Note: We are not CPA’s and advise that you consult your tax professional regarding your unique filing situation before you take any action.
What’s one key factor that differentiates the wealthy class from most Americans?
Overall, the wealthy class is more adept at maximizing the full potential of a capitalistic system. Is this level of adeptness attainable for most Americans ? Yes it is. It’s a matter of having the knowledge to identify opportunities available to anyone who knows of them!
Although this topic exceeds the scope of this message we are going to present you- a gold and silver owner, with ONE action that can give you a tremendous advantage in maintaining and enhancing your personal wealth. It concerns an often overlooked tax loophole under the Internal Revenue Code Section 1091 “Wash Sale” rule.
This tax loophole gives precious metals owners a significant advantage.
If you own precious metals, and if those precious metals happen to depreciate in “price” (not value, as gold and silver’s intrinsic value never depreciates), you can actually get Uncle Sam to cover a significant portion of that depreciation while still owning your precious metals.
Such a move is impossible for stock investors, as the wash sale rule prevents them from doing what can easily be done with metals.
The wash sale rule:
First, let’s make sure you are familiar with the definition of a wash sale. According to the IRS, a wash sale is:
"a sale of stock or securities at a loss within 30 days before or after you buy or acquire in a fully taxable trade, or acquire a contract or option to buy, substantially identical stock or securities."
To summarize: if you hold a stock or security (bond, option, or fund) that depreciates in price, you can sell your shares and write the amount of the loss off as a capital loss. Of course, you no longer own that stock or security. Now, if you plan on repurchasing what you sold, you must wait 30 days before and 30 days after your initial stock sale. If you re-purchase your stock or security any time within the 60-day waiting period, you’ve executed a wash sale and can no longer benefit from a deduction from your capital loss. This however does not apply to precious metals.
And herein lies your main advantage:
The wash sale rule only applies to stocks and securities, but nowhere does the rule mention “precious metals.” Do you see the loophole ? This means that your metals are not subject to the 60-day holding period. In short, you can deduct your capital depreciation and immediately buy back your metals. ! In this way, you can get Uncle Sam to compensate you for up to $3,000 worth of losses per year without having to lose possession of your metals! (Losses exceeding $3,000 can be rolled forward to the following tax year). And, If you have a large taxable gain you can offset your gain with your sale of precious metals.
In 2010, you bought MS-64 $20 Saint-Gaudens gold coins for $2,200/oz. In 2016, the price of your coin had depreciated to $1,200/oz: a difference of $1,000.
You can simply sell your coins to us at the current market price, and then buy them back the same day. This way, you deduct your capital loss and still have your coins.
The minimal fee for this transaction is offset by a much lower tax obligation for you at the end of this year.
In order to use this tax loophole use these three steps :
- First be sure to consult with your tax accountant before executing this transaction. It’s possible that your accountant may not be familiar with this rule. But their expertise and due diligence will allow them to research how such a transaction may impact your specific tax situation.
- Second, if the depreciation exceeds $3,000, you can roll the remaining amount in excess of that figure into the following tax year or they can be used to offset 2017 capital gains.
- Third, contact our specialists at GSI Exchange at +1.800.474.9159 so they can walk you through the calculations and determine the favorability, timing, and pricing.
When you contact us, be sure you know the specific type of coins or bars you have as well as the exact quantity and your original purchase price if possible...
Over the phone, we can assist you.
Why shouldn’t you have every advantage ?