Tax Tips (and other stuff): Storing your gold: Think inside the box
For teh Nevada Apppeal
Well a few weeks ago, a friend of mine wrote a column for the Nevada Appeal and then somehow, I got credit for writing it. To set the record straight, Allen Rowe of Northern Nevada Coin (www.brokencc.com) wrote the recent October column on gold coins.
Allen and I recently had coffee together and laughed at the whole situation. As we talked, we did hit on a problem that many folks have, that being: “OK, so I purchased some gold coins. Where do I store them?” Turns out the answer is not as easy as it may sound.
You are faced with storing an item that is considered “negotiable.” That means the holder is presumed to have title. Thus, if somebody steals your coins, it would not be too hard for them to sell them. Therein lies the problem of storage. If you make it too easy for anybody to take your gold coins (or silver coins, or bullion, etc.), you are inviting it (theft) to happen.
Allen and I discussed several options that are available. One is to use a third-party storage service. Unfortunately, there are not any close by, so if you need your gold, it would be difficult to get it, minus some pretty hefty storage and handling fees, as well as a considerable amount of time passing from when you ask for your gold to when you get it.
Another option that works for coins, but not bullion, is your local bank safe deposit box. Obviously, pretty secure, but not insured if somebody breaks into the bank. This is easier to get to than a third-party storage, but still limited to office hours/days. Also, if the government ever decides to make gold coins illegal (like they did in the Great Depression), there is a trail for the government to follow to confiscate your gold. Bullion can not be stored in a safe deposit box.
One popular option is to purchase a safe and store it in your house. A great idea from a simple access perspective. Assuming the safe is large enough, making it difficult for the thief to carry off the safe, but not impossible for him to crack it open. Be careful on what combinations you choose and where you store it. Maybe, put the combination in your safe deposit box?
The final solution is to bury your gold somewhere, preferably on property you own. (Remember the old saying, “Finders keepers, losers weepers?”) Understand that with modern metal detectors, it would be difficult to really hide any precious metal if somebody knows to go looking for it. If you bury your gold, make sure you take precautions to protect it from scratching, dings, etc. (especially those coins). Also, maybe put a map in your safe deposit box?
What’s the tax hook to this article? Remember, when you sell any precious metal (in coin or bullion form), it is a taxable event. So, keep good records on what you paid for it, storage costs, commissions, etc., and what you sold it for as well as all costs of selling. The net difference would normally be considered a capital gain type sale, but not always. Talk to your tax professional before you buy or sell precious metals to make sure you understand all the tax consequences.
Have you heard? “To get the full measure of joy, you must have someone to divide it with.”
• Kelly Bullis is a Certified Public Accountant in Carson City. Contact him at 882-4459.