No Gain Without Pain
By Daniel at 25 November, 2009, 2:18 am
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Our accountant just told us that Mortgage Companies are now flooding the IRS with requests for 1040 Verification. Anotherwords, lenders will not accept income verification from just YOUR copy of a completed 2008 Form 1040 any longer.
We are in for a very difficult period of declining assets and then, eventually, inflation like you’ve never seen before. This is why the lemmings are running to gold as fast as they can.
However, goldbugs need consider tax consequences: 28% capital gains tax on collectibles and state income tax on gold gains, as well. The IRS believes people who buy physical gold (jewelry,coins, ingets) as well as Gold ETF’s, are not investors, but collectors. Consequently, the preferrential 15% Long Term Capital Gains tax rate is not applicable to any form of gold purchases. Plus, in states like California and Oregon, you will pay for any gain as regular income on your state income tax return to a tune of 11% (upper bracket).
So, your gain is really 39% the Government’s gain, assuming Federal tax rates do not increase. Everybody knows President Obama intends to raise all taxes and especially Capital Gains Taxes to 20%-25% in 2011. Gold has appreciated 47% since Jan 1, 2009. Your current cut: 47%-39%= 2%. Once again, no gain without pain.
Remember one famous piece of financial advice: “You ONLY get to keep what the government lets you keep (from your wages or other income)”.
- Craig Bradley
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