For reference, the unfavorable tax treatment can be found in. c 64I, 2). I tend to think an American gold coin, legal tender, like the OP's gold coin, is more akin to an appreciated stock than a painting. 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. This list may be revised by the testator (the person bequeathing his/her estate) as often as desired during his/her lifetime, and does not require an attorney, witnesses, or notarization. [2], "A second Kruggerand ruling submitted some nine months later, which was withdrawn because of the tax payers death, appeared to indicate that IRS had changed its mind." 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. 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. Dennis says, "bull," however. These personal and business taxes are assessed on certain tangible personal property items, depending on where you live and what you own. Please do not include personal or contact information. Dear Liza: I collect estate jewelry, and ancient and antique coins. ", So? Tangible personal property is generally defined as personal property that can be touched. Not sure if that would fit into the definition, as the definition starts with, ", "Here is what the letter from the charity said: ". The problem with gold coins, and the ones in question, is that they are authorized legal tender with a face value. Tangible personal property is a tax term describing personal property that can be physically relocated, such as furniture and office equipment. Stock, real estate, inventory, taxidermy property, patents, partial interests, self-created, etc. For purposes of this subsection, the term collectible shall not include. Clothing, vehicles, jewelry, and business equipment are examples of tangible personal property. Property taxes in America are collected by local governments and are usually based on the value of a property. (c) Purchase of Coins and Bullion as Investment. Shall we start a thread about *Bitcoin?*. 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 Actually, I left out my basis in that dime, so not sure how you come to that conclusion anyway. the deduction is not limited to face value)? In law, tangible property is literally anything that can be touched, and includes both real property and personal property (or moveable property), and stands in distinction to intangible property. It is a crime to distribute a gun to a prohibited person. The existence of a fiduciary duty does not prevent the rise of potential conflicts of interest. You can't extend the logic b/c the RR logic applies to the specific coins involved in the ruling. Therefore, the Will should make clear what the intent is concerning the distribution of the box and the items in the box. 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. I myself don't think we should treat a dime as personal property. Proof of charitable contributions refers to the substantiation that the Internal Revenue Service requires to claim a donation as a tax deduction. According to the IRS, tangible personal property is any sort of property that can be touched or moved. 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. A growing number of states have enacted laws permitting pet trusts. That is code specific. Heres a look at what tangible personal property is and how it can affect your tax bill. 129 Mount Auburn Street So, I would say that I have a pretty open mind. Finding a qualified financial advisor doesnt have to be hard. I'd bet a gold coin on it. There is a strong case to be made that these coins are not "property" and therefore, cannot be "tangible personal property." Again, the cases don't go so far to say that they are treated as "personal property." I think we can do so with a great many things. [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). 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. With Examples. It's pretty well settled that foreign currency is treated as personal property under the tax code. Sure, if it has the value and the language about no goods/services received. 1.170A-13(c)(2). So again, for the 15th time, I like the "more akin to appreciated stock" argument the best. Mass.gov is a registered service mark of the Commonwealth of Massachusetts. 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. This is clear. Because (1) they're more like stock held for long term appreciation than they are like a painting [i.e. And, I've already told you what I think about your gift and estate tax references. Actually, the law isn't written, because money isn't defined anywhere. Intangible personal property is an item of individual value that cannot be touched or held. Each evidences something else. 5739.01(DDD) and O.A.C. Dennis points are more than well taken. Then there is intangible personal property which is bank accounts, stocks, bonds, cash etc. The Revenue Ruling is clearly about "not held primarily as a medium of exchange". Maybe his intent is to buy some land with it, like Tom Selgas did. 