Coin Clinic – How Does the IRS Define Hobbies?

How can I be sure my coin collecting financial transactions qualify as a hobby to the IRS?

The IRS defines hobbies as activities pursued for pleasure, not for profit. You must still report the income received from pursuing this hobby, although by listing the associated expenses as miscellaneous itemized deductions, you may have a loss rather than a profit. Hobby losses cannot be used to offset income from other sources.

Has it ever been possible to deduct hobby expenses, or has it always been this way?

It all depended on if the IRS determined if you were operating a business or a hobby. Taxpayers lost the hobby expense deduction through the 2017 Tax Cuts and Jobs Act. There is still a fine line to be walked – you might, under certain circumstances, be allowed to deduct hobby loss expenses as a personal deductible expense. Consult a tax accountant before you make such a claim.

Can I form an LLC for my coin collecting?

Members of a Limited Liability Company are not personally responsible for the company’s debts. You can make money from your hobby while benefiting from that hobby being considered an LLC, but you should first check with your attorney and accountant about the practicality of making your coin collecting into an LLC.

How do I know if my coin collecting activities qualifies as either a hobby or as a business?

Look up IRS form FS-2007-18 dated April 2007 online. This document presents the factors to be considered when determining if you are running a business or enjoying a hobby.

In the past, there have been living U.S. citizens appearing on coins. Is this still legal?

According to 31 US Code 5112, no portrait of a living man or woman is allowed to appear on a coin. Title 31 is formally titled Money and Finance, Subtitle IV-Money. Code 112 is titled Denominations, specifications, and design of coins.

Could Melania Trump or Jill Biden appear on First Spouse gold coins prior to their deaths?

31 US Code 5112 applies to the ongoing First Spouse gold coin series as well. This became controversial when, during Nancy Reagan’s lifetime, preparations for a coin honoring her were made. Reagan died on March 6, 2016, but the official release date for the coin honoring her was July 1, 2016.

Is the same true about living former U.S. presidents appearing on our Presidential dollar coins?

According to Public Law 109-145, Section E, “Limitation in series to deceased presidents – no coin issued under this subsection may bear the image of a living former or current president, or of any deceased former president during the two-year period following the date of the death of that president.”

What about a bank note. Can a living person appear on one of these?

In 1866, Representative Martin Thayer of Pennsylvania amended an appropriations bill for the Treasury Department with a provision reading, “Hereafter no portrait or likeness of any living person shall be engraved or placed upon any of the bonds, securities, notes, or postal currency of the United States.”

What motivated Thayer to place this restriction on bank notes?

Superintendent of the National Currency Bureau Spencer Clark put his own image on the 1866 5-cent fractional currency note. Congress meant to commemorate Louisiana Purchase explorer William Clark with the note, but the legislation passed only read “Clark.” Spencer Clark was not a popular man.

Have there been any living people who have appeared on Military Payment Certificates (MPCs)?

Charles A. Brooks used Anne Izard’s vignette on the Military Payment Certificate Series 591 $5. Series 591 was issued between May 26, 1961, and Jan. 6, 1964, in Cyprus, Iceland, Japan, Korea, and the Philippines. The woman appearing on notes for Series 641 is only known as Laura. Series 641 MPCs were in circulation during the Vietnam War period between 1965 and 1968.

Are there more coin collectors than people who are involved in other collecting hobbies?

According to a MagnifyMoney.com 2022 survey, 17 percent of Americans say they collect coins. Toys, dolls, trading cards, and jewelry are collected by 12 percent of Americans each. About 61 percent of the entire population consider themselves to be collectors. The same survey indicated about 70 percent of men and about 51 percent of women consider themselves to be collectors of something.

Who is the world’s wealthiest coin collector?

Coin dealers with affluent clients keep the names of such collectors close to the vest, not only so that other dealers can’t try to compete for their business but to protect the privacy of those collectors.

What is the largest coin collection in the world?

Since it is challenging to draw the line between an accumulation and a collection, it would be problematic to come up with a definitive answer. The National Numismatic Collection at the Smithsonian Institution is likely the largest coin collection. It has approximately 1.6 million objects. This includes numismatic objects from every continent that has been inhabited and covers about 3,000 years of history.

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