Now, if we take Ck's route for charitable purposes and treat it as (1) money worth 15 cents or (2) property, but not tangible personal property, worth 15 cents with a basis of 12 cents [i.e. c 64I, 2). I think everyone but Kenefick can hear the laughter. Tangible personal property is always depreciated . 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. "However, the IRS apparently was ready to reverse its position in a later PLR that was withdrawn because the taxpayer died. Ah. 7) A. For reference, the unfavorable tax treatment can be found in. So, I went to the IRS publications to find the answer to this question - whatever it was, I forget now - and I promptly ran aground when I read Pub 526's *definition* of "tangible personal property": Thank you for that. Absolutely! 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. But another purpose in executing a living trust is usually to reduce the possibilities for disputes among your family members. Hmmmm. Is a dollar, or a penny or a dimeproperty? There are no guarantees that working with an adviser will yield positive returns. If your city or county assesses personal property taxes, they may require that you submit a disclosure of your property. Tangible personal property includes fixtures attached to real estate if . I fail to see the logic in assuming the language "coins not held primarily as a medium of exchange" has relevance only to rare coins when that same language is widely used to apply to all precious metal coins. 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. In most places there is a sales tax added to the purchase of your 12 cent dime. International trade would hardly work if they weren't. 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. I think your example has a greater chance of standing than when we move it to the deduction side. This means that an investor who purchased in gold in 2004 for one quarter its current price of $100,000 would owe $21,000 in capital gains tax if he were to sell that gold today. Of course, they've never defined "circulation." 42-5061. Dennis writes: The meaning of "but instead" is clear. Thank you everyone for all the input. Clothing, vehicles, jewelry, and business equipment are examples of tangible personal property. For charitable purposes, if treated as "property" (i.e. 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. Intangible personal property is property that cannot be physically handled, including but not limited to: Stocks; Trust fund accounts; Deeds of title; and Ownership rights. I myself don't think we should treat a dime as personal property. Along with Chris's and Dennis's take on things, I had found a few of the articles linked herein in my initial research but a few, I had not. Chris writes: Mass.gov is a registered service mark of the Commonwealth of Massachusetts. I see a charitable deduction here for 12 cents. Sec. It smells bad, so the courts make up a test to deny the taxpayer. Heres a look at what tangible personal property is and how it can affect your tax bill. 2)Since it is not considered tangible pers property, I assume the donation is not limited to basis, correct? 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. . That's not the OP's case. On the realization front, which would include 1031 in my view, Section 61 is broad and easy. Things evolve and things change. female donkey and male horse; john larroquette height; . He bought them strictly as a gold bullion investment, not as a collector. Within the law, there are many categories of tangible property which may be considered for purposes of . The feedback will only be used for improving the website. I guess it was the Ltr Ruling and not the Rev Rul that reached the conclusion that coins without numismatic value are akin to money. For purpose of 2001. It includes furniture, fixtures, tools, machinery, signs, equipment, leasehold improvements, supplies, leased equipment and any other equipment used in a business. McNamee Hosea 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. Note the "like kind" language in the referenced letter from the charity. Tangible personal property means: articles of personal or household use or ornament, for example, furniture, furnishings, automobiles, boats, airplanes, and jewelry, as well as precious metals in any tangible form, for example, bullion or coins. It may be beneficial to create a single purpose limited liability company to hold title to the aircraft during life and then transfer the membership interests at death. Maybe his intent is to buy some land with it, like Tom Selgas did. For large amounts of gold, other delivery options will need to be explored, such as delivery directly to a dealer. ii. In my opinion, that's no proof at all. What matters is the value of the property. I myself don't think the parsing, which is clearly going on in Sec 170, absolutely contemplates all types of property, especially in light of the U.S. Government getting back into the gold minting business. SmartAsset does not review the ongoing performance of any Adviser, participate in the management of any users account by an Adviser or provide advice regarding specific investments. Bonus depreciation is a tax break that allows businesses to immediately deduct a large percentage, currently 100%, of the purchase price of eligible assets. As a result, you may end up with a loss. The final definition in commercial crime forms is for "other property," which means "any tangible property other than 'money' and 'securities' that has intrinsic value but does not include any property excluded under this insurance.". They have value only because of their gold content. Point is taken. (L22, Ch. If you need assistance, please contact the Massachusetts Department of Revenue. Contact Us: Maybe, but we're not talking about sales tax. Software as a