What's Your Opinion?

[Glenn in CO]

In this video this lawyer claims that this person who found a 9 cwt diamond in Arkansas is responsible for paying taxes whether he sells it or not. Then he goes on and claims anything a person would find, they would pay tax on it if they sell or not. My understanding when it comes to gold (nuggets, specimens, coins, etc.) it is not taxable until you sell it. I'm not sure about other items one might find that are valuable. What's you opinion?

 

 

[GB_Amateur]

What you said is what I thought, but apparently wrong.  From https://www.kiplinger.com/slideshow/taxes/t054-s003-surprising-things-that-are-actually-taxable/index.html

If you unearth a cache of gold coins in your backyard or discover sunken treasure while deep-sea diving, the IRS wants a piece of your booty. Found property that was lost or abandoned is taxable at its fair market value in the first year it's your undisputed possession, the IRS says.

The precedent for the IRS's "treasure trove" rule dates back to 1964, when a couple discovered $4,467 in a used piano they had purchased for $15. The IRS said the couple owed income taxes on the money, and a U.S. District Court agreed.

The example isn't convincing, though, as that was actual cash found, not a valuable asset yet to be converted to cash.  However, if the highlighted part of "the IRS says" is accurate then it sounds like the diamond you mention is taxable immediately (i.e. in the tax year it is found).  Presumably if it is subsequenty converted to cash then the surplus earned is also taxable, and hopefully if that amount is negative it can be deducted.

There's a reason tax (good) preparers make the big bucks.  😁

Afterthought:  The example I quoted and even the part about "the IRS says" specifically mentions "lost or abondoned property."  Neither of those adjectives applies to naturally occurring minerals.  So more clarity is needed.  (Maybe that was the gist of your post?)

I recall a loophole that was sealed back in the 1980's after gold and silver jumped in value.  People were paying for items with silver and gold coins and the seller was claiming the face value of the coins as the transaction value.  The government jumped in a put a nix on that, saying the transaction was valued at the precious metal value, for tax purposes.

[RickUK]

Interesting question,must admit i am lucky that in all the decades that i have been detecting i have only found nails and rubbish,in my mind its always best to keep everything low profile that way you dont have any issues 😉

[mn90403]

Rick is right.  Most of what I've found is rubbish and if I've ever found anything of value I've always managed to find a true owner.

[Redz]

The linked article provides a good summary for mining. For a individual it is profit based and subject to deductions that limit tax liability.

https://www.lexology.com/library/detail.aspx?g=a19eb9c8-5b1c-4296-8b59-afb6c5ad1660

[Gerry in Idaho]

If I am to get taxed on my finds, then I'm going to write off every detector purchased, every set of tires, the ATV, the toy hauler and the $80K truck used to haul everything.  I'm going to write perdiem on every trip taken and then anything else I can think of.

It would not be cost efficient for the IRS if we did it this way.

Interesting read.

[Reg Wilson]

Who would want that idiot as an advisor?