to be a paper trail somewhere. . .

[Anarchrist]

A few years ago a client/friend mentioned that his local coin shop told him there's no 1099 reporting when he sold gold. I thought that can't be right, and in a sense it's not, but I'm assuming there was a slight misunderstanding on his part and it's mostly true in his case. The 1099-B instructions aren't very detailed and I don't know the irs regulations, but all the coin shops online state the same thing. One example is at https://portlandgoldbuyers.com/irs-g...-requirements/