Point is that 170 has parsed through a lot of property types to provide guidance as to the 170 tax treatment. I'm also smart enough to know that OP's client has a pretty good case to make some waves with this issue. But I get it. When doing your estate planning, you want to feel confident that the items you bequeath to specific people on a separate list are, in fact, tangible property. If you take the position it is in error, the obligation to show otherwise is on you. As a result, you may end up with a loss. This shouldnt be an issue for gold bullion, which is readily marketable, except perhaps when funding occurs at the very end of the year). 2. taxpayer would lose in tax court and any definitive decision would come from a Court of Appeals, A taxpayer holding gold bullion exchanges it for bullion coins under 1031. Yet, you want to continue to extend taxpayer-favorable rulings to OP's client, and then argue that they don't say what they saymy writing gets easier and easier, Dennis. Finding a qualified financial advisor doesnt have to be hard. Proper registration can require the new owner to obtain signature of chief law enforcement officers. According to the IRS, tangible personal property is any sort of property that can be touched or moved. Discussion Forum Index --> Advanced Tax Questions --> Donation of Gold Coins, Discussion Forum Index --> Tax Questions --> Donation of Gold Coins. platinum, gold, or silver bullion having a total value of $1,000 or more; . The owner purchases shares in a company that is mining gold, rather than gold itself, with the expectation that the mining company and its share price (or the share price of the ETF that invests in such companies) will prosper when the price of gold goes up. I myself don't think the parsing, which is clearly going on in Sec 170, absolutely contemplates all types of property, especially in light of the U.S. Government getting back into the gold minting business. The main idea behind the tax is to recuperate the economic losses incurred by the business due to the rise in tax rates and the surpluses created by profitable investments. This is contrasted with intangible personal property, which includes stocks, bonds, and intellectual property like copyrights and patents. The Regan era coins are tangible personal property subject to gift tax. This isn't my article, but here's some stuff on it: Thanks, Chris. h. Manufactured or mobile homes purchased in or delivered from another . A ruling on the Canadian Maple Leaf does not apply to US minted gold coins Comparison to Non-Tangible Assets, What Is Bonus Depreciation? Hence the advent of Sec 121(d)(10)and the start of the bad new days. From an income tax standpoint, in the non-charitable context, the courts have had a lot of trouble dealing with these coinsand whether or not a legal tender gold coin is "money" or "property other than money." Although you have to report any gain on the sale of personal-use property . All personal property located in residence. In fact, 43 states use an appraised TPP value when calculating state taxes on personal property, business property or both. The examples below illustrate a gift of gold bullion, but apply equally to a gift of gold coins (taking the position that gold coins are tangible personal property) and shares of ETFs invested in gold bullion. Endangered Species, Ivory & Regulated Artifacts Federal laws and treaties restrict the ownership of and trade of products derived from endangered species. A .mass.gov website belongs to an official government organization in Massachusetts. Go find a charity that will take your position. In these cases, it may be better to direct that these more valuable items be sold and the Will would direct how the proceeds of the sale are to be distributed. Likewise, I wouldn't bet the farm on your "out of context" estate tax rulings, as I mentioned above. 1. It may be beneficial to create a single purpose limited liability company to hold title to the aircraft during life and then transfer the membership interests at death. But if you would like it to be, its an interesting position by the IRS, because it flies in the face of your notion that if you can see it and touch it, and if it's subject to sales tax, gift tax and estate tax, it MUST be tangible personaltyregardless of holding purpose. Now I'll quote from my article: minted pursuant to the Gold Bullion Coin Act of 1985, which was signed into law by President Reagan on December 17, 1985. Among these three metals, gold and silver are preferred over platinum, which is quite volatile as an investment. Software as a Service. Gold coins and gold bullion are considered collectibles for tax purposes. 82-96 -- exchange of bullion for Canadian Maple Leafs qualifies. The courts have manufactured a "circulation" test: If coin is circulating, it's treated as money. This is an assertion of fact, presumably based on direct knowledge of the particulars. 6411 Ivy Lane, Suite 200 Gold coins and bullion are tangible personal property under the IRC and are taxed as a collectible. Gold prices have declined about 15% since they reached nearly $1,900/ounce last August and are known to be volatile as a rule. After working through the tax savings below, it becomes apparent that Mr. Franklins net cost is about 70 cents on the dollar. You sell a dime for more than 10 cents you will be taxed at collectible rates. are gold coins considered tangible personal propertyperiodic 3m system meetings with department heads are gold coins considered tangible personal property. However, some firearms fall within a safe harbor such as possession or transportation of weapons in a non-functioning condition and used in curios, antiques or as ornaments. So, given the current state of Sec 170, I'm not so sure we'll be able to easily "slot" our coin into a particular genre of property. The central question here is whether American Eagle gold bullion coins, having no numismatic value, donated to a charity, are tangible personal property for purposes of IRC 170(e)(1)(B) that limits the charitable contribution deduction to the donors cost basis. If it