The tale of the reclusive neighbor hunkered down in the house down the street, surrounded by a lifetime of clutter is a familiar one. But in the case of one elderly man who recently passed away in California, along with all that detritus was a collection of gold that’s estimated to be worth about $7 million. He must’ve been one of those 10 million Americans eschewing bank accounts.
The Tahoe Daily Tribune says the man’s neighbors had no idea he was so rich until authorities were called to clean out his home. A local clerk said the sheriff was called out of concern for the man after an odd smell was reported and neighbors hadn’t seen him in awhile.
Soon after a cleaning crew arrived at the house, they called the clerk because they’d stumbled across a pretty major finding in the garage — boxes of gold.
“At that point, we took the house apart,” said the clerk, adding that they went into the house’s crawl space and combed the yard with a metal detector. That search uncovered boxes of gold coins and bullion wrapped in aluminum foil and plastic cases.
“There were dos-pesos smaller than a dime, five-peso coins, $20 gold pieces, gold sovereigns, Austrian duc ats, Krugerrands; you name it, [he] had it.”
The man’s haul took two wheelbarrow loads to take it all away, and will be stored in an armored car company’s vault until his estate gets sorted out. Apparently the man had lived with his mother until 1992, when she passed away. She’d been the one who started the gold collection back in the 1960s.
It’s unknown whether the man and his mother paid the IRS what they should’ve, but given the man’s distaste for the outside world, his heir might have to give up about $800,000 in taxes. His neighbors said while he was a hoarder and “anti-government,” he was quiet and not hard to deal with.
“Our goal is to get the most money for the heir,” said the clerk of the man’s one living relative, adding that it’s the biggest probate case he’s seen in 20 years.
At least hoarding gold is a lot more productive than hoarding newspapers or hundreds of pairs of socks like my great uncle did. Our family never needs socks again, ever, but gold? Gold we could use.
Quiet recluse turns out to be rich [Tahoe Daily Tribune]
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I think this will be my brother in 40 years. I invest in mutual funds. He has half a vault of gold somewhere.
I wonder about the heir. One living relative contacted to be told, “Your crazy shut-in uncle just died and you get a bajillion random gold coins that he kept around the house in plastic cases wrapped with tin foil. Why tin foil? To keep the government from using their … gold-dectector mind beams, obviously. Also, surprise taxes.”
That’s right out of some awful movie synopsis.
This is something that could never happen to me though. I have more cousins than I could even begin to name.
Thanks for this comment. I genuinely laughed.
I would wager the tin foil was to prevent the coins from rubbing together and becoming damaged. Gold is a 2.5 on Moh’s, and aluminum is a 2.75. I would bet that when made into coins, the Moh’s score goes up, so the aluminum foil wouldn’t be “harder” than the gold.
$800,000 paid in taxes… aaaaand it’s gone.
Early estimates put the value at 7 million, but possibly more as some probably have collectors’ value. I think the heir getting 6.2 out of that isn’t shabby.
I was thinking more along the lines that within seconds, the taxes paid will already be spent by the government. Yeah, $6.2 million just for being related to someone isn’t bad.
Even better: since the collection was started in the 60s, before Gerald Ford signed the bill legalizing private ownership of gold coins and bullion, the US Mint confiscated it all.
I thought gold coinage of numismatical value could be retained under that prohibition…, even if there were limits.
Here:
From Wikipedia:
Order 6102 specifically exempted “customary use in industry, profession or art”—a provision that covered artists, jewellers, dentists, and sign makers among others. The order further permitted any person to own up to $100 in gold coins (a face value equivalent to 5 troy ounces (160 g) of Gold valued at about $7800 as of 2011). The same paragraph also exempted “gold coins having recognized special value to collectors of rare and unusual coins.” This protected recognized gold coin collections from legal seizure and likely melting.”
http://en.wikipedia.org/wiki/Executive_Order_6102
Ha ha, yeah. It turns out that it’s expensive to run the most successful government in the history of humanity.
