Free money for coins. IRS happy too
Coin collectors gather round. Hear ye, hear ye, hear ye!. I know, the biggest issue facing us today is how to get money for our collections without stripping our household budget to the bone, leave the Christmas fund alone, the college fund where it can grow and so on and so forth.
I retired three years or so ago, and have found that two things loom in my mind that I want to do.
One: To travel and two: to grow my coin collection to the highest attainable level in my power.
But there was a tremendous conflict. How can I do both without scouring the bottom of the barrel to accomplish same?
Well, the answer came to me at a tax meeting a few years ago with my tax man as I was planning my retirement.
I asked him how i could travel to the far flung corners of the world in my quest of travel, and keep looking in odd places for my coins?
He didn't know the answer so he dusted off his long forgotten volumes of IRS lore and same up with the simple answer.
The IRS does not look at your hobby the same as a business so you do have to be careful if you are looking for deductions from the expenses involved with your quest for coins. Or any other hobby for that matter IF you decide to make money from your hobby.
If you plan to make a profit, you should claim your profits as those things is how our country runs its business. You know, making aircraft carriers and paying the IRS agents etc. and so on and so forth. You would not want them to run up a deficit would you? Of course not.
So, here is how you do it.
Keep a simple log, ledger, or even like I do, on an electronic medium like quicken. I like that the best as it is easy to make reports and makes my tax paying easy.
I also keep every scrap of paper. Guess what? At coin shows many do not make receipts available nor do they want to. So, a simple note of what you paid or got paid for an item will suffice to the fellow or lady whom inspects your taxes. By the way, that is called an audit if you did not know.
Yup, no matter what, you probably do not believe or even know how much you actually spend on collecting coins. Some folks go at it with much greater fervor than others.
Take me for instance. I make forays to a number of states JUST for the express purpose of finding coins. The quest is a lot of the fun of collecting for me. Call it the hunt if you like.
Some big game hunters just like the hunt and when they corner the game, they actually lift a loaded rifle or bow and arrow, draw back and get set, ready and let the beast amble off into the woods.
My lovely wife Helen and I did that in Ranthambore National Wildlife Refuge in India. Went out in the jungle the day before the big hunt, the guide showed us how to hunt a tiger. We listened, watched and went back to the camp. The next day, Helen went first, she did all the right things, got a tigeress in her sights, pulled the trigger and got off a wonderful shot, just right and took the best picture of a stalking tiger you ever saw. It took most of the day.
The next day, it was my turn, and I did pretty good, but never got close enough to get off a shot. With our camera of course.
It is the same with looking for coins, for me, it is the hunt. I love probing the back roads of America for that elusive long lost rare coin. You remember, of course, our truncated journey to the Carolinas looking for a Bechtel mint coin earlier this year when Helen got the tummy thing. She is still recovering.
I will need to check out just how much of the costs of her stay in the hospital and my motels will be deductible against coin profits this year. Perhaps all if I read the letter of the law correctly.
So, here is the bottom line: You may deduct all expenses in buying a coin. Postage, coin show costs, fuel, motels and so on.
Now here is the catch, rub, rules and so on. Of course, I am not a tax man, so do not tell the IRS that I said so. Always check with your rule book, it may be different than mine.
ANY coin related expense is deductible against the profit you made selling it.
ANY costs not directly related to buying coins will NOT be deducted from your coin profit.
Let us say you are going to your Aunt Tillie and her Annual Graduation Week for Elephant Training School, 2000 miles away from your house. On the way you hear of a coin show a bit off your intended track. The costs per mile, any extras you have to pay to get to the show or coin, even if you do not make a purchase is deductible against your profits for the year. The main trip to your aunts home is NOT deductible. ONLY the extras you encountered.
This is why you need to carry a notebook so your deviation can be recorded and deducted.
Now here is the rub. If your year showed a loss and your quests netted you more expenses looking for coins than you made in profits, too bad pilgrim. You have to eat those losses. You cannot deduct more than you made.
Its the same with lottery or gambling debts. You can deduct from winnings ONLY. So, no win, no losses accepted by IRS. Sorry, but they make the rules. Don't wanna play, then don't make money.
You can ONLY deduct as much as you made AND NO MORE! That should be quite simple huh?
Oh, within my understanding, you cannot move losses forward like you do with stock and other investments. Sorry again. :^(
Now up til this year, I have simply estimated profits and losses. Last year, due to extreme trading and investing, much more than selling, I know I did not have a net profit for 2014 and said so on the form, and the IRS accepted my estimate.
This year, my guy says not so fast. This year he wants an itemized list well reported or there may be an investigation by the collection agency we all know so well.
So, I have been dutifully keeping all receipts and am now in the tedious task of entering them in my quicken ledger. I now wish I was more fastidious during the year as I had no idea how much I would be involved with coins. This got insane.
At this writing I have NO idea how many coins came and went. It was like a metro station as coins were traded in an out in big numbers.
Frinstance, this month I bought 400 coins just for resale to get money for my main quest of one of a kinders and raries. Are those words"? I hope so, cause I am leavin them in there. haha
Which leads me to the main theme of this journal. MONEY!
Yup, if you want to find a way to get free money for buying coins for your keepsies, then buy and trade other coins with your stash money, college funds etc. Then just use the profits for coins to keep. That is what I am doing.
ONE THING! Before you go and do a lot of speculating with your hard earned and needed savings, be sure you have a coin sold before you buy it, or be durned sure you got it at a sub retail price. DO NOT speculate with savings. This is NOT what I am saying.
There are myriad ways nowadays to find out what is a great price and what you can resell an item for. Do not get sucked in because you are on the hunt. Keep the emotion out of it until you find a keeper, then you are using profit money and you are not reselling it so if you over pay a bit, its not so important.
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