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Thread: Reportable Gold And Silver Purchases

  1. #1
    Join Date
    Mar 2008

    Default Reportable Gold And Silver Purchases

    This is from an article I found about what has to be reported to the government and what does not. Sorry if this is a repeat post.
    This comes from
    I have no affiliation with this site or company.

    Reportable Purchases

    Often, promoters will claim that the coins they offer are not subject to "reporting." Such statements imply the government requires gold transactions be reported. However, no government regulations require the reporting of the purchases of any precious metals, per se. If payment is made by cash greater than $10,000, however, it becomes a "cash reporting transaction." It is not the gold that the government wants reported but the cash. Such reporting applies to all business transactions involving more than $10,000 cash.

    Regarding cash transactions, Official General Instructions for IRS Form 8300 read: "Who Must File. - Each person engaged in a trade or business who, during that trade or business, receives more than $10,000 in cash in one transaction or two or more related transactions must file Form 8300. Any transactions conducted between a payer (or its agent) and the recipient in a 24-hour period are related transactions.

    This regulation applies to cash - greenbacks, paper money. It does not apply to personal checks, wire transfers, or money market withdrawals. When cashier's checks or money orders are involved, cash reporting may be triggered.

    Form 8300's General Instructions define as cash "a cashier's check, bank draft, traveler's check, or money order having a face amount of not more than $10,000." Using a cashier's check less than $10,000 would be a "cash transaction," but it would not be reportable because it is less than $10,000. However, two cashier's checks, each less than $10,000 but totaling more than $10,000 for a single purchase, would be considered cash and subject to reporting.

    Further clarification: If an investor makes a $15,000 investment in gold and pays with a single $15,000 cashier's check, it is not reportable. If, however, he pays with two or more cashier's checks each less than $10,000, the dealer would be obligated to report.

    Cash reporting requirements were not written specifically for the precious metals industry but for all businesses. The purchase of a car, boat, or jewelry, and payment with two cashier's checks, each less than $10,000 but totaling more than $10,000, would be a reportable transaction.

    Another example: an investor agrees to buy precious metals totaling more than $10,000, again say $15,000, and wants to make payments with money from two accounts. If the investor withdraws $8,000 from the first account and gets a cashier's check, and then gets another cashier's check for $7,000 from the second account, the transaction becomes reportable. A purchase of $30,000 and payment with two $15,000 cashier's checks would not be a reportable transaction. The significant amount is $10,000.

    Personal checks or checks drawn on the payer's own account are not considered cash. Form 8300's General Instructions read: "Cash does not included a check drawn on the payer's own account, such as a personal check, regardless of the amount. "

    Related Transactions

    Form 8300's General Instructions say "Transactions are considered related even if they occur over a period of more than twenty-four hours if the recipient knows, or has reason to know, that each transaction is one of a series of connected transactions." For example, if an investor agrees to buy $20,000 in gold but makes installment payments with cash in amounts less than $10,000, the purchase would be reportable.

    Bank Reporting

    It is often erroneously thought that banks report to the government all personal checks more than $10,000. Banks do not. But, a cash transaction exceeding $10,000 requires a bank to fill out and file a Cash Transaction Report (CTR). A cash deposit more than $10,000 to any bank or other financial institution account by an individual possibly would be reported.

    However, purchases of cashier's checks with cash for amounts $3,000 to $10,000 require banks to complete Monetary Instrument Reports (MIRs). (Some banks call them Monetary Instrument Logs.) MIRs are not filed with the government but are records that enable banks to help comply with cash reporting requirements. It is not clear when a MIR requires the completion and filing of a CTR, but an individual regularly purchasing cashier's checks between $3,000 and $10,000 would probably be reported.

    If a business reports a cash transaction, the customer will know it. Form 8300 requires name, address, citizenship, and social security number. It also asks for method of identification, driver's license, passport, etc. Additionally, Form 8300's General Instructions call for anyone filing a Form 8300 to "provide a written statement to each person named in a required Form 8300 on or before January 31 of the year following the calendar year in which the cash is received."

    Finally, Form 8300 General Instructions has a box to be marked if the transactions appear "suspicious." The box can be marked for transactions less than $10,000 if the recipient believes the purchaser is trying to avoid cash reporting.

    No one wants any red flags at the IRS. Unscrupulous dealers know this and use it to avert clear thinking; they use the threat of "reporting" to raise investor fear. This enables them to sell overpriced coins. Investors justify higher prices by thinking they are getting "non-reportable gold." No investor need be taken advantage of this way.

    Reportable Sales
    Customer sales to dealers of certain precious metals exceeding specific quantities call for reporting to the IRS on 1099B forms. The 1099B forms are similar to other 1099 forms taxpayers commonly receive; the "B" means they have been issued by a business other than a financial entity.

    Reportable sales (again, customer sales to dealers) apply to 1-oz Gold Maple Leafs, 1-oz Krugerrands, and 1-oz Mexican Onzas in quantities of twenty-five or more in one transaction. Reporting requirements do not apply to American Gold Eagles, no matter the quantities. Furthermore, reporting requirements do not apply to any fractional ounce gold coins.

    Only one common silver product is reportable when sold: pre-1965 U.S. coins. The quantity that causes the filing of a 1099B, however, is not clear. The IRS bases its authority to require reporting on CFTC-approved contracts that call for the delivery of $10,000 face value. Consequently, many dealers do not report sales of pre-1965 U.S. coins unless the sale totals $10,000 face value; others report $1,000 sales.

    Sales of American Silver Eagles, privately-minted Silver Eagles, and 100-oz silver bars are not reportable, no matter the quantity. Other precious metals products are reportable, but they are not covered here because the average investor does not trade them.

    Most investors have no first-hand knowledge of these matters; consequently, when precious metals dealers talk about cash reporting, 8300 forms, or 1099s, investors are unable to know that they may not be hearing the whole story. Wanting to avoid the government knowing about their precious metals investments, many investors are delighted to learn that their purchases will not be reported and end up buying overpriced coins.

    As explained under "Reportable Purchases," no precious metals purchases are reported unless cash reporting thresholds are exceeded. Investors wanting to avoid reportable sales should buy American Eagles.

    The above discussions about cash reporting, IRS Form 8300, and bank reporting are for editorial purposes only and should not be relied on as definitive and final. Persons involved in cash transactions should consult their attorney or accountant.

    Investors wanting to buy gold should go with the bullion coins: American Gold Eagles, Maple Leafs, or Krugerrands. These coins move dollar for dollar with the world price of gold and are easy to buy, sell, and trade. Additionally, tracking the value of these coins is easy. No "expert" has to look at them.

  2. #2
    Join Date
    Jan 2008
    Fly-over country, South Dakota. The heart of the USA

    Default Thanks for the info

    Good info,
    Thanks for posting.
    This explains why, when I bought my "several boxes" of Silver American Eagles, I wrote out the check and the dealer said, "Thanks!" and put it in his till.
    Love them birdies!
    If you don't GOT it, You don't GET it!

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