| “Do I have to pay tax on this amount. I had paid probably close to the same amount over the time I purched the silver.”--> A 1099-MISC is required when a business pays you more than $5,000 for goods for resale. You pay tax on the difference between what they paid you and what you paid for the jewelry in the first place. Given the rise in the price of silver(even other traditional products which use silver like silverware and jewelry have been holding pretty steady in demand during these hard economic times.), you probably do have a taxable gain from the sale of the old jewelry. I assume that it silver coin, then long-term investments in collectibles are taxed at a flat 28%. Short-term investments in collectibles are taxed as short-term capital gains at your ordinary income tax rates.; then, silver bullion is a precious metal that the IRS considers a collectible. The IRS taxes the sale of collectibles like silver (gold)bullion and works of art differently than it does the sale of non-collectible items. When you sell the silver, it triggers consequences in the form of capital gains taxes. When you sell silver bullion, the IRS taxes you on the amount of money you make from the sale. To calculate a capital gain, you subtract the original amount you paid for the bullion from the total amount for which you sold it. A positive amount results in a capital gain, and a negative amount results in a capital loss. If you inherited the silver bullion, you use the fair market value of the metal and subtract that from the total amount for which you sold it.For example, your orginal cost was $4,000 and its FMV is $7,000 and you held it for over one year then your tax liability on LTCG is $ 840;$7,000-$4,000$=3,000*28%. If the holdin period is one year or less than one year, then your tax liability on the sale of silver is $750;25%*($7,000-$4,000).
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