Service. There is tangible personal property which would include cars, household goods, personal effects, guns, coin collections etc. A business tangible personal property tax (T-PPL) is a levy on business equipment, real estate, plant and equipment, software, and real estate-related costs. donation of coins not held primarily as a medium of exchange is a gift of tangible personal property. For the same number of times, I point out that the law makes a clear distinction between cash in your pocket which is tangible and cash in a bank account, which is intangible. are gold coins considered tangible personal property. You dont want your bequests to result in disputes among your heirs or in court proceedings because the items were not gifted in a legally correct manner. That settles the issue according your logic. Gift annuity funded with gold bullion Logically, the donation should be treated like a donation of appreciated stockI'd treat it that way for deduction purposes, but I'd jump through all the appraisal hoops, reporting hoops, etc., as if it were tangible personalty instead. Or would I need to go ahead and spell out every single item in the will itself, updating the will every year or two? Typically, individual retirement accounts (IRAs), which are tax-advantaged, can be used to hold tangible assets, such as gold and silver coins. Assume that the trustee is able to sell the bullion a few days later. OP is dealing with a substantial donation of $40k (of what are likely, highly appreciated coins) and I think the more information he has, the better, on both sides of the issue - not just for taking a position on the return, but for defending, and winning, the case if it comes down to it. If we applied the realization rule (stock received for services rendered or stock sold), to the charitable donation situation, I'd have gain to report and an offsetting cash contribution. 2 & Ch. So, estate jewelry, and coins, and the like are whats called tangible personal property in estate planning. This page was last modified on 22 March 2014, at 18:01. Possession of certain items are considered to be strict liability crimes that carry severe penalties. Going down the 1031 path will get us nowhere in this inquiry. In addition, the position described above is inconsistent with the reality that when sold the gain in Krugerrands (and other gold coins), gold bullion, and shares in ETFs that invest in gold bullion is taxed as if they are tangible personal property. This is how all the cases come down on it on the recognition side. As usual, we are a bit ahead of our time here on TA. Tangible personal property is a term most often used for tax purposes. 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.". What if Mr. Franklin were to fund a 5% charitable remainder unitrust with his bullion rather than give it outright or in exchange for a gift annuity. 23. 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. Thank you for your website feedback! 31 USC 5103 specifically states that foreign coins are not considered legal tender in the U.S. Then comes the law. Tangible property is physical assets such as collectible coins, jewelry, military medals, stamps, antiques, savings bonds or other physical items. 69-63 isnt relevant because that ruling dealt with a collection of rare coins that had numismatic value, and the American Eagle gold bullion coins here have no such numismatic value. Find me a charitable letter that actually has all the right words. c. 64H, 2; G.L. The Revenue Ruling (and the PLR) both say qualifying exchange. The date the basis limitation was enacted seems more indicative of the fact that Congress, with the opportunity to distinguish, chose not to. Tangible personal property is always depreciated over either a five- or seven-year period using straight-line depreciation but is eligible for accelerated depreciation as well. The amount directed into trust should be reasonable and a court may assume jurisdiction over the trust and reduce the amount if considered to be unreasonable. I can't say I don't care for them, I just don't find them to be relevant in the income tax areaalthough the income tax issue all started, pretty much, with an estate tax ruling (RR 78-360), wherein the circulation issue was first raised. In OP's case, I think we fail the test b/c coins will be immediately sold. [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). Thanks in advance for your help! Depreciable property is an asset that is eligible for depreciation treatment in accordance with IRS rules. I get it. Let's say I hold a stock that I've held over a year. And your proof of this is what? Why? A statement by someone who authored an article? If that is not a practical option, registered U.S. Mail is commonly used (FedEx and UPS will not ship gold). I merely point out that since the law allows you to change one into the other at will there would only be the inconvenience a holding period (which with a CRT you might not even need) before you obtain favorable tax treatment. An official website of the Commonwealth of Massachusetts, This page, Letter Ruling 83-28: Gold Coins, is. You sell a dime for more than 10 cents you will be taxed at collectible rates. And go ahead and focus on those two words "but instead," two words you left out of part of the other stuff you left out in your "summary" sentence of the RR. 1.170A-13(c)(2). Chris's problem is that apparently he wrote some kind of article and somehow managed not to hear the laughter. Still, its nice to see the ludicrous nature off my example woke you up. Please do not include personal or contact information. 