How is capital gains tax calculated for privately sold bullion, coins, or jewelry?
Executive summary
Physical gold, silver, coins and jewelry are treated as capital assets and—when classified as collectibles—long‑term gains are taxed at a maximum 28% instead of the ordinary long‑term capital gains rates that apply to most stocks [1] [2]. Short‑term gains (assets held one year or less) are taxed at ordinary income rates; sellers must report gains on Schedule D even if a dealer doesn’t issue a 1099‑B [2] [3].
1. How the tax is computed: buy price, basis and holding period
Capital gain equals the sale proceeds minus your adjusted basis (generally the purchase price plus fees). If you held the item one year or less, any gain is short‑term and taxed at your ordinary income tax rate; if held longer than one year, the gain is long‑term and eligible for capital gains treatment—but physical precious metals treated as “collectibles” face a different ceiling on the long‑term rate [1] [2].
2. Why bullion and most coins are special — the “collectibles” rule
The IRS classifies many physical precious metals (non‑legal‑tender bars and coins, certain numismatics and jewelry when valued as collectibles) as collectibles. Net long‑term gains from collectibles are taxed at a maximum 28% federal rate, higher than the 0/15/20% brackets that apply to most capital assets [1] [2] [4].
3. Jewelry and numismatics: metal content vs. collectible value
When an item’s value derives primarily from rarity, historical significance or condition — not just metal content — it more clearly falls into the collectibles category (coins and jewelry can both qualify). Experts quoted in reporting distinguish bullion (value = metal) from collectible pieces (value > metal), but the IRS treats many bullion forms as collectibles for tax purposes, so metal‑only vs. collectible distinctions matter in valuation and tax treatment [4] [5].
4. Reporting rules: you’re responsible even if a dealer doesn’t report
Dealers sometimes must file information returns (e.g., 1099‑B) for large or specific product sales, but your obligation to report gains remains regardless of dealer reporting. Tax guidance and industry coverage emphasize that a private sale that produces a profit must be reported on your return (Schedule D/Form 1040); failure to report can trigger back taxes, interest and penalties [3] [6].
5. State taxes and sales tax caveats
Federal capital gains rules are the baseline; state tax regimes vary. Some states have modified or eliminated taxes on certain bullion transactions in the past, and state sales‑tax rules differ (some states exempt certain legal‑tender coins from sales tax). Coverage notes state differences exist but specifics depend on local law [7] [8].
6. Losses, offsets and basis adjustments
Losses on personal‑use property generally aren’t deductible, but losses from investment sales of precious metals can offset gains. You must establish correct basis (what you paid plus costs) to compute gain or loss; gifts and inheritances carry special basis rules (carryover or stepped‑up basis) that affect the taxable amount when sold [1] [9].
7. Practical illustration and ceiling on rates
Tax reporting guides and industry explainers show that even high‑bracket taxpayers pay at most 28% on long‑term gains from collectibles like physical gold or silver; sellers in the highest ordinary‑income brackets therefore may pay less on some assets but up to 28% on physical metals [2] [1] [10].
8. What sources agree on — and where they differ
Multiple industry and tax sources uniformly state: physical metals are capital assets; gains must be reported; collectibles carry a 28% cap on long‑term gains [2] [4] [1]. Reporting nuances (which specific bullion products trigger dealer 1099‑B filings, or state exemptions for legal‑tender coins) vary across outlets and dealer writeups; those specifics are product‑ and jurisdiction‑dependent [6] [8].
9. Hidden agendas and why careful documentation matters
Dealer‑oriented sites emphasize that reporting thresholds and product lists can be misunderstood and stress recordkeeping; industry pieces may also implicitly protect customer confidence by stressing privacy and reporting differences but still remind sellers that tax liability remains [6]. Tax‑advice and financial‑press articles underscore tax consequences of trading during strong price runs [10].
10. What the available sources do not fully answer
Available sources do not mention precise step‑by‑step worksheets for every item type, nor do they exhaustively list which specific coins are exempt from 1099‑B reporting in every circumstance — those details depend on product definitions, dealer practices and state law and are not fully detailed here (not found in current reporting). For a definitive calculation on a particular sale, consult the cited IRS guidance and a tax professional with your transaction records [1] [3].
Sources: IRS guidance and multiple tax and industry explainers summarized above [1] [2] [4] [3] [6] [10] [8] [7] [9].