But it’s only expensive in absolute terms; in terms relative to the overall economy it is a downright bargain! Imagine all the services we get from the government, and it charges us less than we tip a waitress at Olive Garden.
It was a quote from South Park… it makes me laugh every time I hear it. I didn’t say anything about whether I thought it was bad or good. It’s just fact that the $800,000 will be spent in seconds…. aaaaand it’s gone.
A rough estimate is that it will take care of between
16 and 20 seconds of the governments (our) debt.
Do you know where I can buy some Margaritaville Backed Securities?
If I could find a Margaritaville, according to Tim Geithner – the fair market value is worth about $14 trillion (not that I’m going to get that!)
In exchange for 7 million in gold? Yeah, I’ll “sacrifice” the 800k in taxes.
Why would they have had to pay the IRS for simply owning gold? If they just bought gold and had it why would that be taxed?
Unless they were paid in gold for a job and didn’t send in income tax?
I was wondering that too. Then again, I don’t have a treasure chest in my basement, so maybe it’s a “pirate tax”.
Because taxes, that’s why.
For simply owning it, he didn’t have to pay any taxes. However, now that he’s dead, all that gold is part of the value of his estate. When your estate passes to your living relatives, they pay taxes on it. That is a ridiculously gross oversimplification considering all the nuances of state and federal estate tax law, but basically how it works.
Estate Tax would be my best guess….depending on when he died and the value at the time of death and other items that would make up his taxable estate.
I would guess he died in 2011 with a total estate of roughly $285,000. Nothing taxed. Now there is $7,000,000 in gold so a total estate of $7,285,000 minus $5,000,000 exemption taxed at 35% gives you roughly $800,000 in taxes.
That made sense. The post made it sound like the IRS should have been getting a cut over the years while they were alive.
The taxes owed can be attributed to the government outlawing gold as currency and therefore making it a collectible, thus kicking it to the IRS jurisdiction. Wouldn’t want any competition with the Federal Reserve (which is neither Federal nor a Reserve).
What’s the hard part to understand? If you receive income, you pay taxes. If you inherit money, that is income, so you pay taxes. It seems pretty straightforward to me. As a bonus, unearned inheritance is inexplicably taxed lower than actual, real earned income that you have to work for.
What?
Neighbors also reported that while the man was always carrying a cigarette, it never seemed to be lit, even though smoke was quite obviously drifting from his nostrils.
No, if he was a dragon, it would have all been stuffed in his mattress. That is such a standard bit of money-hoarding lore that if the man had actually stuffed his mattress with gold coins, it would have been mentioned. But it seems many of the coins were just stored in his garage.
Retaining wealth in gold isn’t as remarkable as a cleaning crew finding $7 million and being honest about it.
They may not have been honest about the other $5 million in gold they found that nobody knows about haha.
Probably found $9 million and returned the $7 million they found
for all we know it could’ve been 14 million in gold coins. Suddenly about 6 cleaners are going to quit their job
I did some cleaning/organizing for a while, and I always turned over the money I found. It’s fun to see someone’s face when you’ve cleaned their house and hand them 40-odd dollars.
Honesty is very common.
“Adding that it’s the biggest probate case he’s seen in 20 years”
This must be a small Kalifornia town then. If my friend’s estate was liquidated
right now, he could probably buy well over 10,000 new ZR1 Corvettes.
I hope he remembers all the rides I gave him.
And people say privacy is dead.
Come to think of it, my neighbors have no clue about what’s in my house or what activities take place there. Should that be a surprise?
The government taxing money. Somebody tell me how that is fair.
Well, we run our government on income taxes primarily. The heir didn’t do anything to inherit this large sum of money, so the government is saying “we’ll exempt the first $5.1 million and anything over that give us 35% of this windfall income that you’re getting” The estate tax is pretty reasonable right now compared to some years in the past.
This is essentially double taxation though. They dude earned money that was already taxed in order to pay for the gold.