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. Tangible personal property in the pour over will and trust is left to 4 adul . Rul. And if they're circulating, guess what: They constitute money under the courts' own test. So for example, while a parent may state in her Will that her estate should be equally divided between her two children, she may attach a statement specifying that. What is Tangible Personal Property? Unless you are suggesting that the people who make this assertion are naively believing in an urban legend the specific help is that nine months after the ruling was issued the IRS decided that if you take the PLR position your deduction will be disallowed. Software as a Service. You conveniently left out of the parts about (1) the coins being rare and (2) the coins acquiring value as collector's items. Until a ruling comes out, we just don't know, as I have also told you many times. I have no problem with a taxing a 1031 exchange that involves coins. For charitable purposes, if treated as "money," the deduction would be 10 cents. Did our house get taken out of the trust? Property owners who lease or rent tangible personal property must also file this return for tax purposes. In my opinion, that's no proof at all. Did he reveal the location of this article? and substantial capital gains to go with them. The "gold masters" allowed the corporate mainframe to communicate directly with the store computers. The twisting reflects reality. Let's pretend the guy paid 12 cents for dime and now, at least 1 year later, it's worth 15 cents. Household furnishings, books, tools, jewelry, motor vehicles and boats are some of the items which fall into the category of tangible personal property. The value of these coins lies in the value of the gold contained within them rather than in their face value. Please limit your input to 500 characters. If you actually read what Dave wrote, he was speaking about "guidance"as in cases, rulings, and the like. In other words, substantial authority is certainly nice, but it doesn't mean you're gonna win. Also, because the coins have both intrinsic and marketable value, in and of themselves, they cannot be considered intangible property, without more. She lives with her family in Campbell, California. And there do not seem to be any opinions supporting. Executors Corner - Information for Executors & Trustees, Copyright 2023 Nolo | Tangibles can have considerable financial value . "However, the IRS apparently was ready to reverse its position in a later PLR that was withdrawn because the taxpayer died. Part of the problem, as I see it, and as noted a few times, is that we're dealing with a law (charitable contribution of tangible personalty) that came before the Gold Bullion Coin Act of 1985. Often, a Will will leave all such tangibles to a spouse or to children. ? In addition, and this includes a gift of shares in a gold bullion ETF, the donor will need to file a Form 8283 that describes the gift. Julia Kagan is a financial/consumer journalist and senior editor, personal finance, of Investopedia. This has certainly been the case over the last ten years. c. 64H, 2; G.L. Tangible assets are physical and measurable assets that are used in a company's operations. The money collected is generally used to support community safety, schools, infrastructure and other public projects. Chris writes: Part of it, I think, is the fact that the U.S. had been out of the gold minting business for quite some time before Reagan. Typically, individual retirement accounts (IRAs), which are tax-advantaged, can be used to hold tangible assets, such as gold and silver coins. 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. contact the Massachusetts Department of Revenue. You make no sense. Likewise, I wouldn't bet the farm on your "out of context" estate tax rulings, as I mentioned above. Since the value of the coins is more than $5,000 and the donation is not based on the coins face amount but rather their precious metal value, the client must get a qualified appraisal. Tangible personal property is a tax term describing personal property that can be physically relocated, such as furniture and office equipment. 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. Most charities don't say much more than "Thank you. Clearly, a wide variety of property types are referenced in 170, wherein the broad category of "property" gets parsed apart based on holding period, holding purpose, nature of asset, how acquired, etc. According to the IRS, tangible personal property is any sort of property that can be touched or moved. For large amounts of gold, other delivery options will need to be explored, such as delivery directly to a dealer. (4) "Personal property" means property that is not real property. This might not be what you could actually sell it for today. . Accordingly, it may be best to specify that these types of assets will be sold or provide that a beneficiary may have the option to use his or her part of the estate to buy the asset from the estate at its appraised value. Effective July 1, 2020, there is a new law in Florida (Section 731.1065 of the Florida Probate Code) that treats "precious metals in any tangible form, such as bullion or coins, kept and acquired for their historical, artistic, collectable, or investment value apart from their normal use as legal tender for payment, [as . For those who are interested in life income, a gift annuity or charitable remainder unitrust are both reasonable alternatives to giving gold outright. The client must also complete Form 8283 (including Section B) and attach it to the return. Estate Planning for Art and Personal Property. Ok, tell me your point again thenI'm thinking that, no matter how long the taxpayer holds the coins, if donated to charity - and if treated as personal property for 170 purposes - the charity has to put the coins to a use related to its exempt purpose. Dennis is acting like he telling us something new, which he's not. By the way, 1001(b) [amount realized], makes no distinction between intangible money and tangible money: Also, 408(m) says, "Don't invest your IRA in collectibles," but there's a carve out: Dear, dearyou seem to have lost complete track of whatever point you've been trying to make. Note the "like kind" language in the referenced letter from the charity. Then, the appraiser will compare these values to . 