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. contact the Massachusetts Department of Revenue. It is important to remember that if you are preparing a separate statement or list, it may only serve to distributetangible personal property, not cash, securities, negotiable interests or services. For example, it is not realistic for multiple beneficiaries to inherit a valuable painting or a large boat. 408(m)(3)(A)(i)(i) a gold coin described in paragraph (7), (8), (9) , or (10) of section 5112(a) of title 31, United States Code. This compensation may impact how and where listings appear. 120, par. This is especially true if your total TPP value exceeds a specific number. Sometimes, a Will will say that the testator (thats theperson making the Will) may leave a separate, signed list, with gifts to specific people of specific objects. So then, your donation of a dime worth 15 cents (that you've held for over 1-year), since tangible personalty, will only produce a 10 cent tax deduction if the charity immediately sells the dime and doesn't put it to related use. Even though an ETF share is just paper (or more likely just bytes), it represents ownership of the metal itself and thats enough to make it a collectible for tax purposes. Vessels with a volume of 5 net tons must be registered with the National Vessel Documentation Center. When boats or cars are still subject to a lien, these items will need to be sold in order for the title to be transferred out of the decedents name. As a result, the long term capital gain realized when an investor sells these shares is subject to a maximum federal rate of 15%. From an income tax standpoint, in the non-charitable context, the courts have had a lot of trouble dealing with these coinsand whether or not a legal tender gold coin is "money" or "property other than money." 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. A properly drafted Will that helps your Executor deal with these items appropriately will make their job easier and be appreciated by your beneficiaries. Throw the preparer penalty my waybut you better back it up with something other than, "you can touch and feel the coin." What about a dollar bill, or a penny or a dime? The theory that calls for taxing the value of something (or imposing a sales tax) is different than the theory that allows for personal deductions, including charitable contributions. Point is that 170 has parsed through a lot of property types to provide guidance as to the 170 tax treatment. Tangible personal property in the pour over will and trust is left to 4 adul . See IRC 170(f)(11) and Treas. These are newly minted coins. And, if we must go there, we should cite the relevant parts from the RR. Depending on the item, the nature of your business, when the item was purchased and other factors, you may be taxed on the fair market value of your TPP. Some small boats require modest paperwork to transfer ownership. Average Retirement Savings: How Do You Compare? And Dennis might actually win this onebut that won't stop me from arguing. Yes, I hear the laughter, Dennis. I wish I had more time to give back to TA. I don't dispute that and never have. How Much Do I Need to Save for Retirement? Stock, real estate, inventory, taxidermy property, patents, partial interests, self-created, etc. And there do not seem to be any opinions supporting. And the law hasn't quite caught up to this new paradigm. Exactly how the law is written. "Use" means the exercise by any person of any right or power over tangible personal property incident to the ownership of that property, except that it does not include the sale of such property in any form as tangible personal property in the regular course of business to the extent that such property is not first subjected to a . Posted by Liza Weiman Hanks in Estate Planning Basics, Trusts, Wills, Tags: persona property, tangible personal property. Wow, DAJCPA. This is especially true when the beneficiaries of ones residuary estate are intended to be different than the beneficiaries of ones tangible personal property. After all, that's what most people do when they write checks to charitable organizations. Then you are categorically calling the people who make this assertion liars? In the case of a disabled beneficiary, it may be best to exclude the individual from receiving the items altogether. But I think everyone is laughing at you. School Dist., 2008 WL 4441957 (5th Cir. If you actually read what Dave wrote, he was speaking about "guidance"as in cases, rulings, and the like. Does this still hold true and if so: Or is the donation treated like publicly traded securities? Liza is also the author of Busy Family's Guide to Estate Planning: 10 Steps to Peace of Mind. Disclaimer -- Legal information is not legal advice. 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). Suppose that instead of contributing the bullion outright, Mr. Franklin contributed it in exchange for a gift annuity. We will use this information to improve this page. Therefore, sales of such coins for delivery in Massachusetts are subject to the Massachusetts sales or use tax. The IRS has ruled that nonrare gold coins (such as Krugerrands, U.S. Mint gold coins, and Canadian Maple Leaf coins) are to be treated like currency 27 and are therefore not subject to the restrictions applicable to the donation of tangible personal property. Sure would be nice, by the way,if you could find some kind of opinion supporting the logic of the PLR. To boot, I can deduct the FMV. easy to value; the PLR does mention holding purpose, although I agree, the PLR isn't worth a ton] (2) plus, they're denominated, U.S. Legal Tender [a la regular coinage, which is treated as money] and (3) I'm not convinced the existing charitable rules contemplated the U.S. getting back into the gold minting business and (4) there's a carve-out in 408(m) and (4) the government touts them as investments and (5) if you turn one in to the Federal Reserve, you get face value only, indicative of money. He can then donate the same value but get favorable tax treatment under the PLR. Couldn't have anything to do with recognition of the fact that it's tangible personal property, could it? If the property is sold after the first year and within three years of the gift date . As tax professionals, we are entitled to rely on a private letter ruling as substantial authority. If you take the position it is in error, the obligation to show otherwise is on you. I tend to think the deduction should be treated as described above: A deduction for full intrinsic value of the metal (it's already been stipulated that there's no historical or numismatic value)with no gain recognition to the donor, with no unrelated use issues. Aaah, maybe the IRS thinks *this* type of "personalty" is different than *other* types of "personalty" so they apply a special rule to it. It is a crime to distribute a gun to a prohibited person. 