If I am gifted gold coins from a relative and I sell them, do I pay Capital Gains tax if my income is below a certain threshold?

[pk · Accepted solution]

@willbaker001 

for purposes of computing gain from the transaction  ( sale of  gold coins), gain is  the difference between "Basis" in the asset and the "sales proceeds" (Sales Price LESS any associated costs such as commission and  paid by the seller ). Then 

(a) for a gift   ( i.e. transfer of ownership while the donor is alive), the basis of the asset is the same as that of the donor. Thus in your case it would be whatever the donor paid for the asset/coins.

(b) for an inheritance ( i.e. a transfer of ownership post the  passing of the donor/decedent), basis  is the FMV ( Fair Market Value ) at the time of passing of the decedent.  Thus if one sells coins received as part of inheritance, there is no gain or loss.

(c)  in case of a gift, the holding period  ( for determining long or short term ), is the sum of  donor's and donee's total holding period.  Thus if the donor had bought the coins a couple of years ago, then your holding period is couple of years plus till the date of sale.  This is now long term holding.

(d) Gains on long-term assets  when disposed  is given capital tax treatment.  

See  this page for details of capital gains  tax rate --->>  Topic no. 409, Capital gains and losses | Internal Revenue Service

Note that depending on the value of the gift ( not basis ) a donor may have to file form 709

Is there more I can do for you ?

[willbaker001]

Thank you for clarifying! After calculating the gain on the coins, at what rate will I be taxed on the gain? Will it be my normal 12% tax bracket since my income falls below 96k per year, or will these be taxed at a higher rate?

[AmeliesUncle]

It would be taxed at your regular tax rate, up to 28%.

If you are still in the 12% tax bracket INCLUDING the gain from the sale of the coins, it would be taxed at 12%.  But if the gain from the sale of the coins would put you in a higher tax bracket, some (or possibly all) would be taxed at that higher tax bracket rate.