[Congressional Record Volume 144, Number 46 (Thursday, April 23, 1998)]
[Senate]
[Page S3543]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BREAUX:
  S. 1980. A bill to amend the Internal Revenue Code of 1986 to allow 
certain coins to be acquired by individual retirement accounts and 
other individually directed pension plan accounts; to the Committee on 
Finance.


               individual retirement account legislation

  Mr. BREAUX. Mr. President, I rise today to introduce legislation 
allowing certain U.S. legal tender coins to be qualified investments 
for an individual retirement account (IRA).

  Congress excluded ``collectibles'', such as antiques, gold and silver 
bullion, and legal tender coinage, as appropriate for contribution to 
IRAs in 1981. The primary reason was the concern that individuals would 
get a tax break when they bought collectibles for their personal use. 
For example, a taxpayer might deduct the purchase of an antique rug for 
his/her living room as an IRA investment. Congress was also concerned 
about how the many different types of collectibles are valued.
  Over the years, however, certain coins and precious metals have been 
excluded from the definition of a collectible because they are 
independently valued investments that offer investors portfolio 
diversity and liquidity. For example, Congress excluded gold and silver 
U.S. American Eagles from the definition of collectibles in 1986, and 
the Taxpayer Relief Act of 1997 took the further step of excluding 
certain precious metals bullion.
  My legislation would exclude from the definition of collectibles only 
those U.S. legal tender coins which meet the following three standards: 
certification by a nationally-recognized grading service, traded on a 
nationally-recognized network, and held by a qualified trustee as 
described in the Internal Revenue Code. In other words, only investment 
quality coins that are independently valued and not held for personal 
use may be included in IRAs.
  There are several nationally-recognized, independent certification or 
grading services. Full-time professional graders (numismatists) examine 
each coin for authenticity and grade them according to established 
standards. Upon certification, the coin is sonically-sealed (preserved) 
to ensure that it remains in the same condition as when it was graded.
  Legal tender coins are then traded via two independent electronic 
networks--the Certified Coin Exchange and Certified CoinNet. These 
networks are independent of each other and have no financial interest 
in the legal tender coinage and precious metals markets. The networks 
function in precisely the same manner as the NASDAQ with a series of 
published ``bid'' and ``ask'' prices and last trades. The buys and 
sells are enforceable prices that must be honored as posted until 
updated.
  Mr. President, the liquidity provided through a bona fide national 
trading network, combined with published prices, make legal tender 
coinage a practical investment that offers investors diversification 
and liquidity. Investment in these tangible assets has become a safe 
and prudent course of action for both the small and large investor and 
should be given the same treatment under the law as other financial 
investments. I urge the Senate to enact this important legislation as 
soon as possible.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record as follows:

                                S. 1980

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. CERTAIN COINS NOT TREATED AS COLLECTIBLES.

       (a) In General.--Subparagraph (A) of section 408(m)(3) of 
     the Internal Revenue Code of 1986 (relating to exception for 
     certain coins and bullion) is amended to read as follows:
       ``(A) any coin certified by a recognized grading service 
     and traded on a nationally recognized electronic network, or 
     listed by a recognized wholesale reporting service, and--
       ``(i) which is or was at any time legal tender in the 
     United States, or
       ``(ii) issued under the laws of any State, and''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     1997.
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