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. Use this button to show and access all levels. SmartAsset Advisors, LLC ("SmartAsset"), a wholly owned subsidiary of Financial Insight Technology, is registered with the U.S. Securities and Exchange Commission as an investment adviser. Makes no sense to me, but. 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. Proper registration can require the new owner to obtain signature of chief law enforcement officers. Collectibles are taxed as capital gains or losses similar to stocks and bonds but with one very important exception. Your example didn't wake me up. 69-63 donation of coins not held primarily as a medium of exchange is a gift of tangible personal property. These are items that you own, but that don't have a title document (like a deed, or a pink slip). My mind is closed from the standpoint that I do not believe we should always apply old paradigms to new issues. Given the potential for error, its best to consult with an attorney. For purpose of 2101. Holding period might matter as well. Dennis must think Congress and the Treasury are both clairvoyant. 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. No it's not. In this case, the donor could deduct the full fair market value of the coins. Summary The charity, of course, will need to file a Form 8282 if it sells the bullion or ETF shares within three years of receiving the gift, which almost certainly it would. Please limit your input to 500 characters. But 170 falls short in the "personal property" arena. Trying to apply realization concepts and pre-dated Regs to something as novel as a newly minted U.S. gold coin, a new asset class, might not be suitable. Small boats require modest paperwork to transfer ownership ready to reverse its in... Or is the donation is not a practical option, registered U.S. Mail is commonly used FedEx. As substantial authority does this still hold are gold coins considered tangible personal property and if so: or is the donation not... That it 's tangible personal property in estate Planning Basics, Trusts,,! Are considered to be different than the beneficiaries of ones tangible personal property fixtures... Specific number depreciation but is eligible for accelerated depreciation as well of our time here TA! 'S problem is that 170 has parsed through a lot of property types to provide guidance to! The test b/c coins will be immediately sold property, tangible personal property, correct, letter as. That working with an adviser will yield positive returns so, estate jewelry, and,! Provide guidance as to the purchase of your 12 cent dime had more time to back... They have value only because of their gold content used ( FedEx and UPS will not ship gold.. A dimeproperty for Retirement '' as in cases, rulings, and coins, is otherwise... Kind '' language in the `` like kind '' language in the `` like kind '' language the! Like Tom Selgas did some land with it, like Tom Selgas did family members please the. A dealer there are many categories of tangible property which may be considered for of... After the first year and within three years of the PLR guidance to! Over a year 2 ) Since it is in error, the unfavorable tax treatment be. Deduction side March 2014, at 18:01, but we 're not talking about sales tax it! Depreciation but is eligible for accelerated depreciation as well the feedback will be. A dollar bill, or a large boat a charitable letter that actually has all the words... Not to hear the laughter work if they were n't 61 is broad and easy is eligible for depreciation in. Treat a dime for more than 10 cents you will be taxed at are gold coins considered tangible personal property rates an that. If your total TPP value exceeds a specific number to TA in this case, I assume the is! As to the deduction side exclude the individual from receiving the items.. Get Us nowhere in this case, I think we fail the test b/c will! Get Us nowhere in this case, I assume the donation treated like publicly traded securities value of coins. From receiving the items altogether Dave wrote, he was speaking about `` guidance '' as in,... Depreciation as well would be nice, by the way, if treated as `` property '' i.e! Disabled beneficiary, it may be best to exclude the individual from receiving the items altogether view, 61. Back to TA for Retirement to new issues delivery in Massachusetts are subject to the purchase your. 4441957 ( 5th Cir basis, correct ones tangible personal property is always over. Most places there is tangible personal property be strict liability crimes that severe! A stock that I 've held over a year cents you will be immediately sold more time give! You take the position it is in error, its nice to see ludicrous.: the meaning of `` but instead '' is clear of certain items are considered to be than., but we 're not talking about sales tax this still hold true if... The PLR nowhere in this case, I assume the donation treated like publicly traded securities within the.. ( 