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Author: KenAtPcs Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121572  
Subject: No receipt = zero tax basis? Date: 10/15/2005 4:22 PM
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I have 2 gold coins I bought in early 1980 (if I recall correctly) from the US Postal Service (issued by the US Mint). They are part of the American Arts Commemorative Series minted in the early '80s.

I no longer have a receipt, and don't even know how much I paid (except it is undoubtedly less than their current worth). If I sell them, must I declare a zero basis? That seems unreasonable, since at no time did they sell for anything approaching zero. So it seems reasonable that the lowest basis I should declare would be the lowest price they ever sold at (which I doubt I can determine, but I could make a guess based on the price of gold over the last 25 years).

I assume that even if I found out how much they originally sold for, I can't use that price as my basis, since I can't prove that's when I bought them. Is there any alternative I haven't mentioned?

Ken
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Author: irasmilo Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 81098 of 121572
Subject: Re: No receipt = zero tax basis? Date: 10/15/2005 5:20 PM
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I have 2 gold coins I bought in early 1980 (if I recall correctly) from the US Postal Service (issued by the US Mint). They are part of the American Arts Commemorative Series minted in the early '80s.

I no longer have a receipt, and don't even know how much I paid (except it is undoubtedly less than their current worth). If I sell them, must I declare a zero basis? That seems unreasonable, since at no time did they sell for anything approaching zero. So it seems reasonable that the lowest basis I should declare would be the lowest price they ever sold at (which I doubt I can determine, but I could make a guess based on the price of gold over the last 25 years).

I assume that even if I found out how much they originally sold for, I can't use that price as my basis, since I can't prove that's when I bought them. Is there any alternative I haven't mentioned?


I don't know if this would stand up if challenged, but if the coins have a face value, then I would use that as your cost basis. The coins wouldn't have sold for less than face value.

Ira


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Author: KenAtPcs Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 81100 of 121572
Subject: Re: No receipt = zero tax basis? Date: 10/15/2005 5:41 PM
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Ira,

I don't know if this would stand up if challenged, but if the coins have a face value, then I would use that as your cost basis. The coins wouldn't have sold for less than face value.

Nope, no face value. Here's an ebay auction I found containing one of the coins I have:
http://cgi.ebay.com/3-AMERICAN-ARTS-GOLD-MEDALLION-COINS-1980-Grant-Wood_W0QQitemZ8341975610QQcategoryZ527QQssPageNameZWDVWQQrdZ1QQcmdZViewItem

If you have any other ideas, please let me know.

Thanks,

Ken

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Author: DeltaOne81 Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 81102 of 121572
Subject: Re: No receipt = zero tax basis? Date: 10/15/2005 6:02 PM
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I assume that even if I found out how much they originally sold for, I can't use that price as my basis, since I can't prove that's when I bought them. Is there any alternative I haven't mentioned?

Ken


I bet you could. First, it's the honest thing to do. Second, it would only ever be an issue if you were audited, so over 999 times out of 1000 you would be perfectly correct, honest, and no trouble. That said, it's probably a good idea to find out the letter of the law as far as if that would pass an audit or not. Either from people on this board or from a tax professional.

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Author: irasmilo Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 81103 of 121572
Subject: Re: No receipt = zero tax basis? Date: 10/15/2005 6:39 PM
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I assume that even if I found out how much they originally sold for, I can't use that price as my basis, since I can't prove that's when I bought them. Is there any alternative I haven't mentioned?

Ken


I bet you could. First, it's the honest thing to do. Second, it would only ever be an issue if you were audited, so over 999 times out of 1000 you would be perfectly correct, honest, and no trouble. That said, it's probably a good idea to find out the letter of the law as far as if that would pass an audit or not. Either from people on this board or from a tax professional.


Yes, Ken could. But it would NOT be the honest thing to do. Second, no professional can ethically recommend playing audit lottery. Even if the odds of audit were 1 in 1000, he would still be wrong 1000 out of 1000 times. Unfortunately, Ken already knows the correct answer. If he can't find documentation for what he paid for the coin, he may have to use $0 as his cost basis.

Another thought comes to mind, however. If the precious metal content of the coins is known, you could do a search of historic prices of bullion and calculate what the lowest value was for the bullion content of the coin. It's highly unlikely that the coins ever sold for less than bullion value. This would establish a lower (but greater than $0) bound on the cost basis.