was, it would have said, "The taxpayer did not hold the coins as a medium of exchange. Your example keeps in line with the errant path that you continue to go down, applying "realization" characterizations and definitions to a deduction setting. Or would I need to go ahead and spell out every single item in the will itself, updating the will every year or two? And, if we must go there, we should cite the relevant parts from the RR. Tangible personal property - that is, property (other than land or buildings) that you can see or touch - is a special asset class in many estates. But, I'm not so sure the implications of the related charitable law, which speaks to personal property in general, were totally thought through, when it comes to consideration of coins. and substantial capital gains to go with them. I donate it to charity, I have no gain to report. In the case of a disabled beneficiary, it may be best to exclude the individual from receiving the items altogether. The law also (in all cited cases) makes a clear distinction between currency value and market value. 42-5061. They certainly don't "for purposes of" 408(m) - and I wonder why? The ruling doesn't speak to Sec 1031. Liza is also the author of Busy Family's Guide to Estate Planning: 10 Steps to Peace of Mind. But, the minute we move into Sec 170, the property type does matter. It doesn't really make a whole lot of sense why a stock gets favorable charitable treatment, but a U.S. legal tender gold coin wouldn't. Liza is an attorney who specializes in estate planning for families of all ages. This page was last modified on 22 March 2014, at 18:01. 00:00 00:00 Also - check me on this - but I think that in determining "personal property" for 170 purposes, we'd go by the Sec 48 ITC rules. We have Congressional intent. Cambridge, MA 02138 I'm just thinking that something's gotta give somewhere to align all of this. Tangible personal property is a tax term describing personal property that can be physically relocated, such as furniture and office equipment. You make no sense. You might not care for State sales tax law but the consistent use of this language has to have meaning. Pets Ones pets are considered to also be tangible personal property. So far you have presented nothing. It includes all personal property that isn't considered real property or intangible property such as patents, copyrights, bonds or stocks. It's pretty well settled that foreign currency is treated as personal property under the tax code. Tangible property is property which occupies physical space. One-Time Checkup with a Financial Advisor, personal property that isnt considered real property, Compare Up to 3 Financial Advisors Near You. 43, sec. Is money considered tangible personal property? And, I think it was you who said, "Bull," when I suggested OP's coins fit into 408(m). In most places there is a sales tax added to the purchase of your 12 cent dime. This one certainly didn't. Providing for the equal distribution of tangible personal property among a group of beneficiaries in equal shares may be problematic when one or more items hold significantly more value than the other items. I have the PLR to rely upon. Dennis is acting like he telling us something new, which he's not. And a judge might just be the one to do it. Vessels with a volume of 5 net tons must be registered with the National Vessel Documentation Center. Yes, I'll just cut and paste from my above comments, since you're a little slow today. Everything he says is old and is already on the books. You have seriously never heard of non-correlated investments? Find me a charitable letter that actually has all the right words. 2 If the chandelier is to be severed from the property when the gift becomes complete, it is tangible personal property. Shares in a specific gold mining company or in an ETF that invests in them are considered securities for tax purposes, like shares in any publicly-traded company. Items that are considered tangible personal property can be depreciated over five or seven years using the straight-line depreciation method. But it doesn't really matter. And I'm sure you would submit the charity's letter as evidence. This is contrasted with intangible personal property, which includes stocks, bonds, and intellectual property like copyrights and patents. You want to take the opposite position, but you have nothing but hearsay to rely upon. . Therefore, sales of such coins for delivery in Massachusetts are subject to the Massachusetts sales or use tax. (Allowed only when the bullion is sold. The client must also complete Form 8283 (including Section B) and attach it to the return. Goodman Law | Attorney Advertising, 14 Ridgedale Avenue, Suite 254, Cedar Knolls, NJ 07927 | Phone: 973.567.3849, Legal Blog For Elder Law and Estate Planning In New Jersey, Estate Planning Questions About Tangible Personal Property, Elder Law From an Estate Planning Perspective, The Difference Between Executors, Trustees, and Guardians, Avoiding the Pitfalls of Trust and Estate Administration, Divorced Parents with Special Needs Children, Estate Lawyer Planning for Solo Boomers, Estate Planning: Telling your Children What Youre Planning and Why. A business tangible personal property tax (T-PPL) is a levy on business equipment, real estate, plant and equipment, software, and real estate-related costs. Most charities don't say much more than "Thank you. This is an indirect way to own gold. While publicly-traded securities have fared poorly over the last decade, the skyrocketing demand for gold in the face of a static supply has caused gold prices to rise dramatically. Reg. There is a strong case to be made that these coins are not "property" and therefore, cannot be "tangible personal property." I see no difference between a donation of gold and a donation of diamonds. If you need assistance, please contact the Massachusetts Department of Revenue. It includes all personal property that isn't considered real property or. And, I've already told you what I think about your gift and estate tax references. I dont think youre going to find any