FP Answers: How is a coin collection taxed when the coins are sold?

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Q. I inherited my father’s coin collection when he died 15 years ago. With the elevated gold price, I’ve recently sold several $100 Canadian gold coins (years 1976 through 2009) from the collection. After I sold them I became aware that capital gains would apply to the sale of the coins. My quandary is that I do not know what the value of these coins was on the date of his death (Nov. 11, 2009) so I can determine the capital gain for each (note that some coins were $14,000 and some were $22,000).

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I’ve contacted my dad’s executor but he doesn’t have any records (such as tax returns, appraisals, etc.) of the coins’ worth in 2009. I’ve also reached out to Canada Revenue Agency (CRA), some local coin dealers, as well as the Edmonton Numismatic Society, but, to date, I have not received any guidance from them. My question is: Are you aware of a website, a reference document, or some other source that would provide this historical information for this variety of Canadian $100 gold coins? And can you explain to me how capital gains tax would work in this particular situation? Thanks for taking the time to consider this question. —Gordon, Red Deer, Alta.

FP Answers: Gordon, your father’s coin collection would have been considered listed personal property when he died, and should likely have been included in his estate valuation. Even today with the advance of electronic records that track the price of commodities such as gold, as well as data tracking the price of collectibles, it can still be challenging to pinpoint the historical value of unique items such as gold coins.

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Oddly enough, though gold is traded 24/7 on global mercantile exchanges, it is easier to find values for collectibles such as trading cards, comic books, or action figures than it is for items such as gold coins issued by the Canadian Mint or other financial institutions. Another challenge is that collectibles, such as gold coins, may derive their price not only from their weight and purity but also the significance of that coin itself.

Many coins are issued to commemorate the anniversary of significant events, the contribution of notable individuals to society, or even to represent membership in a society or guild. These coins may not have a trackable history of their market value as they may not have been widely circulated and could have different values based on the coins being part of a particular run that was produced or part of a broader collection.

As mentioned, the historical price of gold is easily accessible online and is usually expressed as the “spot” price, which represents the price of one ounce of pure gold. This is one way to establish a minimum value for your coins if you know the purity and weight, but determining their value for tax purposes, which could be higher, may require more research. I recommend seeking out a coin dealer or expert who has performed appraisals in the past.

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Listed personal property can be of significant value, with many dying in possession of collectibles such as those mentioned above or also including items like vintage vehicles, designer furniture, fine art or even sports jerseys. There are also auction houses whose business involves accurately valuing assets to be put up for sale. If you have trouble finding a specialist who can evaluate your coins, you could always look for any upcoming trade shows in your area or even in an adjacent province or state, as these may be good venues to find dealers who are familiar with your coins.

In terms of the tax treatment of the sale of collectibles, they are generally taxed as capital property triggering capital gains or losses when sold. Technically, the value of your father’s coins should have been included in your father’s estate for capital gains and estate administration and probate tax purposes. But the executor may no longer have those records all these years later, whether items were reported correctly or not.

For your own tax purposes, if the sale of a collectible is under $1,000, its cost will also be set at $1,000, and if you receive less than $1,000 for the sale, the proceeds are also set at $1,000. This effectively makes the sale of any single collectible for less than $1,000 tax free. There is one exception to the rule, that if you sell one part of a broader set or collection, where the breakout price affects the aggregate value of the set, then you must treat the entire set as having a cost basis of $1,000, which would then be applied proportionately to the other components. This rule limits the ability of a seller to divide up a set and sell it as parts rather than a whole to avoid taxes.

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In terms of how you calculate your own capital gains or losses on disposition, you would only need to determine the value of these coins on the date of death in 2009. Since you have already sold several coins, it is possible that the buyers you sold to may also have insight into these historical values and so you could see if they are experts in the field or know someone who can help.

Andrew Dobson is a fee-only, advice-only certified financial planner (CFP) and chartered investment manager (CIM) at Objective Financial Partners Inc. in London, Ont. He does not sell any financial products whatsoever. He can be reached at adobson@objectivecfp.com.

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