6.11 Exchanges of Coins and Bullion

An exchange of “gold for gold” coins or “silver for silver” coins may qualify as a tax-free exchange of like-kind investment property. An exchange is tax free if both coins represent the same type of underlying investment. An exchange of bullion-type coins for bullion-type coins is a tax-free like-kind exchange. For example, the exchange of Mexican pesos for Austrian coronas has been held to be a tax-free exchange as both are bullion-type coins.

However, an exchange of U.S. gold collector’s coins for South African Krugerrands is taxable. Krugerrands are bullion-type coins whose value is determined solely by metal content, whereas the U.S. gold coins are numismatic coins whose value depends on age, condition, number minted, and artistic merit, as well as metal content. Although both coins appear to be similar in gold content, each represents a different type of investment.