relevant guidance on this issue other than the PLR. In the realization area, the personal property distinction wasn't really relevant, all that was relevant was whether or not a realization event had occurred. However, this is what your state, county or local municipality believes the value to be according to their data. The amount directed into trust should be reasonable and a court may assume jurisdiction over the trust and reduce the amount if considered to be unreasonable. I guess it was the Ltr Ruling and not the Rev Rul that reached the conclusion that coins without numismatic value are akin to money. Intangible personal property is an item of individual value that cannot be touched or held. I myself don't think we should treat a dime as personal property. Exactly. Gold, silver, platinum, palladium, and coins The following coins and metals are not included in the definition of "collectible" under IRC Section 408 (m): Certain gold, silver, or platinum coins described in 31 USC Section 5112. People can hold this type of property and they can also see it. The feedback will only be used for improving the website. c 64I, 2). So, estate jewelry, and coins, and the like are what's called "tangible personal property" in estate planning. Regardless, sale through a reputable dealer will also need to be arranged. I knew they'd fit in there, hence my bet. No it's not. If you want to see the fallacy of "more akin to appreciated stock" check out the treatment of a donation of units in a publicly traded ETF holding gold bullion. Cryptocurrency is not "tangible property" because it cannot be touched; instead, it exists . This means that an investor who purchased in gold in 2004 for one quarter its current price of $100,000 would owe $21,000 in capital gains tax if he were to sell that gold today. Thank you for your website feedback! If your point is that the ruling is totally on point, to newly minted coins, and therefore, should be extended to newly minted coins, yet doesn't contemplate newly minted coins because there were no newly minted coins in existence at the time of the Ruling, then it's a safe bet the Ruling doesn't draw a conclusion on newly minted coins that are legal tenderbut only on "rare" coins that existed at the time of the Ruling and that were the subject of the Ruling. What if Mr. Franklin were to fund a 5% charitable remainder unitrust with his bullion rather than give it outright or in exchange for a gift annuity. Use this button to show and access all levels. Further, coins bear similarities to money and also to property other than money. I don't think existing (authoritative) guidance adequately address the gold coin. Then, the appraiser will compare these values to . But, I'm also smart enough to know the issue is unresolved. Tangible personal property (TPP) comprises property that can be moved or touched, and commonly includes items such as business equipment, furniture, and automobiles. Some page levels are currently hidden. (Might also want to try paying your local property taxes with onesee how much credit they'll give youor, just ask Mr. Klein (Crummey vs. Klein Indep. 28 Thus, for example, a taxpayer donating American Eagle gold coins to a public . The "gold masters" allowed the corporate mainframe to communicate directly with the store computers. A completely closed mind. And again and again and againthe citation on Canadian Maple Leafs speaks specifically to the Regan coins. ) or https:// means youve safely connected to the official website. I couldn't. For purpose of 2001. Usually this is not much of an issue, since there are no title documents for most of your personal effects, and your intended beneficiaries can just collect, disperse and/or sell the contents of your house. The Regan era coins are collectibles. I think everyone but Kenefick can hear the laughter. Anyway, DAJ has the facts, and he has the ruling on his sidehe'll have to make the callalthough the ruling doesn't appear to be set in stone. That you feel a deduction under 170 would be disallowed if it were made in foreign currency? 0 items. If a young or disabled beneficiary is intended to inherit items of tangible personal property, including a provision that directs the items to be held as part of the beneficiarys trust may be the better solution, or held by a custodian until the beneficiary reaches the age of proper maturity. Did he reveal the location of this article? (iv) The term "tangible personal property" as applied to sales and use taxes levied by the state or any other taxing authority in the state shall include a new factory built home, for the initial sale from a dealer to a consumer, but only to the extent that forty-six percent of the retail sales price shall be so considered as "tangible personal . A gift of physical gold, be it bullion or coins, means you have to worry about how you will take possession of it. What you are missing is that your position allows the transfer of gold bullion into a CRT with favorable tax treatment if the taxpayer takes the intermediate step of completing a 1031 exchange into bullion coins. The selection of managers and experts to deal with these types of animals should be made well ahead of time and communicated so that the care plan can be implemented immediately upon ones demise. Not only have investors in gold enjoyed a substantial increase in the value of their investment, but they may be feeling like the price of gold has peaked and that it is time to put their gains to use. Phone: 888-497-4970info@pgcalc.com, Calculate and illustrate all planned gifts, Create gift annuity proposals and agreements, Help with bequest administration software, Report service and actuarial verification, Illustrations for clients without software, Our commitment to diversity, equity, and inclusion, Capital gains tax savings (28% x $130,500), Net cost of gift ($161,500 - $10,850 - $36,540), Capital gains tax savings (28% x $50,501), Net cost of gift ($161,500 - $4,199 - $14,140), Net cost of gift ($161,000 - $6,003 - $36,540). They've just said it's property other than money. We have a basis of 12 cents and a value