Council for Tangible Assets and the Precious Metals Association of North America are
both urging members of Congress to retain like-kind exchanges for
personal property in Section 1031 of the U.S. tax code, and say that
eliminating such changes will adversely affect dealers and investors
in precious metals.
Both organizations argue that separate tax bills in both the House
and Senate, if enacted, would restrict like-kind exemptions to real
estate only, and eliminate personal property.
“We do not know how extensive the use of like-kind exchanges is
among coin dealers and their clients, so we cannot provide an
assessment [on specific affects of the tax legislation],” according to
David Crenshaw, ICTA's chief operating officer. “However, both the
House and Senate bills would limit the exemption to real estate
exchanges, only. The viability of all other like-kind exchanges, not
only coins, would be threatened.”
Mitchell Moonier, speaking on behalf of the Precious Metals
Association of North America (formerly Silver Users Association),
said, citing Title 26 US Code, §1031, “currently, U.S law
allows for the deferral of capital gains on ‘the exchange of property
held for productive use in a trade or business or for investment if
such property is exchanged solely for property of like kind which is
to be held either for productive use in a trade or business or for investment.’
“For the precious metals industry, this impacts both investors and
jobs along the precious metals supply-chain. For example, an investor
may hold gold bullion at a depository or refiner and subsequently
decide that they want to take physical possession of their investment.
To accomplish this, they exchange their gold bullion holdings for a
'like-kind' product such as American gold Eagle bullion coins.
“Similar exchanges happen every day and they help sustain jobs along
the precious metals supply chain.
“LKEs allow investors to make responsible decisions with their
continuing investments without facing unfair taxation. Once an
investor ‘cashes-out’ on an investment, then the gain is realized.
“The House and Senate tax reform bills include changes to Section
1031 that would repeal LKEs for personal property, such as investments
in precious metals,” Moonier said.