Would this be a gain or a loss?

[Joe Btfsplk]

A sells property with a basis of $100,000 to B.
B pays A with 200 rare 50¢ US coins worth $1000 each.
200 X 50¢ = $ 100
200 X 1000=$ 200,000

Does A have a capital loss of $ 99,900?
or
Des he have a capital gain of $ 100,000?

[Jiggers]

Capital Gain

Obviously a capital gain of $100,000. The coins would then have a basis of $1,000 each and any future disposition of them would calculate a gain or loss based on that.

[Bees Knees]

Agreed. This is a barter exchange. You use the FMV of the property exchanged to determine gain or loss on the transaction.

[Joe Btfsplk]

I'm inclined to agree

I'm inclined to agree, but it could be argued that the coins are legal tender and as such are only worth $100 in that category.

I wonder if this loss tactic has ever been attempted. A CPA I know told me, several years ago, that this came up in his practice, but he never told me what he decided to do about it.

[jimmcg]

FMV prevails over legal denomination when it is greater. Would be a bit of a strech in this case to use legal denomination to generate a capital loss. Seem to recall a court case a few years ago re a similar situation. When I have a minute I will check.

[Joe Btfsplk]

Gain or loss

If people could get by with this, people who sell any kind of high-priced goods could have his customers buy the coins from his buddy the coin dealer, then sell them for the face value of the coins and then sell the coins back to the coin dealer.

Another relevant factor is that sales tax is charged on the sale of valuable coins.

[Unregistered]

Definitely must use the FMV.

A section from Joslin v. US 49 AFTR 2nd 82-379

"Unquestionably, a silver dollar has both a face value and a separate value reflecting the coin's numismatic worth. To this extent a silver dollar combines the characteristics of cash and property. When a taxpayer bargains for and benefits from the higher market value of silver coins, he or she must include this amount in income. That silver dollars are designated legal tender with a nominal value of one dollar acceptable at the United States Treasury to discharge one dollar of debt, or exchangeable for a one dollar Federal Reserve note, does not require a different result. "

New York Enrolled Agent