Collectible (28% Gain) – Tax Reporting and Filing Instructions
Collectibles (28% rate) gain refers to long-term capital gains from the sale or exchange of certain tangible property, such as works of art, antiques, coins, stamps, gems, metals (including gold, silver, and platinum bullion), and alcoholic beverages. These gains are taxed at a maximum rate of 28%, regardless of the taxpayer’s regular tax bracket.
What Constitutes a Collectible?
- Works of art
- Rugs and antiques
- Metal bullion (gold, silver, platinum)
- Gems and coins
- Stamps and alcoholic beverages
- Certain other tangible property
Reporting Collectibles Gain on Tax Returns
When reporting collectibles gain, taxpayers must use the 28% Rate Gain Worksheet found in the instructions for Schedule D (Form 1040). This worksheet helps determine the portion of capital gain that is subject to the 28% tax rate.
For individual filers, the amount reported in Box 1d of Form 2439 (if applicable) or Box 9b or 8b of Schedule K-1 (Form 1065 or 1120-S) should be entered on line 4 of the 28% Rate Gain Worksheet.
If you are filing Form 1040 or 1040-SR and have reported collectibles gain on Form 8949, Part II, you must include that gain on line 3 of the 28% Rate Gain Worksheet in the Schedule D instructions.
Calculating the 28% Rate Gain
The worksheet requires you to calculate the proportion of your total capital gain that is attributable to collectibles. This is done by dividing the collectibles gain by your total capital gain distribution.
Example: If your total capital gain distribution is $2,800 and $610 of that is collectibles gain, you would calculate: $610 ÷ $2,800 = 0.22. This result (0.22) is entered on line 4 of the worksheet.
Where to Report Collectibles Gain
- Form 1040 or 1040-SR: Use Schedule D, line 18, and the 28% Rate Gain Worksheet.
- Form 1041 (Trusts/Estates): Use the 28% Rate Gain Worksheet in Schedule D instructions for Form 1041.
- Schedule K-1 (Form 1065 or 1120-S): Report collectibles gain in Box 9b or Box 8b, respectively.
Important Notes
- Collectibles gain is taxed at a flat rate of 28%, which may be higher than the taxpayer’s regular long-term capital gains rate.
- The gain must be reported separately from other capital gains to ensure proper tax calculation.
- Taxpayers must keep detailed records of the acquisition and sale dates, basis, and fair market value of collectibles.
Source:
Form 6781
Form 2439
Schedule K-1 (Form 1065)
Schedule K-1 (Form 1120-S)
Schedule D (Form 1040)
Disclaimer: Always verify information with official IRS forms and instructions or consult with a tax professional. OLT (Online Taxes) provides guidance based on retrieved tax context but does not offer personalized tax advice.