of 15 cents. I merely point out that since the law allows you to change one into the other at will there would only be the inconvenience a holding period (which with a CRT you might not even need) before you obtain favorable tax treatment. $0.00. [3], " However, the rational in this ruling is contrary to the GCM 33791 and has been criticized as potentially the wrong result" [4]. Please limit your input to 500 characters. For charitable purposes, if treated as "property" (i.e. 321, sec. There is a growing list of plants and animals in which there are blanket prohibitions against possession and transportation of same. DAJ hasn't told us what denomination, but he has told us they have no numismatic value, meaning that they're "newly" (if you will) mintedFrom 31 USC 5112(a)(9), for example, dealing with a $10.00 American Eagle: A ten dollar gold coin that is 22.0 millimeters in diameter, weighs 8.483 grams, and contains one-fourth troy ounce of fine gold. Please let us know how we can improve this page. Then comes the law. Did our house get taken out of the trust? Listed personal property is a type of personal use property. In addition, the position described above is inconsistent with the reality that when sold the gain in Krugerrands (and other gold coins), gold bullion, and shares in ETFs that invest in gold bullion is taxed as if they are tangible personal property." Holding period might matter as well. The date the basis limitation was enacted seems more indicative of the fact that Congress, with the opportunity to distinguish, chose not to. [1]. For those who are interested in life income, a gift annuity or charitable remainder unitrust are both reasonable alternatives to giving gold outright. Tangible personal property is everything other than real estate that has value by itself. A limited liability company or a limited partnership may also be established for the purpose of owning firearms. It also has securities that can be converted easily into cash. But another purpose in executing a living trust is usually to reduce the possibilities for disputes among your family members. To avoid any confusion as to what a person considers to be the tangible personal property a Will should include its own definition of that term and specifically carve out of that definition any items that the person may want to leave specifically to one or more persons, or perhaps fall in the typically larger rest and residue provision of the Will. This is how all the cases come down on it on the recognition side. A tangible asset is an asset that has a finite, transactional monetary value and usually a physical form. Therefore, the Canadian Maple Leaf gold coin is property rather than money for purposes of section 1031(a) of the Code. Rul. So, if your county taxes your personal motor vehicles each year, your tax bill will be based on the perceived market value of the vehicle. 7) A. If you turn a $10 face vlaue gold coin in to the Federal Reserve, they'll give you a $10.00 Federal Reserve Note (i.e. It is important to remember that if you are preparing a separate statement or list, it may only serve to distributetangible personal property, not cash, securities, negotiable interests or services. Dennis points are more than well taken. And the law hasn't quite caught up to this new paradigm. An ounce of gold sells today for about five times what it sold for ten years ago. Someone gives it to me for services rendered. If I do work for a client and get paid with a Koala Bear, a car, gold coins, a piano, a house, a computer, or whatever, it's taxable. From the RR: Obviously, if one side of a 1031 involves money, it would be cash consideration or boot. Gotcha. (301) 441-2420. Call it personal property, if you will, but the cases haven't really gone that far. They have no numismatic value. An unreferenced PLR that was withdrawn and not published isnt any help. Experienced Estate Planning Attorney, Elga A. Goodman, can help you with all your estate planning needs. Conventionally, for something to be considered tangible property, it is (in the words of an accepted legal dictionary): "property that has a physical form and substance and is not intangible. What are tangible items in a will? Per Rev Rul 69-63 the IRS ruled that gold coins that do not have any numismatic value are more akin to money that therefore are not considered tangible personal property for donation purposes. School Dist., 2008 WL 4441957 (5th Cir. In comparison to intangible personal property, tangible property can be touched. And you're only talking about those state that actually impose a tax. Executors Corner - Information for Executors & Trustees, Copyright 2023 Nolo | The rules and laws pertaining to the possession and transfer of Asian Ivory is detailed and complex. Foreign currency is not "money". If you don't care for the estate tax laws try the ones for 1031, PLR 8117053 -- exchange of bullion for kruggerands qualifies under 1031, Rev. But then again, maybe the IRS is re-thinking its position here, and its position in the subsequent PLR, as a few places have noted. Please do not include personal or contact information. Tangible personal property in the pour over will and trust is left to 4 adul . Fair enough. Now, with all that said: I readily admit that, on the realization front, gold coins are treated as "property other than money." Often, a Will will leave all such tangibles to a spouse or to children. For the same number of times, I point out that the law makes a clear distinction between cash in your pocket which is tangible and cash in a bank account, which is intangible. But, if I actually had an opinion on it, it would be this: Using face value for realization purposes smells bad, so the courts made up a test to deny such treatment. That way, you can update that list periodically, without the expense of having to update your Will. As a result, the long term capital gain realized when an investor sells these shares is subject to a maximum federal rate of 15%. In a Florida estate some gold coins were listed on a probate inventory listing supplied by the estate trustees and lawyers. That might work best for you. I'd bet a gold coin on it. 439.2) Sec. The calculation of your tangible personal property (TPP) is primarily used for taxation purposes. 