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. Summary 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. That way, you can update that list periodically, without the expense of having to update your Will. Disclaimer -- Legal information is not legal advice. Best Review Site for Digital Cameras. A .mass.gov website belongs to an official government organization in Massachusetts. As usual, we are a bit ahead of our time here on TA. Reg. 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). So, that's all I know. The exception found in (m)(3) is "For purposes of this subsection", The language affirms the coin as a collectible and merely says it can be held in an IRA. That you feel a deduction under 170 would be disallowed if it were made in foreign currency? The ability to document ownership and origination of ivory heirlooms may be extremely important to provide to the executor of ones estate and to the beneficiaries. To boot, I can deduct the FMV. preferred parking dodger stadium. If the courts would like to call these coins "property other than money," for purposes of 170, then great. (Allowed only when the bullion is sold. Precious metals like gold, silver, or platinum, are another example of tangible assets. The taxable amount is determined by factors such as fair market value and the items age. In fact, 43 states use an appraised TPP value when calculating state taxes on personal property, business property or both. This is not meant as disagreement, merely a comment. Still, its nice to see the ludicrous nature off my example woke you up. We'd like to know about Section 170. 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. 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. And, I'm also smart enough to know that OP's client has a pretty good case to make some waves with this issue. I bring up 408 only because nowhere else, aside from Sec 613 (percentage depletion), will you find the word "Gold" in the IRC. Point is taken. Anyway, these debates are good. Translation: They aren't rare. 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. The offers that appear in this table are from partnerships from which Investopedia receives compensation. They will use the vehicles make and model, manufacture year, mileage and condition to determine what its potentially worth for taxation purposes. ) or https:// means youve safely connected to the official website. However, this is what your state, county or local municipality believes the value to be according to their data. Just an observation. . 00:00 00:00 This isn't my article, but here's some stuff on it: Thanks, Chris. 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. But if you want to apply it, go ahead. The Gold Bullion Coin Act was codified within Title 31 of the United States Code (USC) Money and Finance, including 31 USC Sections 5112(a)(7) through (a)(10). Again, not that it matters. 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. 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 . 2 & Ch. Use this button to show and access all levels. I report the value as income (realization). If the property is sold in the first year, the charitable deduction is reduced to basis. They are still tangible personal property. The coins in the RR did take on collector's value and this is why the RR made mention of it. Yah I read that one (at least some of including the section on coins, anyway). In these cases, the county will also provide a valuation table that can be used to estimate the value of the property based on its age and useful life. Rul.69-63, we conclude that South African gold coins are not tangible personal property within the meaning of section 170(a)(3) of the Code. This one certainly didn't. Be glad too. New interpretations abound. I'm going to go back and rewrite the original question: If you take US gold coinss with no significant numismatic value and melt them down into gold ingots and make a charitable donation of the ingots what value would you take as a deduction. 82-96 -- exchange of bullion for Canadian Maple Leafs qualifies, But then, when you agreed with Fogel you didn't seem to notice that he dismissed all of your positions as irrelevant, "Because the Canadian Maple Leaf gold coins are bought and sold for their gold content, they are bullion type coins. Personal property comes in two forms. It includes furniture, fixtures, tools, machinery, signs, equipment, leasehold improvements, supplies, leased equipment and any other equipment used in a business. It speaks to rare coins, because as you noted, but would rather forget, the ruling predates. Possession of certain items are considered to be strict liability crimes that carry severe penalties. 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. Argument can be made that they're "money" under the tax code, since case law brings up "circulating" as a critical distinction between "money" and "property other than money." This is especially true when the beneficiaries of ones residuary estate are intended to be different than the beneficiaries of ones tangible personal property. Since when is "personalty" defined by "holding purpose?" This is contrasted with intangible personal property, which includes stocks, bonds, and intellectual property like copyrights and patents. 