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What are the tax liabilities for selling gold? For example, suppose I bought an ounce of gold in 2005 at $500 and I sold it yesterday for $1,500. What kind of taxes are due on this (in the United States)? Where do I report the transaction to the IRS?

What if I bought the gold more recently - say one year ago - and realized a smaller profit like $100?

If I bought one coin a year ago and another back in 2005, then sold one of those yesterday, how do I decide which cost basis to use?

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Gold is classified as a collectible so the gain rates are as follows:

  • Held less than one year. The capital gain is taxed at ordinary income tax rate, (up to 35%). See here.
  • Held more than one year. The capital gain is also taxed at ordinary income rate, but with a cap of 28%. In other words, if your marginal tax rate is 15%, the gain is taxed at 15%, not 28%. If you're rich and your marginal tax rate is 35%, then you tax the gain at 28%. See here.

So you'd report a gain of $100 or $1,000 , depending on which coin you sold.

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    Almost. Gold sales use the Collectibles gain tax rate maximum of 28% only if was held for a year or more. For a shorter holding period, the ordinary tax rate would apply. See here. – mgkrebbs Jun 12 '11 at 6:55
  • What happens for people whose income is so low that they do not pay any income tax? – JDelage Jun 13 '11 at 4:22
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    @JDelage: That's putting the cart before the horse. The way to determine whether no tax is owed is by running the numbers, including any capital gains on the sale of the collectible. – mbhunter Jun 13 '11 at 5:00
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    Let me rephrase that - is there tax due on the sale of bullion, regardless of total income? So, assuming total income including profit from sale of gold is below the minimum income to trigger income tax liabilities, are there still some (other) taxes to be paid on the sale of gold? – JDelage Jun 14 '11 at 21:26

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