Avoid sales tax on coin acquisitions
Posted by John T. Reed on
I screwed up on part of my effort to convert gold coins and numismatic silver ones to junk silver. In CA, you need to make coin purchases exceed $1,500 per purchase. The reason is CA imposes sales tax on smaller purchases. In Oakland, it is 9.5%. I paid about $30 in tax on my purchase of 66 JFK ’64 half dollars.
Further complicating things is that eliminates a lot of coin dealers because they do not have $1,500 worth of the type of junk silver that I want, namely, 1964 JFK half dollars or at least early 1960s Franklin half dollars. 1960s silver coins generally weigh more than earlier ones because of wear, but the convention in the industry is to sell junk silver as if all such coins have the same amount of silver and copper in them. So they price them according to the face value of the coin. Dumb.
Californians who live near the state border or who travel out of state can solve this problem by buying their smaller-than-$1,500 lots in the other states—as long as those states do not also tax junk silver sales. California borders Oregon, which has no sales tax. Also Nevada and Arizona. NV charges sales tax on all junk silver purchases regardless of the amount of the sale. AZ does not charge a sales tax on bullion like junk silver.
People who have not lived in the West may not realize how big California is. To drive from my house near San Francisco to OR is five and a half hours (343 miles). To Flagstaff, AZ is eleven hours (742 miles).
Can you fly or take a train? Okay, but you’ll be carrying, say, 200 half dollars (about $1,000 worth). They weigh 12.5 grams each. That’s 5.5 pounds of metal.
Big picture on the twenty or so pounds of inherited coins my wife handed me to deal with: even though most were over a century old, only six had any numismatic value, that is, were worth more than their melt value because of their rarity. And you had to look up each coin individually on the Net to find the numismatic value caused by obscure mint marks or years when relatively few coins were made for various technical reasons. All the other coins sell for melt value.
Generally, all the gold buyers offer you the same amount for the gold. I went to three different dealers yesterday and was offered $270, $275, and $276 for five-dollar gold pieces from the 1910s. I assume that is because the market for gold is quite competitive. But I was offered $48, $65, and $110 for a Carson City minted Morgan dollar from 1890—and the two guys who offered $110 were the same two guys who only offered me $70 for it a week before!?
Similarly, the prices at which JFK half dollars were offered to me varied from $6 (which included sales tax) to $6.75 (which did not).
So see if you have any numismatic stuff, although not much falls into that category. Get rid of your gold because although it has fallen in price a lot in recent years, it is still almost double its long-term average price adjusted for inflation. Silver, on the other hand has an average long-term price of about $15.40 but is now at $14.54. Avoid sales tax. Store any gold you keep, at least, in Canada, not the U.S., to avoid a repeat of Executive Order 6102.
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