How do step-up in basis rules apply to inherited bullion versus collectible coins?
Executive summary
Inherited bullion and collectible coins generally receive a step‑up in basis to their fair market value (FMV) on the decedent’s date of death, so heirs pay capital gains tax only on post‑inheritance appreciation when they sell [1] [2] [3]. The practical difference between bullion and numismatic (collectible) coins is valuation — bullion is typically priced to metal spot and easier to value, while numismatic coins often require professional appraisal or auction substantiation to establish FMV for the stepped‑up basis [4] [5] [3].
1. The headline rule: step‑up to FMV at death
For inherited property the IRS treats the cost basis as “stepped up” to the asset’s fair market value at the decedent’s date of death; that reset applies broadly to tangible assets including coins and collectibles and determines future capital gains liability [1] [2] [6]. Multiple practitioner guides and tax explainers state the same point: heirs’ basis is generally the FMV on the date of death, so an immediate sale often produces little or no taxable gain [3] [7].
2. Bullion coins: straightforward valuation, straightforward tax result
Bullion — e.g., American Gold Eagles, Maple Leafs, bars — is valued primarily for metal content and therefore can be priced from published spot and dealer sheets when establishing FMV for the stepped‑up basis [4] [5]. Sources say common bullion can often be documented with reliable pricing records tied to ounces and type, which makes proving the stepped‑up basis simpler than with rare coins [5] [3].
3. Collectible/numismatic coins: appraisal and documentation matter
Numismatic coins carry premiums for rarity, grading and provenance; those premiums must be reflected in the FMV used for the step‑up, and that usually requires professional appraisal or auction results to withstand IRS scrutiny [4] [3] [6]. Practitioners advise getting an immediate appraisal at inheritance so the higher stepped‑up basis is documented and defensible if the IRS asks [6] [3].
4. Selling: when capital gains arise and how holding period is measured
Capital gains tax is triggered only when an heir sells for more than their stepped‑up basis; the holding period for inherited assets typically begins the day after the decedent’s death, which affects whether any gain is long‑term [5]. That means selling later for a higher price than FMV at death creates taxable gain, while selling immediately often results in little or no taxable gain [2] [5].
5. Practical tax traps: poor records and mixed collections
If a collection mixes bullion and numismatics, each piece should be valued separately for tax purposes; lack of documentation, missing appraisals or informal transfers increase the chance the IRS will challenge the reported basis and thus the reported gain or loss when sold [3] [8]. Sources stress that auction houses, insurance records or past appraisals are helpful evidence to substantiate FMV at death [3] [8].
6. Estate tax vs. capital gains: separate issues
The stepped‑up basis reduces heirs’ future capital gains exposure but is distinct from estate tax rules; a large estate can still trigger estate tax at the estate level even though heirs get the step‑up for basis purposes [4] [2]. Practical pieces mention high federal exclusions mean few estates pay estate tax, but estate tax rules remain separate from the step‑up mechanic [4] [2].
7. What the sources disagree on (or don’t address)
All provided sources agree the step‑up applies to inherited coins; differences are emphases rather than contradictions. Some sources emphasize the ease of valuing bullion versus the appraisal needs for numismatics [4] [5] [3]. Available sources do not mention specific IRS forms or line‑by‑line reporting requirements for coin sales, nor do they provide a definitive list of acceptable appraisers — that detail is not found in current reporting [4] [3].
8. Bottom line for heirs: document value, appraise when needed, plan before selling
If you inherit bullion, use market sheets and dealer quotes to document FMV; if you inherit collectible coins, obtain immediate professional appraisals or auction estimates so your stepped‑up basis is defensible. Selling for more than the FMV at death produces capital gains taxable to the heir; selling at or near FMV generally produces little or no tax because of the step‑up [5] [4] [3].
Limitations: this note summarizes consistent guidance across practitioner articles and tax explainers in the provided reporting; it does not substitute for advice about filing forms, state inheritance taxes, or complex estates — those specifics are not covered in the cited clips and warrant consultation with a tax or estate professional [2] [3].