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Pillar of the Community
United States
717 Posts |
This is not directly coin related, but is easily applicable.I am 70 years old. A retired elementary school teacher. All of my life I have been an inveterate collector of things of value. I've collected coins, stamps, baseball cards, watches, etc... 20+ years ago I was teaching 4th grade, and because of my students I got interested in........(I'm almost ashamed to admit it)...Pokemon cards. I applied the rules I learned collecting stamps and coins and I always bought the best. This was not hard because at the time very few cards cost more than $50. Anyhow, after a couple of years of making many purchases on ebay I began to ask myself, "what the heck are you doing." All my cards were placed in screw down holders or in plastic sheets in binders. Now here comes the question: The price of these card has gone up, and have really exploded the past few months. A lot of my cards are worth a, by my definition, crazy amount of money. Since I have no interest in the cards, and none of my potential heirs do either, I decided to auction them off and have placed my entire collection with Heritage Auctions. I am aware that the profit I make will be subject to capital gains taxes. I don't know what I paid for them originally. as it was 20 years ago and I have no receipts. What sort of determination would be acceptable to the IRS? |
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Pillar of the Community
2222 Posts |
Wow, tough position to be in, I don't know the answer.
Sorry to hear no one close to you would be interested.
Maybe the best/most reasonable cost estimation would be good enough. Does HA report to the IRS?
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Pillar of the Community
United States
5822 Posts |
Have you talk with the Heritage representatives who auction off these cards for you about missing receipts for tax reporting?
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Pillar of the Community
 United States
6522 Posts |
Dont file for years. Then when they come after you, call one of those guys on t.v. and only pay a fraction of what you owe.  |
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Pillar of the Community
United States
4085 Posts |
I think your best course of action would be to estimate the cost of each as best you can. If you are estimating a relatively low cost as compared to the selling price, I don't think the IRS would question it. For example, if you sell a card you claim you paid $50 for for $400, I don't see that getting questioned. What are they going to say - we think it was only $20? On what basis and what's the difference really? $30? That's not much.
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Valued Member
United States
284 Posts |
There must be an historical archive of what these sold for in that era. Just remember, if the seller said $50.00, you, driven by conscience, insisted s/he take $60.00. Report same after the prefix "to the best of my memory." As long as there's no blatant dishonesty in your claim , the worst you have to fear is a claim of underpayment against you by IRS. Then you get to choose which would be more fun Pay 'em or argue with 'em.
Kevin
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Bedrock of the Community
Australia
21786 Posts |
When a lot of your most valuable purchases were made many decades ago and there is no records of purchase, it is impossible to make a capital gains assessment that makes any sense on those items.
For me, I just don't bother.
I have always paid in cash, because I have cash budgeted all of my life, and I still do. If no money, then no fun. Bonus: I have never been in debt. Was collecting gold coins in my late 'teens, well into my 70's now.
My avatar coin was bought from Spinks in London in 1978. How do I make a capital gains tax assessment on that, before there was any capital gains tax laws in Australia? (there is now).
When I kick the bucket, my kids will just put it up for public numismatic auction, and simply pocket the proceeds.
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Pillar of the Community
 United States
7934 Posts |
I think @KenKat has the right advice.
In the unlikely event you get audited (remember the audit rate is much lower than it used to be), YOU are in a better position than the IRS to know about what you actually paid.
By the way, my son, who is a sizeable dealer in game cards has also decided to sell some of his valuable cards now for the same reason.
Edited by tdziemia
03/15/2021 10:09 pm
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Pillar of the Community
United States
5662 Posts |
In the US at least, assets that are inherited get a step up in their cost basis to their current value, so if they are sold immediately there would be no capital gain tax. The OP's situation on the other hand will require a long term cap gain tax on collectibles (max 28%). I agree with @KenKat that the best approach would be to use your best judgment to estimate what you paid for them. Since you don't have actual receipts, just provide a reasonable explanation to the IRS in the event you are audited (which is unlikely if you are voluntarily reporting the cap gains). |
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Bedrock of the Community
United States
94367 Posts |
I cannot send you an e-mail - please send one to me.
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Bedrock of the Community
Australia
21786 Posts |
My son is a tax accountant. Has an American wife.
He has remarked that U.S. and Australian Tax Laws are surprisingly similar with regard to capital gains tax.
Edited by sel_69l
03/16/2021 01:21 am
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Bedrock of the Community
United States
20753 Posts |
Might be to late but you should have just sold them on ebay and said nothing to anyone about it. |
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Pillar of the Community
United States
5662 Posts |
As of next year, anyone with ebay sales totaling more than $600 in one year will have their sales reported to the IRS, so this question will be relevant to a lot of people. |
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Pillar of the Community
Canada
5393 Posts |
The answer to your question is pretty easy actually .
But first congrats on your "terrible" dilemma .
Great foresight on the collecting! Cards are red hot right now .
We just went through a similar US Tax issue ( my wife is American
and just finished up with the IRS)
You can easily , with Heritage help arrive at a cost base for
the original purchase of the cards , by using guides of the
time of acquisition . Since you were not a dealer the items are personal
use items and should only be subject to any Capital Gains / Losses incurred.
The use of an accountant who is strong in the Collectibles area ,
HIGHLY RECOMMENDED, irregardless of what we advise here.
Best of Luck , nice problem to have , hope you do very well !
Jack / paccoin
Edited by Pacificoin
03/16/2021 11:52 am
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Pillar of the Community
Canada
5393 Posts |
@ Carl ......a most terrible piece of advice !
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Pillar of the Community
United States
5177 Posts |
Quote:
Since I have no interest in the cards, and none of my potential heirs do either, I decided to auction them off and have placed my entire collection with Heritage Auctions. I am aware that the profit I make will be subject to capital gains taxes. I don't know what I paid for them originally. as it was 20 years ago and I have no receipts. What sort of determination would be acceptable to the IRS? How about donating the collection to charity and take a Full Market Value Deduction form your income taxes? Another option is to place the collection in a Charitable Remainder Trust, with you and your kids as Beneficiaries and a Non-Profit as the Designated Charity? Not sure if this is something you are willing to consider. https://www.fidelitycharitable.org/...-trusts.htmlEdited by NumisEd
03/16/2021 11:15 am
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Replies: 25 / Views: 4,449 |
Posted 03/15/2021 3:55 pm