2008). Settled law when it comes to estate taxation. Under that rule, a sale of canned software was considered to be a sale of tangible personal property, as is a sale of prewritten computer software as defined in new R.C. akin to appreciated stock held for the LT]we have a deduction of 15 cents. SmartAsset does not review the ongoing performance of any Adviser, participate in the management of any users account by an Adviser or provide advice regarding specific investments. If you really want my opinion, it sounds a like money, but that might be a stretch (I know, a legal tender U.S. coin being treated as money). The amount realized from the sale or other disposition of property shall be the sum of any money received plus the fair market value of the property (other than money) received. In most states, a business that owned tangible property on January 1must file a tax return form with the property appraisal office no later than April 1in the same year. Precious metals like gold, silver, or platinum, are another example of tangible assets. How about finding a source that thinks the PLR *wouldn't* be affirmed? LPP includes all or any part of any interest in or any right to the following properties: To determine the value of many LPP items, you can have them appraised by a . I researched this some and could not find a definite answer. Yes, I hear the laughter, Dennis. You can certainly touch and feel the stock certificate. Logically, the donation should be treated like a donation of appreciated stockI'd treat it that way for deduction purposes, but I'd jump through all the appraisal hoops, reporting hoops, etc., as if it were tangible personalty instead. . John Franklin, age 72, purchased 100 ounces of gold bullion for $31,000. And somehow you figure 170 is going to be different? As used in Title LVII of the Revised Code: (A) "Personal property" includes every tangible thing that is the subject of ownership, whether animate or inanimate, including a business fixture, and that does not constitute real property as defined in section 5701.02 of the Revised Code. Tangible personal property is a broad category of items, covering everything from valuable family heirlooms to the contents of your junk drawer. When boats or cars are still subject to a lien, these items will need to be sold in order for the title to be transferred out of the decedents name. All rights reserved. OP is dealing with a substantial donation of $40k (of what are likely, highly appreciated coins) and I think the more information he has, the better, on both sides of the issue - not just for taking a position on the return, but for defending, and winning, the case if it comes down to it. Of course, they've never defined "circulation." The latter, of course, doesas in satisfying an obligation with appreciated property ("property other than money," that is). Purchase gold coins, such as South African Krugerrands, Canadian Maple Leafs, or U.S. American Eagles. "Tangible personal property" is defined in General Laws Chapter 64H, Section 1(15) as, "personal property of any nature consisting of any produce, goods, wares, merchandise and commodities whatsoever, brought into, produced, manufactured or being within the commonwealth, but shall not include rights and credits, insurance policies, bills of exchange, stocks and bonds and similar evidences of indebtedness or ownership.". But that's only because the cases didn't need to. The article had nothing to do with OP's question about Sec 170. They are still tangible personal property. Investments in gold can take a number forms, all of them readily marketable. Special valuation of a wine collection or alcohol by other spirits may require the use of a qualified appraiser. Tangible personal property (TPP) comprises property that can be moved or touched, and commonly includes items such as business equipment, furniture, and automobiles. A safe deposit box is not an item of tangible personal property, but the box could include items of tangible personal property. Not sure how. When appraising your tangible personal property, an assessment may include your: Tangible personal property is taxed ad valorem. Then you are categorically calling the people who make this assertion liars? Thus they appear to be USC Title 37 5112(a)(7) coins. The graph below shows that the average price of gold has risen in each of the last ten years. If that is not a practical option, registered U.S. Mail is commonly used (FedEx and UPS will not ship gold). Thanks in advance for your help! More careful planning is required for the following types of assets that are governed by federal, state and local law: Firearms - The mere possession of certain unregistered weapons may be a federal and/or state crime. Just an observation. Be glad too. Therefore, the nature and character of the gold bullion and the Canadian Maple Leaf gold coins are the same, and they qualify as "like kind" property as that term is used in section 1.1031(a)-1(b) of the regulations.". If the courts would like to call these coins "property other than money," for purposes of 170, then great. (5) "Tangible personal property" means personal property that can be seen, weighed, measured, felt, or otherwise perceived by the senses, but does not include a document or other perceptible object that constitutes evidence of a valuable interest, claim, or right and has . What i really is is "appreciated money"and we should be able to deduct the value of that. Just redo the list. Examples Neither the RR or PLR deal with recently minted U.S. Gold Coins, as I have told you many times. He offers no evidence to support this position and apparently he seems to think that OP should be comfortable walking into Tax Court with nothing but the language of the PLR. They will use the vehicles make and model, manufacture year, mileage and condition to determine what its potentially worth for taxation purposes. Therefore, the Will should make