Ask the Experts: Do you have to pay taxes on gold you panned yourself?
Is gold that you panned from a river or up in the mountains on vacation considered taxable? -Edward
Presuming this isn’t an entirely hypothetical question, congratulations on striking gold! May you enjoy your newfound wealth. Or what’s left of it. Because yes, the government will be taking some of that.
Earlier this year you may have heard about a couple in California who found $10 million worth of gold coins on their property. That’s pretty awesome, right?
Well, it was about 53 percent awesome. The other 47 percent went to state and federal taxes. The couple didn’t even need to sell any of the coins – tax was immediately due based on the estimated value of the coins.
The reason goes back to a landmark case: Cesarini v. United States. Cesarini bought a used piano for $15 (the 1950s were a different time) and later found $5,000 inside the piano. Cesarini argued that the found money didn’t constitute gross income per the Tax Code (as it was then written). The IRS disagreed. The IRS won.
The case helped clarify what items are considered gross income per the Tax Code, extending the list to include treasure troves.
When it comes to your self-panned gold nuggets, however, I wouldn’t be worried about taxes until you’ve actually sold the gold. At that point it’s clearly additional income with a paper trail. Make sure you keep track of all documentation and claim the proper amount on next year’s taxes.
Thanks for the question!