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Some questions about individuals selling gold jewelry in the U.S. Let's say the usual 20 or 22 karat Indian gold jewelry that women wear, bought or received as gifts over years, and some of it has no sentimental or ancestral value or collectible value to keep and pass on to kids, and owner instead of recycling it into new gold jewelry, wants to sell it.

1. What are the capital gains tax implications, if any? I googled and found a few links, most seem to say personal jewelry sale is not subject to taxes, but nothing definitive and sometimes contradictory.
[URL="http://www.newsnet5.com/dpp/money/consumer/dont_waste_your_money/is-selling-gold-jewelry-taxable"]http://www.newsnet5.com/dpp/money/consumer/dont_waste_your_money/is-selling-gold-jewelry-taxable
[/URL][URL="http://www.irs.gov/newsroom/article/0,,id=170634,00.html"]http://www.irs.gov/newsroom/article/0,,id=170634,00.html
[/URL]http://allamericangold.com/questions.html

2. Does this new tax law effect only gold coins and not jewelry for sure? http://abcnews.go.com/Business/gold-coin-dealers-decry-tax-law/story?id=11211611#.TtMuU7JFu7s

3. Is selling the jewelry a good idea financially? Or, is it better to just keep it? I guess it'd also depend on what one plans to do with the money got for it.

4. Is there any reason for which selling it in India would be better than selling it in the U.S.?

5. How does one find a reliable shop or business to sell it to locally (not by mail) in the U.S. (other than comparing the rate they offer?)

6. I gathered that the buying shops have the sellers sign a Declaration of Ownership, and need a form of id as proof. Is there any way this showing proof of id can be avoided? Not that there is anything illegal or shady planned : ), just not very comfortable showing id and any info from it noted down in such places.

Thx.

modus_vivendi;425121Some questions about individuals selling gold jewelry in the U.S. Let's say the usual 20 or 22 karat Indian gold jewelry that women wear, bought or received as gifts over years, and some of it has no sentimental or ancestral value or collectible value to keep and pass on to kids, and owner instead of recycling it into new gold jewelry, wants to sell it.

1. What are the capital gains tax implications, if any? I googled and found a few links, most seem to say personal jewelry sale is not subject to taxes, but nothing definitive and sometimes contradictory.
[URL="http://www.newsnet5.com/dpp/money/consumer/dont_waste_your_money/is-selling-gold-jewelry-taxable"]http://www.newsnet5.com/dpp/money/consumer/dont_waste_your_money/is-selling-gold-jewelry-taxable
[/URL][URL="http://www.irs.gov/newsroom/article/0,,id=170634,00.html"]http://www.irs.gov/newsroom/article/0,,id=170634,00.html
[/URL]http://allamericangold.com/questions.html

2. Does this new tax law effect only gold coins and not jewelry for sure? http://abcnews.go.com/Business/gold-coin-dealers-decry-tax-law/story?id=11211611#.TtMuU7JFu7s

3. Is selling the jewelry a good idea financially? Or, is it better to just keep it? I guess it'd also depend on what one plans to do with the money got for it.

4. Is there any reason for which selling it in India would be better than selling it in the U.S.?

5. How does one find a reliable shop or business to sell it to locally (not by mail) in the U.S. (other than comparing the rate they offer?)

6. I gathered that the buying shops have the sellers sign a Declaration of Ownership, and need a form of id as proof. Is there any way this showing proof of id can be avoided? Not that there is anything illegal or shady planned : ), just not very comfortable showing id and any info from it noted down in such places.

Thx.

1) The IRS web site is pretty clear. All capital gains on personal property are taxable. That is definitive. Capital losses on personal property are not deductible. Finding basis on jewels, especially inherited jewels, is another matter altogether.

2) There is nothing new about capital gains tax law but reporting requirements for gold dealers ( issuing 1099s) have increased recently. Capital gains on gold coins would also be taxable. However, they could be said to be investments -- they would still be taxable, but a loss would count as a capital loss and could be deductible. A loss in gold is unlikely, though.

3) If you want to invest in gold or gems, there are several ways to do it that are better than plain jewelry, since that has overhead and craftsmanship costs in the purchase price, that are rarely recoverable when sold (except for world famous designers and one of a kind pieces). Remember insurance costs too. There was an article in a US paper recently about how Indian families in the US were being targeted for thefts since they are known to often have lots of jewelry.

4) You are required to pay US taxes in any case and there are possible hassles with customs on both sides taking jewelry (other than small amounts).

6) I doubt you can avoid any id requirements since reputable shops want to protect themselves against buying stolen goods and have anti money laundering requirements as well.

MV,

You have posted a few links in your post. A quote from the article in the very first link is reproduced below:

[QUOTE]


To the best of my knowledge, the information in this quote is WRONG, unless the law has changed and I am not aware about it.

Precious metals, held less than a year are taxed at ordinary income tax rates, but precious metals held more than a year are NOT TAXED at 15% rate but at a rate of 28%. This also applies to GOLD ETF.

I have friends who contend that it is easier to sell (or exchange it for store credit to buy new fashions) old 22kt gold jewelry to desi shops during india visits. The shops know that 22kt is de rigueur in desh, whereas it is not the usual jewelry alloy in the west; and besides, with the volume of business, they have minimal trouble recycling that. Many larger shops have buy-back and repair sections within their shops. One time while visiting Chennai, I was amazed at the crowds in every one of those gold shops in that famous shopping area with sari stores -- of resellers and those that waited on some custom work.