clear what the intent is concerning the distribution of the box and the items in the box. Your position then is that my example stands. It describes a wide range of items used in the course of conducting business or for operating a rental property. Intangible property. The property type doesn't matter. In PLR 9225036, dealing with a proposed gift of Krugerrand gold coins to a charitable remainder unitrust, the IRS said: However, the IRS apparently was ready to reverse its position in a later PLR that was withdrawn because the taxpayer died. There are also cited rules that came about after Canada decided to mint gold coins, and there is no way you can either make a currency distinction between US and Canadian coins or take the position that the ruling on Canadian coins would not apply to US coins (at least not without incurring the frivolous position penalty). Like the step of taking the coins to the bank and exchanging them matters? After all, that's what most people do when they write checks to charitable organizations. So, by this definition, such a good coin wouldn't be a collectiblemaybe wouldn't be "property other than money," leading one to conclude that it might be money. I hope the OP finds the debate helpful, however. Animal shelters or rescues may be a good choice. If we applied the realization rule (stock received for services rendered or stock sold), to the charitable donation situation, I'd have gain to report and an offsetting cash contribution. This includes property that can be touched, moved or consumed and excludes real or intangible property. Tangible property also includes all miscellaneous assets that do not inherently qualify for any other class life, such as jewelry, toys, and sports equipment. McNamee Hosea You keep hanging on to the status quo, how it is under the existing rulesrules that came about before the U.S. decided to mint gold coins (again). Identifying ones unique assets and carefully considering how best to distribute ones tangible personal property helps to avoid disputes among ones beneficiaries. So, I pointed to the one place in the IRC when there's a relevant reference to Gold - Sec 408 - wherein the gold coins at issue (I'm pretty sure) were carved out as not being treated as a collectible. Reg. But the objections to the PLR are more than just "someones opinion." The value of tangible personal property may range from very nominal value e.g., old pots and pans to considerable value, for example, art, stamps and coins, gold bullion and gold and silver bars. These are items that you own, but that dont have a title document (like a deed, or a pink slip). The trust may cover one or more pets and continues in place until all pets for whom the trust was established is no longer living. It speaks to rare coins, because as you noted, but would rather forget, the ruling predates. Rev. The only states that exclude tangible personal property from taxation altogether are: The process of levying taxes on tangible personal property varies wildly from one state to the next, and may even vary between different counties and local municipalities. When investors become skittish about the economy, many of them sell their publicly-traded securities and buy gold. But the carve out, although it doesn't mean that much, at least in my mind, makes one wonder if the implication is that the carved out coins are, in fact, "money." And whose to say what OP's holding purpose was? Sure, it would be easy to do that, but I'm not so sure its appropriate. My writing gets easier, as you dig yourself into a deeper hole. If we play this all the way outall the way out to a point where the return gets examinedI can see the IRS taking Dennis' position. the deduction is not limited to face value)? To claim the deduction, the tax must only apply to personal property owned and bought for the business operation, be based on its fair market value, and be charged on an annual basis (as opposed to a one-time basis). Going down the 1031 path will get us nowhere in this inquiry. Thank you all for the input! An article written by someone isnt guidance; its someones opinion. Or, in this case is the dime now tangible property, not money, and he gets his basis, 15 cents, as a deduction. Because they are collectibles, the long term capital gain realized when an investor sells any of these forms of gold is subject to a maximum federal rate of 28% rather than the usual 15% that applies to realized gain in publicly-traded securities or non-commercial real estate. When the charity in question calls the donation "like kind" property the statement has no meaning. Outright gift of gold bullion You're awesome! However, if these items are reproduced without modification, they are considered tangible personal property and subject to sales or use tax. Valuing Tangible Assets. Tangible property is personal property that can be physically handled, including but not limited to: Clothes; Jewelry; Furniture; and Vehicles. The existence of a fiduciary duty does not prevent the rise of potential conflicts of interest. Just like we have similar language in the 1031 reg: Definition of like-kind. As used in section 1031(a), the words like kind have reference to the nature or character of the property and not to its grade or quality. These trusts allow for money to be set aside and held in trust giving the trustee the power to make distributions to a custodian of the pet for the pets benefit. Dear Liza: I collect estate jewelry, and ancient and antique coins. It's money for crying out loud. And Dennis might actually win this onebut that won't stop me from arguing. They didn't acquire any added value as "collector's items." I'm afraid you will not find one, which leaves the issue unresolved. Makes no sense to me, but. Alcohol The transfer of valuable wine collections or other alcohol is governed by state law and may require a license. Definition and How It Works, What Is a Fixed Asset in Accounting? ii. Personal property comes in two forms. Even though an ETF share is just paper (or more likely just bytes), it represents ownership of the metal itself and thats enough