The lady according to the article chose to sell the coins from the IRA for the market value, forced by the “laws” as the IRS decides them— to do so. And thus forced to pay a tax on would guess not only the distribution cash value but also on the increase.
Unless this was a Roth IRA. Researching the implications there vs. a Trad IRA holding physical gold where the money going in was not taxed but doubly taxed “coming out” so to speak.
Are you reading an article from a source other than the Wall Street Journal?
The WSJ article doesn't say that they sold the coins at all. It does say "[b]ut in an IRS audit, Mr. McNulty, a Rhode Island-based plant manager at a sailcloth factory, conceded that he engaged in prohibited transactions in 2015 and 2016, although the decision didn’t say what they were. That dissolved his IRA and caused taxable IRA payouts to him of about $316,000."
But that didn't include the gold held in the family safe.
The article continues "[t]hat left two issues for Tax Court Judge Joseph Robert Goeke to decide: whether Donna McNulty’s storage of about $411,000 of gold and silver American Eagle coins in a safe at her home was permitted under the law, and whether the couple owed stiff penalties for understating their tax. The couple lost on both issues."
No mention whatsoever about selling the coins.