What federal tax reporting and capital‑gains rules apply to selling physical gold and silver?
Executive summary
Physical gold and silver are treated as capital assets for federal tax purposes and gains are reported on Schedule D/Form 1040; long‑term gains on physical bullion are taxed under the IRS “collectibles” rules with a maximum federal rate of 28% while short‑term gains are taxed at ordinary income rates (up to the taxpayer’s top bracket) [1] [2] [3]. Dealers and brokers must file information returns in specific circumstances (1099‑B, Form 8300 and cash‑transaction reporting), so many retail sales trigger third‑party reporting even if the seller keeps privacy in other cases [4] [5] [6].
1. What tax applies when physical gold or silver is sold
Gains realized when selling physical gold or silver are capital gains: if the metal is held more than one year the gain is “long‑term” and, because the IRS classifies physical bullion as collectibles, long‑term gains are capped at a 28% federal rate rather than the lower long‑term rates that apply to most securities; if held one year or less gains are short‑term and taxed at ordinary income tax rates [2] [3] [7].
2. How the gain is calculated and what counts as basis
The taxable gain is sale proceeds minus cost basis; cost basis typically includes the purchase price plus associated costs such as dealer premiums, storage and insurance, and those documented costs reduce the taxable gain when reported on Schedule D (Form 1040) [1] [8].
3. Forms and reporting the taxpayer must file
Sales of physical precious metals are reported by taxpayers on Schedule D when filing Form 1040; dealers will often furnish Form 1099‑B to report proceeds for reportable items and that information flows to the IRS under the instructions that govern broker/dealer reporting [1] [4] [5].
4. Dealer and cash‑transaction reporting thresholds that trigger third‑party forms
Precious‑metal dealers are required to file information returns when certain thresholds and product definitions are met: for example, federal law requires reporting of cash receipts of $10,000 or more in a single transaction (Form 8300) and dealers must file 1099‑B for items on the IRS Reportable Items List when quantities and purity thresholds are reached (examples cited include 1 kilo of .995‑fine gold bars or 1,000 oz of .999‑fine silver rounds as reportable) [5] [9] [10].
5. Which products are often exempt from dealer reporting and why that matters
Many routinely traded investment coins—such as Gold and Silver American Eagles and certain U.S. and foreign coins listed by the IRS—are not treated as reportable items for dealer 1099‑B filing, so a private seller might not receive a 1099‑B for such a sale even though the gain remains taxable and must be reported by the seller [9] [6] [10].
6. Related tax treatments for ETFs, mining stocks and state sales tax nuances
Paper or ETF exposures and mining stocks have different tax rules: ETFs or funds holding physical metals that are treated as collectibles can inherit the 28% collectible long‑term rate, while mining stocks are treated as securities with the usual long‑term capital‑gains rates [3]. In addition, while federal capital gains rules are uniform, state sales and use taxes on purchases or other state tax treatments vary by state [3] [11].
7. Practical compliance steps and reporting reality
Keep meticulous records of purchase price, dealer premiums, dates, storage and insurance receipts because cost basis documentation determines tax owed; expect dealer reporting in many transactions due to 1099‑B and Form 8300 rules, and consult tax instructions or a professional for large or complex transactions because nuances (product lists, purity and quantity thresholds, and differing form triggers) determine whether a dealer reports the sale to the IRS [1] [4] [6].