If a dealer issues a 1099‑B, how should a taxpayer calculate cost basis and report capital gains for precious metals on Schedule D?
Executive summary
When a precious‑metals dealer furnishes a Form 1099‑B, the taxpayer must reconcile the gross proceeds on that form with their own cost basis (generally purchase price plus dealer premiums, commissions, storage or insurance charges and other acquisition costs), report each disposition on Form 8949 as required, and carry the totals to Schedule D; if the dealer reported basis to the IRS in box 1e and no adjustment is needed, transactions can often be aggregated per IRS instructions (Form 8949 → Schedule D) [1] [2] [3]. Precious metals are treated as collectibles for tax‑rate purposes, so long‑term gains may be subject to the higher collectibles rate (up to 28%) rather than the ordinary preferential long‑term capital gains rates [4].
1. What the 1099‑B will show and what that means for reporting
Form 1099‑B that a dealer furnishes will show gross proceeds and may show the cost or other basis in box 1e; when basis is reported to the IRS and no adjustment is necessary, IRS guidance lets taxpayers aggregate like transactions on Form 8949 and transfer totals to Schedule D, but if basis is missing or incorrect the taxpayer must enter the correct basis on Form 8949 and attach required codes and explanations [1] [2] [3]. The IRS 1099‑B instructions also explain special rules for precious metals sales and which transactions dealers must report, so the presence of a 1099‑B is a reporting trigger but not the determinant of tax liability—the taxpayer remains responsible for accurate reporting [5] [6].
2. How to calculate cost basis for precious metals
Cost basis for bullion and coins is typically the taxpayer’s original purchase price plus transaction costs such as dealer premiums, commissions, shipping, storage and insurance that were part of acquiring the metal; those acquisition costs reduce the capital gain when the item is sold and must be documented in case the IRS questions the basis claimed [7] [4]. If the 1099‑B lacks a basis figure, or shows an incorrect basis, the taxpayer must supply the correct cost basis on Form 8949 (column (e)) and explain any adjustments per the Form 8949 instructions [1] [2].
3. Where to put the numbers: Form 8949 then Schedule D
Each sale reported on a 1099‑B should be reflected on Form 8949 first: enter the proceeds shown on the 1099‑B in the proceeds column, enter the cost basis (either as reported in box 1e or the taxpayer’s calculated basis) in the basis column, and use the appropriate codes if adjustments are needed; the subtotals from Form 8949 feed Schedule D, which aggregates short‑term and long‑term gains and losses to compute the net capital gain or loss for the return [1] [2] [3]. If the broker reported basis to the IRS and no adjustments apply, those transactions may be aggregated and moved directly to Schedule D using the boxes described in the instructions [2].
4. Tax rate nuance and collection classification
Precious metals are classed as collectibles for tax purposes, meaning long‑term gains (held more than 1 year) are generally taxed at the collectibles rate—subject to a maximum rate of 28%—not the lower long‑term rates that apply to most equities, while short‑term gains are taxed at ordinary income rates [4]. This classification makes accurate basis documentation especially important because understated basis can produce a materially higher tax bill.
5. Caveats, unreported sales, and practical realities
Not every physical metal sale triggers a 1099‑B—IRS rules exclude certain forms and quantities from dealer reporting—yet absence of a 1099‑B does not relieve the taxpayer of the obligation to report gains or losses; similarly, dealers have practical incentives to comply with IRS reporting rules, and taxpayers should retain receipts and dealer invoices because the taxpayer bears ultimate responsibility for correct basis reporting [5] [4] [8]. Dealers’ reporting practices and commercial motives can create friction—some dealers over‑report for compliance caution, others may under‑report on ambiguous items—so independent recordkeeping and consulting a tax professional when basis is unclear are prudent steps [9] [10].