“Junk” bags of U.S. circulated silver coins such as dimes, quarters and half dollars minted before 1965 are eligible as replacement property in a 1031 exchange. These coins are typically traded in $1,000 face value and contain 715 to 770 ounces of silver, representing an inexpensive way to purchase silver per ounce. Fractional bags of 125, 250 and 500 silver dollars, in addition to silver collectibles such as the certified MS63 to MS65 U.S. silver dollars and MS 60 Morgan and Peace silver dollars are acquired to hold for silver content and coin scarcity.
Revenue Ruling 82-96
Gold bullion was found to be like-kind and 1031 eligible to Canadian Maple Leaf gold coins. The Canadian Maple Leaf gold is still considered legal tender in Canada but is traded on the basis of its gold content, which, like bags of 90 percent silver coins, exceed the face value of the coins.
In California Federal Life Insurance, the court ruled that exchanging Swiss francs for U.S. Double Eagle gold coins was not like-kind because the Swiss francs could be used in Switzerland while the U.S. Double Eagle gold coins are held for their bullion content. The implication is that coins must be non-circulating; however, the Swiss francs lacked both numismatic or bullion value beyond their face value.
1031 Exchange
Internal Revenue Code §1.1031 allows U.S. and foreign individual and corporate taxpayers to defer the capital gain tax associated with the sale of real and personal property held for productive use in a trade, business or investment, such as precious metals, when exchanging for real and personal property held for productive use in a trade, business or investment. The capital gains tax on collectibles is currently 28 percent plus state capital gains tax. A 1031 exchange defers, delays or postpones the tax until the replacement property is eventually sold.
Related gold and silver articles of interest include:
- Avoiding the Tax Consequences of Selling Gold and Silver with a 1031
- 1031 Exchange Requirements: Gold and Silver Predominant Use
- 1031 Exchange: Collectibles – Artwork, Vintage Motorcars, Coins
- 1031 Exchange: Gold and Silver Exchange-Traded Funds (ETFs)
- Gold and Silver 1031 Exchange Frequency
- Gold, Silver, Copper 1031 Review
- Numismatic Type Coins 1031 Eligible
- 1031 Exchange Gold and Silver Bullion Insights
