Check web for proper tax reporting

This article was originally printed in the latest issue of Numismatic News.
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Body After reading all the letters in your Sept. 7 issue, I feel the need to write regarding the 1099 issue since many of the letters contain incorrect information.

I have been a tax professional since 1972 and am quite familiar with the rules on Form 1099. First, the form would be issued when there is a sale of $600 or more during the calendar year rather then a profit. Since the sale is reported, the seller would need to report this on Schedule D of the tax return and the seller would need to put in the cost basis of the coin.

While the IRS receives sales information, they never receive cost basis. If there is a net loss over the year, the taxpayer could actually obtain a tax benefit from the sales.

Regarding who receives a 1099, the rules are simple. Any check issued that is does not contain “Corporation, Corp, Incorporated, or Inc.” would be subject to the 1099 being issued. Since corporate checks may not be cashed and must be deposited by law, an exception applies.

The form used to obtain a taxpayer ID number is the W-9 form and can be obtained as well as additional information on the subject at WWW.IRS.GOV.

The amounts reflected on the 1099 form will be the actual cash or check being received/paid. So if someone is upgrading and trades a coin in worth $1,000 and pays $700, only the $700 would need to be reported.

Sales tax is a state issue and currently the United States has no national sales tax. So each state decides what coin sales are taxable and what sales tax rates are paid. In that regard it would be business as usual.

But since shows are a cash business, this will probably change the show circuit at some point regarding sales taxes. Sellers will need to decide whether the sale of coins is a hobby, or a business also and that information will guide them on whether they complete the Schedule D or a Schedule C. Expenses like books, mileage, magnifiers, Numismatic News and all other expenses made to transact the business are a deductible expense reducing the potential profit.

Obtain the free publication 334 from the IRS website. You can get into your state tax website by going to Google and putting in (your state) tax website and it will bring you to that site.

Mark Pollachek is a hobbyist and tax professional since 1972 from Springfield, N.J.
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