7717 / Is a “rare” coin or currency money or “property”? How will it be valued when it is used in a taxable transaction?
Rare (numismatic) coins or currencies that have been removed from circulation and coins or currencies in circulation that have a numismatic value in excess of face value are “property other than money” for purposes of the federal income tax.1
As “property other than money,” a rare coin or currency will be valued at its fair market value (FMV) rather than face value when it is used in a taxable transaction. Thus, where a taxpayer “sold” real property with a tax basis of $2,000 for silver coins having a face value of $2,000 and a FMV of $6,000, the taxpayer realized a $4,000 taxable gain in the transaction.2 Similarly, a dividend paid to a taxpayer in U.S. Double Eagle $20 gold coins having a total face value of $5,500 had to be reported as $70,396 of dividend income.3 Also, an individual who receives compensation for services rendered in the form of rare but circulating coins or currencies that have a FMV in excess of their face value must include the higher FMV in income.4
1. See California Fed. Life Ins. Co. v. Comm., 76 TC 107 (1981), aff’d, 680 F.2d 85 (9th Cir. 1982); Joslin v. U.S., 666 F.2d 1306 (10th Cir. 1981); Lary v. Comm., TC Memo 1987-169, aff’d, 842 F.2d 296 (11th Cir. 1988).
2. Rev. Rul. 76-249, 1976-2 CB 21.