Those Gold Sales May Be Taxable

If you took advantage of the escalating gold and silver prices and made any sales of gold, silver, gems, jewelry, or the like during 2011, you are required to report the sales on your tax return. Whether or not the sales are subject to tax, and at what tax rate, depends upon the type of item sold and your tax basis for the item.

Determining Basis—Generally, your tax basis is what you originally paid for the item, assuming that you can recall the amount. It may be difficult to remember how much you paid for an item; however, if the cost was significant, you hopefully have documentation that can verify the price. Without documentation, you are at the mercy of the IRS should you be audited! Even more complicated is determining the value of an item acquired as a gift. Your tax basis for a gift generally is the same basis as it was for the item in the hands of the individual who gave you the gift. Meanwhile, the basis for an item acquired by inheritance is generally the fair market valueof the item on the date of the inheritance. As you can see, simply determining the basis for the items that you sold can be complicated.

Types of Items Sold—Not all items are taxed the same. The percentage depends on whether the item was held for personal use or for investment purposes and whether or not the item is classified as a collectible. A higher maximum tax rate applies to collectibles than to other capital assets.

• Jewelry—Generally, jewelry that is held for personal use is excluded from the definition of collectibles and is taxed the same as any other personal use property. Losses are thus not allowed, and gains are taxed as either short-term or long-term capital gains. For the most part, jewelry that an individual may choose to sell will have been owned for over a year, and the gain will be taxed at the long-term rate, which, for 2011, is a maximum of 15% (0% to the extent that the taxpayer is in the 15% regular tax bracket or lower). Beware, however, as some jewelry may include gold or silver coins that are considered collectible items and thus may be taxed at a higher rate, as explained below.

• Collectibles—Gold and silver coins and bullion are included on the IRS’s list of collectibles. Unlike jewelry, the sale of “collectibles” can result in either a taxable loss or a taxable gain. In addition, collectible gains are taxed at a maximum rate of 28%, as opposed to a maximum of 15% for other capital assets that are held long-term. The maximum rate does not imply that all collectible gains are taxed at 28%. A taxpayer in a lesser tax bracket will be taxed at that lesser rate.

New York Urges Taxpayers To Report Income From Offshore Bank Accounts

New York Urges Taxpayers To Report Income From Offshore Bank Accounts
NYS Voluntary Disclosure and Compliance Program is Opportunity to Come Forward and Pay Back Taxes and Avoid Possible Criminal Prosecution

ALBANY, NY (10/08/2009)(readMedia)– New York State Department of Taxation and Finance Acting Commissioner Jamie Woodward today announced that New York taxpayers who invested in offshore bank accounts or other offshore activity are required to report to the state Tax Department any changes in their taxable income resulting from a federal audit or from the filing of an amended federal return.

Former and current New York State residents should review their state tax returns to determine if they need to file amended returns to report this income.

Eligible New York taxpayers should also consider New York State’s Voluntary Disclosure and Compliance (VDC) Program. Under the VDC program, eligible taxpayers can avoid monetary penalties and possible criminal charges by disclosing what taxes they owe, paying the tax and entering into an agreement to pay all future taxes.

This urging comes on the heels of the Internal Revenue Service’s (IRS) recent successful court battle and its aggressive action to force foreign financial institutions to disclose the names of taxpayers who currently have unreported offshore income or who previously had undisclosed foreign accounts or entities.

The IRS is currently offering a voluntary disclosure program for federal tax liabilities on unreported offshore income.

Taxpayers who participate in the federal program are required to file or amend their federal tax returns. The application deadline for federal leniency is October 15, 2009 and detailed information can be found on the IRS’ website at http://www.irs.gov.

New York taxpayers who participate in the IRS’ voluntary disclosure program and file or amend their federal tax returns are urged to report any changes made in their taxable income to New York State in a timely manner in order to avoid the possible penalties for failing to report federal changes.

The IRS and New York State have agreements to share information between the two agencies. Information received from federal amended returns and from foreign governments will ultimately be shared with New York State authorities.

The required forms and instructions on filing an amended New York tax return are available on the tax department’s website at http://www.tax.state.ny.us/forms/default.htm.

Information and an easy four-step application process for eligibility to New York State’s VDC Program are available online at http://www.tax.state.ny.us/e-services/vold/default.htm.