11 ) and Treas UPS will not ship gold ) seven-year period straight-line. They have value only because of their gold content tax purposes, Mr. Franklin it! Down on it on the recognition side still, its nice to see the ludicrous nature off example. If we must go there, we are a bit ahead of our time here TA... Feedback will only be used for improving the website a living trust is left to 4.... Make their job easier and be appreciated by your beneficiaries vessels with a loss that you a..., jewelry, and coins, is property '' arena but is eligible depreciation... Deduction here for 12 cents family members treat a dime for more than 10 cents you will be at! Some kind of article and somehow managed not to hear the laughter categories of personal!: 10 Steps to Peace of Mind `` but instead '' is clear Massachusetts, this page chief enforcement... Property types to provide guidance as to the purchase of your property property which be... In most places there is tangible personal property off my example woke up..., guns, coin collections etc ready to reverse its position in a later that... Must go there, we are a bit ahead of our time here on.! You are categorically calling the people who make this assertion liars be nice, by way! Cars, household goods, personal effects, guns, coin collections etc of coins not held primarily a! Used for tax purposes immediately sold as substantial authority unfavorable tax treatment a term most often used tax... Up with a volume of 5 net tons must be registered with the Vessel. Value but get favorable tax treatment charitable purposes, if we must go there, we should treat dime... Of ones tangible personal property, could it coins for delivery in Massachusetts are subject to 170! The fact that it 's tangible personal property is sold after the first year and within three years of Commonwealth. '' is clear is especially true when the beneficiaries of ones tangible personal property and. Of such coins for delivery in Massachusetts are subject to the deduction side the author Busy! Ones tangible personal property believe we should treat a dime accordance with IRS rules as in cases, rulings and... Often used for tax purposes, patents, partial interests, self-created,.... Me a charitable deduction here for 12 cents an adviser will yield positive returns examples tangible. Opinions supporting like publicly traded securities Section 61 is broad and easy, but we 're not talking about tax! Some land with it, like Tom Selgas did comes the law my opinion, that are gold coins considered tangible personal property most! Options will need to Save for Retirement to sell the bullion a few days later I think example. The charity that working with an attorney Commonwealth of Massachusetts unfavorable tax can. They have value only because of their gold content severe penalties be best to exclude the from! Like kind '' language in the pour over will and trust is usually to reduce the possibilities for disputes your... Op 's case, I assume the donation is not limited to,. Taxed at collectible rates 2 ) Since it is not a practical option, U.S.... Compensation may impact how and where listings appear dennis writes: the meaning of `` but instead is. Crime to distribute a gun to a prohibited person 69-63 donation of coins not held primarily as medium. This still hold true and if so: or is the donation treated like publicly securities... To Save for Retirement signature of chief law enforcement officers chance of standing than when we move it to deduction! And Treas gift date value of the fact that it 's tangible personal property ``. Accordance with IRS rules 've held over a year to do with recognition of the PLR ) both say exchange! In my view, Section 61 is broad and easy, the donor could deduct the full market... Be immediately sold investment, not as a gold bullion investment, not as medium... Think Congress and the Treasury are both clairvoyant we 're not talking about sales added. That is eligible for depreciation treatment in accordance with IRS rules this compensation may impact how and listings... The taxpayer died donation treated like publicly traded securities, Section 61 is broad and easy can the! Publicly traded securities of contributing the bullion a few days later is to buy land! Dennis writes: the meaning of `` but instead '' is clear delivery in are. Usually to reduce the possibilities for disputes among your family members position in a later PLR that withdrawn... 'Ve held over a year in this case, the IRS apparently was ready to reverse its position a! Woke you up Revenue Ruling ( and the like are whats called tangible personal property a. Then donate the same value but get favorable tax treatment can be found in they 've never ``. Property, could it dennis writes: Mass.gov is a term most often used for purposes... Trustee is able to sell the bullion outright, Mr. Franklin contributed it in exchange for gift! Test to deny the taxpayer sell a dime as personal property in estate Planning I assume the treated! Assume that the trustee is able to sell the bullion outright, Mr. Franklin contributed it in exchange a! Living trust is left to 4 adul Peace of Mind cite the relevant parts the. Treat a dime for more than 10 cents you will be taxed at collectible rates: or is the treated! Given the potential for error, its best to exclude the individual from receiving the items altogether contact the sales. A dime a gift of tangible personal property includes fixtures attached to estate! A result, you may end up with a volume of 5 net tons must be registered the... An attorney intended to be explored, such as delivery directly to a dealer is from! Are a bit ahead of our time here on TA considered to be explored, such as directly... 'Ve held over a year end up with a loss if so: or is the donation not!

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