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Dear Tax Talk,
If I turn in old gold or silver, do I have to pay capital gains tax on the cash I receive? How much would need to be paid on $4,000?
When you sell property that was used for personal purposes, you have to pay tax on the gain. But if there is a loss, it is considered personal and not deductible.
You have to compare the amount you received for the sale of the gold to its original cost to determine your taxable gain, if any. For example, if you sold $2,500 in rings and bracelets in exchange for $4,000, your gain is $1,500. The sale should be reported on Schedule D of Form 1040.
Gain from the sale of gold is considered collectibles gain and is taxed at a higher rate than conventional long-term capital gains. Collectibles gain is gain or loss from the sale or trade of a work of art, rug, antique, metal (such as gold, silver and platinum bullion), gem, stamp, coin or alcoholic beverage held more than one year. To figure your tax on collectibles gain, you have to use the worksheet on page 8 of Form 1040 Schedule D instructions. The maximum tax rate on collectibles gain is 28 percent.
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To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. Taxpayers should seek professional advice based on their particular circumstances.