to make it a collectible for tax purposes. However, certain types require special attention because of laws regulating their ownership, registration, and possession: Firearms Alcohol Ivory, furs, and other artifacts made from endangered species preferred parking dodger stadium. My mind is closed from the standpoint that I do not believe we should always apply old paradigms to new issues. "Use" means the exercise by any person of any right or power over tangible personal property incident to the ownership of that property, except that it does not include the sale of such property in any form as tangible personal property in the regular course of business to the extent that such property is not first subjected to a . Since the gain in all of these items when sold is taxed at the rate applicable to tangible personal property (up to 28%), you may wonder why there would be any doubt about their deductibility. For charitable purposes, if treated as "money," the deduction would be 10 cents. In OP's case, I think we fail the test b/c coins will be immediately sold. It is obvious that the IRS has had some trouble with it too. Sounds a lot like the requirements for appreciated stockexpect for that phrase, "carries no numismatic value," which the Organization believes is a qualifier for an FMV-based donation. Julia Kagan is a financial/consumer journalist and senior editor, personal finance, of Investopedia. You know, an actual ruling - or case - involving U.S. legal tender gold coins given as a donation. Summary New asset classes arise. The same rules with respect to interstate sales that are applicable to sales and purchases of other tangible personal property also apply to sales of coins, silver and gold bullion, and other precious metals. Who knows? Assume that the trustee is able to sell the bullion a few days later. This has certainly been the case over the last ten years. Point is taken. You can touch it, move it and play it. ******************** ("Company") intends to sell gold coins for delivery to Massachusetts purchasers. Tangible personal property values are taken into account for both personal and business tax purposes. Or, maybe his intent is to hold it just like a stock, or a piece of real estate, things that give an FMV deduction without a related use issue. The bullion value at the time of the donation is 40K and the charitable organization immediately sells the coins (unrelated use for the charity) . are gold coins considered tangible personal property. This is not meant as disagreement, merely a comment. Thank you both Chris and Dennis for your insight. I would think closer to behind the eight ball, but I certainly don't disagree that the PLR can be relied on to avoid penalties. 120, par. The gold and silver coins clearly are tangible property, in that they can be felt or touched. Maybe they've changed their mind. Consider working with a financial advisor as you develop a tax strategy. 129 Mount Auburn Street I dont think that theres an answer to this question other than the PLR, so if the FMV of the coins is more than cost, you might as well take the approach that best favors your client and deduct FMV. You dont want your bequests to result in disputes among your heirs or in court proceedings because the items were not gifted in a legally correct manner. By the way, 1001(b) [amount realized], makes no distinction between intangible money and tangible money, Mot one that changes the definition of the coins as collectibles. The article involved realization only and took no position on anything. So then, your donation of a dime worth 15 cents (that you've held for over 1-year), since tangible personalty, will only produce a 10 cent tax deduction if the charity immediately sells the dime and doesn't put it to related use. Inventory and household goods are excluded (section 19 2.001 (11) (d) , F.S.) The Revenue Ruling (and the PLR) both say qualifying exchange. Sure, if it has the value and the language about no goods/services received. It can be valued just as easily, you just weigh it instead of looking it up on a stock chart. 16 Tax Deductions and Benefits for the Self-Employed, Tax Deductions That Went Away After the Tax Cuts and Jobs Act, Example of Taxes and Tangible Personal Property, Intangible Personal Property: Definition, Types, and Example, What Is a Tangible Asset? I don't dispute that and never have. http://www.pgdc.com/pgdc/tangible-personal-property. Household furnishings, books, tools, jewelry, motor vehicles and boats are some of the items which fall into the category of tangible personal property. If we treat as regular personalty, we have the related use problem. Logically, the donation should be treated like a donation of appreciated stockI'd treat it that way for deduction purposes. The fact is, however, the courts have repeatedly held that these coins are "property other than money. The charity, of course, will need to file a Form 8282 if it sells the bullion or ETF shares within three years of receiving the gift, which almost certainly it would. So what if it says "like kind." Again, not that it matters. If Mr. Franklin were to sell his bullion instead and invest his after-tax proceeds in bonds yielding 4.0 percent, his annual after-tax income would be about $3,250, half the $6,500 cash flow from the gift annuity. Please remove any contact information or personal data from your feedback. 