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. This is because this type of property usually does not increase in value over the years. A properly drafted Will that helps your Executor deal with these items appropriately will make their job easier and be appreciated by your beneficiaries. The latter, of course, doesas in satisfying an obligation with appreciated property ("property other than money," that is). The graph below shows that the average price of gold has risen in each of the last ten years. (Note that gain reported under the four-tier system for taxing unitrust payments will be taxed at 28% until all gain attributable to the bullion has been distributed). GCM 33791 was issued in 1968, before the basis limitation rule of IRC 170(e)(3)(B) was enacted in the Tax Reform Act of 1969 (P.L. I dispose of it via sale, I have a gain to report (realization). Art, valuable collections, pianos and other fragile items, are expensive to insure and to ship. Makes no sense to me, but. 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. 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. What exactly does "legal tender" have to do with the issue? R.C. Client donates American Eagle gold coins. The term includes articles even if held for investment purposes and encompasses tangible property . They didn't acquire any added value as "collector's items." "Collectibles" is a term of art to designate something subject to a special 28% tax rate, or something that can't go in an IRA. Your gift is tax deductible to the extent allowed by law" and let it go at that. akin to appreciated stock held for the LT]we have a deduction of 15 cents. But another purpose in executing a living trust is usually to reduce the possibilities for disputes among your family members. Who knows? Thank you all for the input! I donate it to charity, I have no gain to report. Tangible property is physical assets such as collectible coins, jewelry, military medals, stamps, antiques, savings bonds or other physical items. Liza is also the author of Busy Family's Guide to Estate Planning: 10 Steps to Peace of Mind. Yeah, me too. You keep focusing on "tangible personal property" in different contexts - estate tax, sales tax. I'm also smart enough to know that OP's client has a pretty good case to make some waves with this issue. A letter from the property appraisal office will usually be sent by mail to the company notifying it to file taxes on its property. It's really a muddled thing with legal tender gold coins: there's cost, face value and real value. I don't dispute that and never have. Why would you think the exchange is taxable? An article written by someone isnt guidance; its someones opinion. So, estate jewelry, and coins, and the like are what's called "tangible personal property" in estate planning. Absolutely! The article involved realization only and took no position on anything. If the issue is unresolved it would be only because no-one wants to try your method and face the preparer penalties. 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. The property appraiser places a value on the property, and the tax amount due is calculated by multiplying the property value by the tax rate set by the tax authorities in the state. If you guys are thinking, "Dennis seems to be focusing on the status quo and ignoring the fact that the U.S. has started minting gold coins again," you would be right. 2. And note, the RR *didn't* say, "the coins can be felt and touched, so they are tangible personalty property.". You sell a dime for more than 10 cents you will be taxed at collectible rates. Please limit your input to 500 characters. Paper assets that represent value, such as stock certificates, bonds, and franchises, are not tangible property. This compensation may impact how and where listings appear. Foreign currency is not "money". Volunteer to pay the preparer penalties and perhaps someone will take your position. Household furnishings, books, tools, jewelry, motor vehicles and boats are some of the items which fall into the category of tangible personal property. Someone gives it to me for services rendered. The law also (in all cited cases) makes a clear distinction between currency value and market value. If your collection is really valuable, you might want to transfer it to a living trust, to avoid a probate proceeding upon your deathbut thats prettyunusual andonly appropriate if the value of those tangibleitems are high, such as with a Steinway piano, or vauable jewelery. 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.". Heres why. Bear in mind the law relating to treatment of coins as tangible personal property has application outside of 170. You talk about the ruling predating and somehow can't recognize the extension and why it still applies. Now, with all that said: I readily admit that, on the realization front, gold coins are treated as "property other than money." therefore, they can be measured and are considered tangible personal property. Not one that changes the definition of the coins as collectibles. We go by face value. When the charity in question calls the donation "like kind" property the statement has no meaning. No exemption is available for distribution made in accordance with a Will or a Trust. Of course, you said, "bull," which just goes to show you didn't see the link between OP's coins and 408(m)and you didn't fully understand the true nature of OP's coins. What's interesting, these cases go to court because someone has used these coins in commerce, to pay wages, or to receive payment, but the courts say the coin type was "non-circulating." Taxpayer's should pay tax on the value of stuff they get. Cambridge, MA 02138 And when I say, "well, you're dealing with two completely different sets of coins," you wonder why I can't extend the logic of the RR to the OP's situation. Consider a stock held long-term. 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. And, if it's unresolved, we look to other things that might give us hint as to the right answer in the charitable context.