Then his heir shouldn’t have to pay any tax on the value of the estate.
It’s like how a business gets taxed on their profits then distributes the left over profits to the owners. Yet the owners then get taxed on that already taxed money.
Except he didn’t pay any taxes on the appreciation. If he had liquidated the gold while he was alive, he would have to pay taxes. Dying before that happened, saved him money!
The issue is when did he acquire the gold? If he got it a loooong time ago, they may have saved taxes with the estate tax. If there were no estate taxes, the heirs would have basis in the gold equal to the deceased. They would then pay capital gains on the sales price less basis which could be more than estate taxes.
Now they have all that gold with a basis of $7mil. Granted they could have delayed the taxes in the capital gains scenario by selling gradually.
Everything is double-taxed, at least. So what’s your point?
My wages are taxed when I earn it and again when I spend the remainder.
Such is the price of admission to civilized society.
Nay to the “double taxation” argument. A good rule of thumb to use is, whenever money changes hands, it can be subject to taxation.
Merely having the gold isn’t a taxing event: it being transferred to the heir is.
Yeah and they keep making up more “events” to tax.
That’s nonsense.
Nobody says that income tax and sales tax is double taxation, even though it’s the same person with the same dollar. For inheritance, it’s DIFFERENT PEOPLE. Newsflash: when you get new money, that’s called income, and you pay tax on it.
If shareholders in a corporation are so beefed about paying taxes, then they can leave the money with the corporation. But if they get private control of the money, then that’s income, and of COURSE they have to pay tax on it. Duh.
Those of us who actually have to earn our money don’t have much sympathy for people who say “my great great granddaddy already paid taxes on the fifty billion dollars he left me, back in 1895. Boo hoo I have to pay taxes on it now! My family should be able to be rich and untouched for all time!” No. That’s nonsense and no thinking person accepts it.
By your argument, all money is infinitely taxed – you pay someone with money, it’s income to them, what’s left they pay to employees as income, they use it to pay for goods, it’s income to that seller, etc.
The point is to look at an individual, and in this case it’s only taxed once for each person (he paid taxes and used after tax money to buy the gold, then when his heir gets it he pays taxes as it’s income to him/her).
If money could only be taxed once in its lifetime of circulation, we would have no roads or other large-scale government items.
Plus some other folks made good points about how the estate tax is probably much lower than if the guy had liquidated the gold before death.
The government outlawed using gold as money. It’s now just a commodity or collectable with value that can be taxed. So now the government owns all the money.
They print it we rent it.
Was his neighbor William Devane?
Carson City is the capital of Nevada.
So, the linked article said he was 69… what was he waiting for with all that money and gold? Yeah, I get that he was probably waiting for the government to collapse or something… but you’re retired and just sitting around at home with a ton of money. I think I’d at least buy an RV and tour the country if I had that much money and nothing to do but wait on the expected doom and gloom.
Mental illness would explain his actions.
If you tour the country, who will protect your gold? Remember the guy who won all that money on “Press Your Luck” and took it out in singles? He left the house ONE night, and the money got stolen.
You dames have no clue about security.
That’s what happens when you don’t take precautions against running into Whammies on the street.
Just load up the RV! He’d probably be traveling alone anyway.
Now I’m just picturing some old man in an RV a la Scrooge McDuck.
Thanks for that link. Interesting reading!
We had a guy like this in our area – had gold bars in the wood box. No “clerks” involved, the FEDS came in and took control of the stuff once it was discovered. And no, he had NOT paid any taxes…
Mother started the collection, and when she died the gov would have wanted inheritance tax on it, just like they do now.
Ah, you make an excellent point. I wasn’t sure what the article meant about him paying taxes on it.
I am sure that much gold puts the heirs on a different tax bracket and as such could probably contact Romney on how to not to pay any taxes on it.
I almost forgot:
Arrr, they be plundering his booty!
And a bevy of House Burglars are face-palming themselves in disgust for dismissing this house for the another one nearby…..