Greyfri, thanks for the detailed response.

greyfri;425148
3) If you want to invest in gold or gems, there are several ways to do it that are better than plain jewelry, since that has overhead and craftsmanship costs in the purchase price, that are rarely recoverable when sold (except for world famous designers and one of a kind pieces). Remember insurance costs too. There was an article in a US paper recently about how Indian families in the US were being targeted for thefts since they are known to often have lots of jewelry. ...

That is true. If one has money to invest, then investing in gold by buying plain jewelry doesn't make sense for the above reasons. But, if one already has gold jewelry that is no longer being used as jewelry, then, what is best to do with it- sell, or hold on to it. Going by the multiple hassles in selling, I am guessing it is better to just keep it.

Desi;425160MV,

You have posted a few links in your post. A quote from the article in the very first link is reproduced below:



To the best of my knowledge, the information in this quote is WRONG, unless the law has changed and I am not aware about it.

Precious metals, held less than a year are taxed at ordinary income tax rates, but precious metals held more than a year are NOT TAXED at 15% rate but at a rate of 28%. This also applies to GOLD ETF.

Thanks. I was wondering why I thought personal jewelry sale gains is not taxed, and I think I've figured out- the FAQ of the businesses that buy the gold go to great lengths to mention that they do not report what they buy to the IRS unless it is a certain form of gold or above some amount. I assumed if they don't report, the seller does not have to report it either. : )

Looks like it is the law to report any gains from selling such assets, but many do not do it. Sort of like many don't pay tax on online purchases though by law they are required to pay a tax on such purchases even when the online retailer does not collect it.

okonomi;425165I have friends who contend that it is easier to sell (or exchange it for store credit to buy new fashions) old 22kt gold jewelry to desi shops during india visits. The shops know that 22kt is de rigueur in desh, whereas it is not the usual jewelry alloy in the west; and besides, with the volume of business, they have minimal trouble recycling that. Many larger shops have buy-back and repair sections within their shops. One time while visiting Chennai, I was amazed at the crowds in every one of those gold shops in that famous shopping area with sari stores -- of resellers and those that waited on some custom work.

Yes, that is definitely the easier way and I've done it a few times in desh for store credit to buy newer stuff. Not sure about just selling it. I don't do any gold shop visits in desh by myself, a local relative comes along. If I exchange it for newer stuff, the relative is a big help. But, if I am selling it for money, the relative will worry that we have fallen on lean times, and offer to help us out with money. If I succeed in reassuring that such is not the case, the relative will get this look of relief in the eye, followed by a faraway look, and will then offer to take the jewelry or part of it off my hands : ) With India trips shrinking from 3 weeks to 2 weeks in duration, I don't fancy spending time in crowded jewelry shops. j/k about the relative bit. : )

The idea behind this whole research was to make sure letting that jewelry lie around in locker etc is not too bad an idea financially.

It should be much easier to sell 22-ct jewelry in India (i.e. you will get better rate). It is more common to do that over there than in USA and there are more shops (i.e more competition) doing that. Just make sure you go to some trustworthy jeweller based on references - preferably with someone who is a regular customer over there :). The key to conduct this transaction is to check on (a) how good rate for the gold you are getting compared to published rate (b) how much you lose to impurities and (c) how much are they charging for the transaction cost.

If you sell in India, you get rupees in cash. No need to report anywhere. If you plan well, you can use those rupees for your shopping needs in India.

With the gold boom, places that buy gold have mushroomed in the malls in USA also. But my guess is that you will be severely fleeced if you use them. (I have no first or second hand info about that, just a guess. )

[ As someone said, if you want physical gold for investment purposes, it is better to buy 24ct coins from the mint (e.g. Maple Leaf) instead ]

samv;425195It should be much easier to sell 22-ct jewelry in India (i.e. you will get better rate). It is more common to do that over there than in USA and there are more shops (i.e more competition) doing that. Just make sure you go to some trustworthy jeweller based on references - preferably with someone who is a regular customer there :).

If you sell in India, you get rupees in cash. No need to report anywhere. If you plan well, you can use those rupees for your shopping needs in India.

There in lies the crux of the problem. The regular customer will report it everywhere. : )

I could spend the rupees right next door on silk sarees, but my folks will get to know I sold jewelry. And they will worry, worry, worry. : )

But, yes, this seems to be the easiest way to turn it to spendable cash.

modus_vivendi;425198There in lies the crux of the problem. The regular customer will report it everywhere. : )

I could spend the rupees right next door on silk sarees, but my folks will get to know I sold jewelry. And they will worry, worry, worry. : )

But, yes, this seems to be the easiest way to turn it to spendable cash.

My suggestion will be to start handing out jewelry (in the same or exchanged form) in lieu of other gifts when you have weddings/births/special occasions in the family in India.

Do you work for the Federal Reserve or the Propaganda Ministry :) The timing was uncanny:

http://www.bloomberg.com/news/2011-11-27/bond-dealers-see-fed-buying-545-billion-of-home-loan-debt-in-third-easing.html