Ira

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Author: KenAtPcs Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 81104 of 121572
Subject: Re: No receipt = zero tax basis? Date: 10/15/2005 6:47 PM
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Another thought comes to mind, however. If the precious metal content of the coins is known, you could do a search of historic prices of bullion and calculate what the lowest value was for the bullion content of the coin. It's highly unlikely that the coins ever sold for less than bullion value. This would establish a lower (but greater than $0) bound on the cost basis.

Thanks, IRA, that pretty much settles it. The gold content is known -- I have 3 ounces worth. (That was actually what I meant when I cryptically wrote: I could make a guess based on the price of gold over the last 25 years.)

What a shame. I actually have a loss in the neighborhood of about $600 or so, but instead I will likely have to declare a profit of about $700. All for lack of a slip of paper!

Thanks again,

Ken (who was surprised the receipt wasn't there, since even 25 years ago, I knew better)

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Author: irasmilo Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 81106 of 121572
Subject: Re: No receipt = zero tax basis? Date: 10/15/2005 7:01 PM
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Ken (who was surprised the receipt wasn't there, since even 25 years ago, I knew better)

A shot in the dark, but who knows... If you bought the coins from a commercial vendor and they're still in existence, perhaps, they have 25 year-old sales records. It's worth an inquiry.

Ira


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Author: KenAtPcs Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 81108 of 121572
Subject: Re: No receipt = zero tax basis? Date: 10/15/2005 7:37 PM
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If you bought the coins from a commercial vendor

I have 2 gold coins I bought ... from the US Postal Service

What are the chances? Slim & none. But I suppose it might be worth a shot.

Thanks for the idea,

Ken

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Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 81109 of 121572
Subject: Re: No receipt = zero tax basis? Date: 10/15/2005 7:58 PM
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I'm going to take the liberty of a rare disagreement with Ira on this one. The fact is that you know what you paid for the coins. I see no problem in claiming that amount on moral grounds.

The problem arises only if the IRS becomes interested in checking your return. While you are on fine moral standing, you aren't able to prove it. I do not see this as playing audit lottery. (In my mind, that is taking a stance you know to be wrong just because the odds favor you not getting caught.) If you need to prove your basis, you do have a problem. All you can do is explain the situation to the auditor and ask them to do what they feel is right.

My gut tells me that if this is the only thing on your return that you can't prove, most auditors will let the one item that you can't prove stand as is.

--Peter

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Author: KenAtPcs Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 81110 of 121572
Subject: Re: No receipt = zero tax basis? Date: 10/15/2005 8:29 PM
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Thanks, Peter, for that alternate viewpoint.

The fact is, I do NOT know how much I paid, only that gold was considerably more per ounce in 1980 than it is today. I don't even know exactly when I bought it, except it was in the earlier part of the year. (In fact, for all I know, perhaps I pre-ordered it in late 1979 ... but I doubt that they did such a thing. I really don't remember the details of the transaction.)

Perhaps it would be fair, and honest, to assume a price equal to whatever price I sell it at. No loss, no gain. There were times in the early part of 1980 when gold was not *too* much more than it currently is (though never below, AFAIK). So maybe, on the off chance I'm audited, that would be a reasonable argument to make.

I'm still going to try to contact the USPS, *just* in case they happen to have kept such records. A lot of trouble for what amounts to a relatively small difference in taxes (at 15% LTCG rates), but it really bugs me that I didn't keep the receipt! :-)

Thanks,

Ken

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Author: ziggy29 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 81111 of 121572
Subject: Re: No receipt = zero tax basis? Date: 10/15/2005 8:34 PM
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>> If the precious metal content of the coins is known, you could do a search of historic prices of bullion and calculate what the lowest value was for the bullion content of the coin. It's highly unlikely that the coins ever sold for less than bullion value. This would establish a lower (but greater than $0) bound on the cost basis. <<

Yep, this is pretty much what I was thinking. I'm pretty sure the IRS would accept this as a reasonable cost basis if they accept the date of purchase.

