Taxation on Casascius coins - USA

[rjk]

I bought Casascius coins in 2012 and have held them since then. If I sell them for USD, what are the tax implications?

[FiniteKez]

It would be long term capital gains, just like if you were selling a stock you had held for more than a year. The rate you pay for capital gains depends on your tax bracket. For someone filing as single the capital gains rates are:

Tax Bracket	|	Capital Gains
10%	|	0%
15%	|	0%
25%	|	15%
28%	|	15%
33%	|	15%
35%	|	15%
39.6%	|	20%

[rjk]

Thanks for the info. Since it's a physical item, this makes me wonder if such a tax applies to the random shit that I occasionally sell on craiglist/ebay, or are these coins being treated specially "because bitcoin"?

[rjk]

Also, another question in relation to this being a physical item: Can I pass off the value of the BTC1 on each coin for capital gains and then count the remainder of the coin's profit as non taxed hobby income? It seems that the value of the BTC itself is the main issue here, and if there were no BTC involved it would be a much simpler person-to-person transaction of occasional nature that would not normally be taxed.

Example: I bought the coins loaded with BTC1 each back in 2012. The value of BTC1 at that point was about $3.50. Now, if I sell the coin for any amount higher than the market value of ~$3k, could I count the amount over ~$3k as non-taxed hobby income since this isn't any sort of regular business? That would separate out the value of the BTC from the value of the coin itself.

[FiniteKez]

Yes capital gains applies to physical items too. There's lots of information covering capital gains from people who hold gold and silver. And to answer your second question, no you can't ignore profits on the physical coin. Although being a simple brass coin, the actual value of it is going to be pretty low compared to the bitcoin on it. I would be careful on how you try to sell the coin as well. From what I remember, that operation was shut down by the government because they considered physically minted bitcoins something you needed a license to sell.

[darkangel11]

Also, another question in relation to this being a physical item: Can I pass off the value of the BTC1 on each coin for capital gains and then count the remainder of the coin's profit as non taxed hobby income? It seems that the value of the BTC itself is the main issue here, and if there were no BTC involved it would be a much simpler person-to-person transaction of occasional nature that would not normally be taxed.

Example: I bought the coins loaded with BTC1 each back in 2012. The value of BTC1 at that point was about $3.50. Now, if I sell the coin for any amount higher than the market value of ~$3k, could I count the amount over ~$3k as non-taxed hobby income since this isn't any sort of regular business? That would separate out the value of the BTC from the value of the coin itself.

That's an interesting matter because when you're trading a loaded coin its value is many times higher than that of an empty one. So, this is comparable to selling a physical item + exchanging BTC on that address fiat. If you sell it for cash it will be impossible to trace, especially if the original address on the coin hasn't been used, so that's something to think about for sure if you're willing to take the risk