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Cost basis for inherited collection, now sold off
fentonacres
Posts: 3 ✭
I recently sold through auction my grandfather's collection of T206, T205 cards (500+). What I need to obtain is a professional opinion of what the collection might have auctioned for back in 2007 when I inherited it. Any resources? I am reaching out to the auction house but no response to date. Obviously, I want to avoid paying a buttload of taxes and it is what my tax accountant is recommending. Thanks for your help.
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first off welcome. hopefully you did well.
with that being said, i doubt very seriously someone would be willing to go back thru 500+ cards, gauge their condition, research that info for you and then tie that info to themselves. i doubt the auction house will either. thats not really standard operating procedure and what you are asking is a pretty daunting task that has no definite answer.
best thing is to provide some info on the bigger ticketed items and the overall hammer price when the collection did sell. even then itd be a total guess. but at least you could do a cost comparison of then and now and perhaps use the same percentages across the board.
best of luck in your endeavor and realizing just what a task you are asking of the board. and even if someone does chime in, would you really take that info for something as important as taxes? i know my reply isnt the golden answer youre looking for, but it is the sound truth.
I believe several auction houses have online histories that go back at least to 2007 (e.g., Lelands, Heritage, Robert Edward Auctions, SCP). It's helpful that you get the value based on 2007 prices, rather than the sharp decline in prices beginning with the financial crisis in 2008. Try to stick to 2005-2007 year sales if you can.
As a fallback, you might be able to use a price guide from back then (e.g., Beckett). Not sure if your cards were graded or not.
**** WHAT FOLLOWS IS NOT ACTUAL TAX ADVICE ***
My non-expert opinion is that the IRS is extremely unlikely to appoint a baseball card expert to review your return and do the research required to rebut your tax basis. I think the key is that you have SOMETHING to point to that says what these cards were worth in 2007. A quick ebay search for (Beckett baseball card price guide 2007) will get you a source, and you can use that source, along with the auction's description of the condition of the cards to get a price. If you want to maximize your basis and you think Beckett was too low, then I think you have hundreds of hours of research ahead of you and a nightmare awaits if the IRS does ask how you came up with your figure. FWIW, if I were in your shoes, this is what I would do. But I don't have an accountant; since you do, I'd run the idea by him or her. I don't know if a Beckett Guide counts as "a professional opinion", but it is the opinion of the people at Beckett, and they are professionals at pricing baseball cards.
I would say a 2007 Beckett would at the very least create a baseline minimum value. The IRS can't say that the Beckett is inflated. That would be like the IRS saying the Kelly Blue Book was not an accurate way to value cars.
At the very least, it's capital gains, so the tax rate won't be as terrible as regular income.
Actually, since these cards are as old as they are, they may be considered for tax purposes as "collectibles" and not as a capital gain. If that's the case, the tax treatment on the gain or loss is different than a capital gain. Check with an accountant who should be able to provide the correct answer.
I would also get a copy of Sports Collector's Digest from that time to compare/average the cost basis of the cards with the information from Becketts. If questioned by the IRS, having 2 recognized, documented sources in the hobby should be fine.
https://www.investopedia.com/articles/personal-finance/061715/how-are-collectibles-taxed.asp
Were the cards graded? If so, you will likely be able to find at least some comps from that era in the Auction Prices Realized section of the PSA website.
Thank you all. All good advice. Many of the cards were graded and others sold in lots. I think the approach of taking the high value cards, then going back with a reference source (Beckett, say) and comparing and then using a percentage for the rest. I will then have the resource materials, my auction list, as well as my own database and scans from 2007. Again, thanks.
Just an update. Thanks for your advice!! I received this today (Amazon!) and it will be so helpful. And, at first glance, it looks as if 2007 pricing was a good year and, hopefully, will save me some change on my taxes next year since this was an inherited collection. Fall and winter are setting in here so I have a good project to occupy the frosty mornings.
Be sure to check in with the executor of your grandfathers estate. Your basis should be consistent with the value used in your grandfathers federal estate tax calculation.