#29

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Author: sjfans Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 81112 of 121572
Subject: Re: No receipt = zero tax basis? Date: 10/15/2005 8:36 PM
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I'm still going to try to contact the USPS, *just* in case they happen to have kept such records. A lot of trouble for what amounts to a relatively small difference in taxes (at 15% LTCG rates), but it really bugs me that I didn't keep the receipt! :-)

Is there any way to trace the transaction through some of your other records? For example, did you buy them using a credit card that you still have records for or using a check that you could find a copy of? I know, it's also a very long shot considering that it was 25 years ago. Just a thought...

sjfans

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Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 81113 of 121572
Subject: Re: No receipt = zero tax basis? Date: 10/15/2005 8:36 PM
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Just one more thought in the hunt for details -- any chance of there being a credit card record of the transaction? After 25 years (give or take), it's probably a very long shot as well.

--Peter

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Author: ziggy29 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 81114 of 121572
Subject: Re: No receipt = zero tax basis? Date: 10/15/2005 8:38 PM
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>> The fact is, I do NOT know how much I paid, only that gold was considerably more per ounce in 1980 than it is today. I don't even know exactly when I bought it, except it was in the earlier part of the year. (In fact, for all I know, perhaps I pre-ordered it in late 1979 ... but I doubt that they did such a thing. I really don't remember the details of the transaction.) <<

But you know when you bought it, right...roughly? If each coin has a troy ounce of gold, for example, you could reasonably look at the rough time period where you bought the coin, and to be conservative, you could use the lowest spot price of gold in that period to claim a cost basis.

For example, if you know you bought it in a three month window when gold prices ranged from $600 to $750, you could pretty safely use a $600 cost basis.

The only problem I see is that you have no documentation that you bought it then, and not later when gold dipped to $250 an ounce.

#29

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Author: edcosoft Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 81115 of 121572
Subject: Re: No receipt = zero tax basis? Date: 10/15/2005 8:42 PM
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Thanks, IRA, that pretty much settles it. The gold content is known -- I have 3 ounces worth. (That was actually what I meant when I cryptically wrote: I could make a guess based on the price of gold over the last 25 years.)

What a shame. I actually have a loss in the neighborhood of about $600 or so, but instead I will likely have to declare a profit of about $700. All for lack of a slip of paper!


With the price of an ounce of gold at $500 to $680 in early 1980 and these coins probably selling for more than that, and now at about $470 you probably do have a loss of $600 but I can't follow how you establised a $700 profit. Any coin dealer will probably pay you more than you could get on e-bay, in cash, no receipt. ed


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Author: edcosoft Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 81116 of 121572
Subject: Re: No receipt = zero tax basis? Date: 10/15/2005 8:49 PM
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WOW!! 6 posts tallied before I could get mine posted. Note--coins gains rate is 28% not 15% LTCG rate. ed

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Author: KenAtPcs Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 81117 of 121572
Subject: Re: No receipt = zero tax basis? Date: 10/15/2005 8:51 PM
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but I can't follow how you establised a $700 profit.

That was assuming a cost basis of the lowest price of gold during the last 25 years, roughly $225/ou (off the top of my head, without research -- could be wrong, but not by much).

Is there any way to trace the transaction through some of your other records?

Wow, 2 separate posts at the identical posting time with the exact same idea! Great minds really DO think alike! :-)

I have already looked for checks and/or credit cards going back that far, but I couldn't find anything older than 15 years. This was before I'd even bought my first house, so I'm sure at some point I decided there's no reason to keep stuff from that long ago. Yeah, right. :-)

Thanks again, everyone!

Ken

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Author: KenAtPcs Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 81118 of 121572
Subject: Re: No receipt = zero tax basis? Date: 10/15/2005 8:53 PM
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Note--coins gains rate is 28% not 15% LTCG rate. ed

Oh. Ouch. Guess that "relatively small" amount just became about 2x as big.

Thanks, I had *no* clue!

Ken

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Author: foolazis Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 81131 of 121572
Subject: Re: No receipt = zero tax basis? Date: 10/17/2005 11:08 AM
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Have you tried contacting the US Mint or a coin dealer? They may be able to tell you the official issue price of the particular medallion. Your problem will be being able to document that you bought directly from the issuer at the time of issue, as opposed to buying it sometime later on the secondary market.

foolazis

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Author: ziggy29 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 81132 of 121572
Subject: Re: No receipt = zero tax basis? Date: 10/17/2005 11:55 AM
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>> Have you tried contacting the US Mint or a coin dealer? They may be able to tell you the official issue price of the particular medallion. Your problem will be being able to document that you bought directly from the issuer at the time of issue, as opposed to buying it sometime later on the secondary market. <<

Except that there isn't necessarily an "official issue price" because the price, even during the initial offering period direct from the Mint, will change over time with spot bullion values.

