Collectibles (28% rate) gain refers to long-term capital gains from the sale or exchange of certain tangible personal property, such as works of art, rugs, antiques, metals (including gold, silver, and platinum bullion), gems, stamps, coins, alcoholic beverages, and other specified collectibles. These gains are taxed at a flat 28% rate, separate from the standard long-term capital gains rates, and are reported on specific tax forms and worksheets.
Reporting Collectibles (28%) Gain
- Form 1099-DIV, Box 2d: Mutual funds and other entities report collectibles (28%) gain in Box 2d. This amount must be included on the 28% Rate Gain Worksheet in the Schedule D (Form 1040) instructions.
- Form 2439, Box 1d: For regulated investment companies (RICs) or real estate investment trusts (REITs), the collectibles gain portion of distributions is reported in Box 1d. Individual filers enter this amount on line 4 of the 28% Rate Gain Worksheet in Schedule D instructions.
- Schedule K-1 (Form 1065), Box 9b: Partnerships, S corporations, estates, and trusts report collectibles (28%) gain or loss in Box 9b. This amount is also entered on line 4 of the 28% Rate Gain Worksheet in Schedule D instructions.
- Form 8865 (Schedule K-2 and K-3), Line 13: For partnerships and S corporations, collectibles (28%) gain is reported on Line 13 of Schedule K-2 and K-3.
28% Rate Gain Worksheet (Schedule D, Line 18)
The 28% Rate Gain Worksheet is used to calculate the total collectibles gain for reporting on Schedule D, line 18. The worksheet includes:
- Collectibles gain from Form 8949, Part II
- Section 1202 exclusions (if applicable)
- Collectibles gain from Form 4684, Form 6252, Form 6781, Part II, and Form 8824
- Collectibles gain reported on Form 1099-DIV (Box 2d), Form 2439 (Box 1d), and Schedule K-1 (Box 9b)
- Long-term capital loss carryovers from Schedule D, line 14, or Schedule K-1 (Form 1041), box 11, code D
- Any long-term capital loss from Schedule D, line 7
Special Considerations
- Children’s Tax Returns (Form 8814): If a child’s capital gain distribution includes collectibles (28%) gain reported on Form 1099-DIV, parents must calculate the portion attributable to collectibles by multiplying the child’s total capital gain distribution (Schedule D, line 13) by a fraction. The numerator is the collectibles gain portion; the denominator is the total capital gain distribution. The result is entered on line 4 of the 28% Rate Gain Worksheet.
- Foreign Source Collectibles: If foreign source collectibles gain is involved, refer to the Partner’s Instructions for Schedule K-3 for additional guidance.
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Disclaimer: Always verify details with the current year’s Federal or State Department of Revenue Forms and Instructions. For complex situations, consult a tax professional or attorney.