I have a client who goes to the bank and buys rolls of quarters to look for errors. If he finds one, he resells on Ebay for a profit. He also buys coins from Ebay and resells for a profit. Are these sales reported on Sch D as capital gains? I assume since it's currency it can't be reported on a Sch C? He does have an office and is planning on opening a shop to sale the coins. I haven't ever dealt with this kind of tax situation before. Any help would be greatly appreciated. Thanks in advance.
Yes they are considered collectibles. As are the ones he buys to resale. Oh I know, but he's selling quarters for around $60.00 each with errors or certain mint marks. If none are in the roll he cashes them back in at the bank. He's made around 20k doing this.
A regular and continuous activity with a profit motive sounds like a trade or business to me. I'm not sure it's relevant that the coin shop is online via ebay instead of brick-and-mortar.
I just want to make sure I'm understanding this right. Since he is seeking a profit from the sale of coins I would just report on Sch C as I would a normal business with his expenses being the price of the coin purchased? If he buys 4k worth of coins on ebay and resales them for 6k. I'm just doing the usual 6k income minus 4k expenses? I apologize, it just seems it shouldn't be done this way. I think because of it being money. So I wouldn't need to do anything with capital gains since it's a business and does he need to report sales on a 1099-B? I'm hoping you can help straighten me out.
Makes sense, or is it cents. One last thing sir. So will the IRS not consider this as the selling of collectibles and want it reported as a capital gain?
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