#29

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Author: Bob78164 Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 81135 of 121572
Subject: Re: No receipt = zero tax basis? Date: 10/17/2005 5:57 PM
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KenAtPcs writes (in part):

A lot of trouble for what amounts to a relatively small difference in taxes (at 15% LTCG rates), but it really bugs me that I didn't keep the receipt!

I reply:

Aren't collectibles subject to a higher tax rate than long-term capital gains rates? --Bob

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Author: KenAtPcs Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 81136 of 121572
Subject: Re: No receipt = zero tax basis? Date: 10/17/2005 11:17 PM
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Aren't collectibles subject to a higher tax rate than long-term capital gains rates? --Bob

Someone did point that out, but it's always nice to have it reaffirmed. :) I actually didn't realize they were collectibles, I considered them an investment in gold. However, because they were issued as coins by the US Mint, it's possible (even likely) that the IRS would classify them as collectibles.

Maybe I'll just never sell these things. That might be easier all around. ;-)

Thanks!

Ken

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Author: irasmilo Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 81137 of 121572
Subject: Re: No receipt = zero tax basis? Date: 10/18/2005 12:43 AM
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Someone did point that out, but it's always nice to have it reaffirmed. :) I actually didn't realize they were collectibles, I considered them an investment in gold. However, because they were issued as coins by the US Mint, it's possible (even likely) that the IRS would classify them as collectibles.

Investments in gold are also taxed at 28% maximum. So, it doesn't matter whether you thought they were collectibles or coins or precious metal.

Ira



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Author: KenAtPcs Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 81138 of 121572
Subject: Re: No receipt = zero tax basis? Date: 10/18/2005 11:23 AM
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nvestments in gold are also taxed at 28% maximum. So, it doesn't matter whether you thought they were collectibles or coins or precious metal.

Oh. I didn't know that. That means there's a tax return of a few years ago that I should go back & revise. I'll at least have to take a look at it, but I don't know if it's worth the trouble or not. (It was a reported loss on some bullion I held for many years.) Yet another good reason not to invest in gold. :-)

Thanks, Ira,

Ken

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Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 81139 of 121572
Subject: Re: No receipt = zero tax basis? Date: 10/18/2005 11:45 AM
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Oh. I didn't know that. That means there's a tax return of a few years ago that I should go back & revise. I'll at least have to take a look at it, but I don't know if it's worth the trouble or not. (It was a reported loss on some bullion I held for many years.) Yet another good reason not to invest in gold. :-)

If it was a loss, then the maximum tax rate doesn't really matter. You used the loss to reduce other kinds of income. Also, the statute of limitations is 3 years. If the return is older than that (i.e. 2001 or older), then there really isn't much point in amending.

--Peter

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Author: KenAtPcs Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 81140 of 121572
Subject: Re: No receipt = zero tax basis? Date: 10/18/2005 1:33 PM
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If it was a loss, then the maximum tax rate doesn't really matter. You used the loss to reduce other kinds of income. Also, the statute of limitations is 3 years. If the return is older than that (i.e. 2001 or older), then there really isn't much point in amending.

I looked it up. It was 2003, so it is amendable. But you were right. It simply offset other cap gains, and when I corrected it, it made no difference to the calculations (other than correctly reporting it as such in the 28% tax calculations). So, no worries.

I've been doing my own taxes for 20 years now. Still making mistakes and learning. Amateurs! ;-)

Thanks, Peter,

Ken

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Author: vkg Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 81152 of 121572
Subject: Re: No receipt = zero tax basis? Date: 10/19/2005 6:00 PM
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If you routinely contribute to a charity that would accept the coins as a donation, it might simplify your tax issues. You would not need to establish a cost basis.

Debra

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Author: DtrrrJoel Three stars, 500 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 81518 of 121572
Subject: Re: No receipt = zero tax basis? Date: 11/15/2005 11:03 AM
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If you routinely contribute to a charity that would accept the coins as a donation, it might simplify your tax issues. You would not need to establish a cost

You really captured it! It was as if that new addition to the tax rules was put in just to figure a solution to this post. Excellent suggestion.

Joel

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