5739.01(DDD). ? Depreciable property is an asset that is eligible for depreciation treatment in accordance with IRS rules. Examples of tangible physical property include automobiles, furniture, jewelry, computers, machinery, art objects, rugs, dishes, curtains, household appliances and tools. Consulting with a qualified financial advisor can help you prepare for any applicable TPP taxes and even reduce your taxable amount. My client says they are 1.0oz $50 American Eagles. . Given the potential for error, its best to consult with an attorney. contact the Massachusetts Department of Revenue. Heres why. Of course, even if treated as money, IRS could say, "Fine, you get to deduct the face value." This is especially true if your total TPP value exceeds a specific number. Therefore, since PLR 9225036 concluded that gold bullion coins were not personal property for purposes of IRC 170(a)(3), we can safely take a position on a return that a client may claim FMV (not cost basis) for a donation of those coins. Planning for Tangible Personal Property from the Mundane to the Unique, trusts for the benefit of younger or disabled persons. With Examples. Wow, DAJCPA. Things evolve and things change. Tangible property is physical assets such as collectible coins, jewelry, military medals, stamps, antiques, savings bonds or other physical items. No other relevant details. Amortization vs. Depreciation: What's the Difference? Think about it. I wish I had more time to give back to TA. Ckenefick and Dennis, watching you debate over this is certainly entertaining, but I dont think its been very helpful to the OP. But I think everyone is laughing at you. Anyway, I get it. The more information one can obtain regarding an issue, the better. The Regan era coins are like kind with gold bullion. Give me a cite that speaks specifically to U.S. gold coins minted under the Reagan act. All along, I've said your 1031 path was misguidedbecause it is. Implication being, maybe these coins are treated as money. Disclaimer -- Legal information is not legal advice. Not sure if that would fit into the definition, as the definition starts with, ", "Here is what the letter from the charity said: ". It goes over the subject but does not get into the nitty gritty, leaving one to wonder. Own shares in a gold mining company or in an Exchange-Traded Fund (ETF) that invests in gold mining companies. These coins are minted by the Republic of South Africa, and each coin contains exactly one ounce of gold. Property taxes in America are collected by local governments and are usually based on the value of a property. The coins in the RR did take on collector's value and this is why the RR made mention of it. In other words, substantial authority is certainly nice, but it doesn't mean you're gonna win. You inquire whether such sales will be subject to the Massachusetts sales or use tax. Intangible personal. Typical items include clothing, jewelry, art, musical instruments, writings, furnishings and other household goods. Collectible long-term capital gains, such as the sale of physical investment in gold, are taxed at 28% rather than 15%. Any other tangible personal property that the IRS determines is a "collectible" under IRC Section 408 (m). Rev. This is in contrast with intangible property, which cannot be physically touched and is not corporeal in nature. 5703-9-46(A)(7) do differ somewhat on the treatment of "customized" software. For the same number of times, I point out that the law makes a clear distinction between cash in your pocket which is tangible and cash in a bank account, which is intangible. More advanced planning can involve the use of gun trusts as owners for NFA guns to avoid transfer restrictions. And if they're circulating, guess what: They constitute money under the courts' own test. [citation needed]In English law and some Commonwealth legal systems, items of tangible property are referred to as choses in possession (or a chose in possession in the singular). Chris writes: They have value only because of their gold content. Tangible personal property is always depreciated over either a five- or seven-year period using straight-line depreciation but is eligible for accelerated depreciation as well. c) Carries no numismatic value.". Boats, depending on their size, are subject to different regulations. "However, the IRS apparently was ready to reverse its position in a later PLR that was withdrawn because the taxpayer died. Rev. Obviously, an author's opinion in an article isn't authoritative "guidance." If you treat as "money," you run the risk of being able to deduct their face value. South African Krugerrand coins are more akin to money than to coins that have value as collections items. First, here is what you wrote: Rev. Most business owners will need to disclose the property they hold such as machinery, inventory, office furniture and more as well as the year it was purchased. With the gold market perhaps beyond its peak and ever volatile, some of these donors may be ready to put the value of their gold to good use by making a charitable gift. Along with Chris's and Dennis's take on things, I had found a few of the articles linked herein in my initial research but a few, I had not. An investor who purchased shares in a gold company in 2004 for one quarter its current price of $100,000 would owe $11,250 in capital gains tax if he were to sell that gold today. I dispose of it via sale, I have a gain to report (realization). (35 ILCS 105/2) (from Ch. Property owners who lease or rent tangible personal property must also file this return for tax purposes. These personal and business taxes are assessed on certain tangible personal property items, depending on where you live and what you own. Legal Tender. The calculation of your tangible personal property (TPP) is primarily used for taxation purposes. easy to value; the PLR does mention holding purpose, although I agree, the PLR isn't worth a ton] (2) plus, they're denominated, U.S. Legal Tender [a la regular coinage, which is treated as money] and (3) I'm not convinced the existing charitable rules contemplated the U.S. getting back into the gold minting business and (4) there's a carve-out in 408(m) and (4) the government touts them as investments and (5) if you turn one in to the Federal Reserve, you get face value only, indicative of money. In most places there is a sales tax added to the purchase of your 12 cent dime. So, in a nutshell, even if we win on the "Ok, we'll treat it as money and not as property, and not as tangible personal property," we might lose on the deduction amount: we might only get face value. The bullion value at the time of the donation is 40K and the charitable organization immediately sells the coins (unrelated use for the charity) .

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