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Taxes on 60 year old cards purchased as a kid

I'm trying to plan how to sell valuable cards I actually purchased as a kid, keeping in mind the capital gains taxes that will be owed. I've had many of them graded over the years. I guess the way to do this would be to figure the cost basis for a graded card to be, as an example, $0.01 for purchase (from a gum pack) plus grading fee of say $10.00 totalling $10.01. Then each card sold would be itemized on a Sch D & form 8949 similar to stocks. one line item each, with the net profit for each card sale on far right column. Along the way I would consider how much capital gains to harvest in a given year to avoid tax bracket hassles.
That's the way I'm understanding it now. I can't find much on this specific scenario on the web. I would like to find a tax advisor who really knows this stuff, preferably an old timer who bought as a kid and kept them like I did.

Comments

  • JRR300JRR300 Posts: 1,305 ✭✭✭✭

    do you want to sell now? One way to avoid the capital gains is to leave them to someone, say in a will or trust. When they inherit, they will do so at current value and can sell with no gains tax

  • JRR300JRR300 Posts: 1,305 ✭✭✭✭

    Also, remember that you can always look for a private buyer. No records that way.

  • RTB7RTB7 Posts: 10

    Thanks for your comments. I'm most interested in starting to sell them the smartest way over the course of several years.

  • JRR300JRR300 Posts: 1,305 ✭✭✭✭

    ok. Don't know exactly what and how much $$$$ you're talking about. There are some sites that do not issue 1099's, so I would check that out first. I would also suggest listing them on applicable facebook pages or here in the BST registry. Again private sales have no trail and would create no record for the IRS. You could also try various card shows; you my be able to sell some there. Stay away from dealers as they will most likely offer half of what the cards are worth. Good luck. BTW, the new capital gains rules for collectibles are still in the interpretation process and could very well change by the end of the year. Just have to wait and see.

  • RTB7RTB7 Posts: 10

    I'm certain capital gains are in the picture. Just trying to understand if individual sales gains of old high grade star slabs are handled one per row on form 8949, Part 2, Long Term, box F checked (no 1099 issued).

  • JRR300JRR300 Posts: 1,305 ✭✭✭✭

    If you were my client, I would recommend keeping the itemization for yourself but lumping them together on the form. If you rec'd a 1099, I would list those by the total of the 1099 so the IRS can easily match it up. There is no way I would suggest doing it individually. Just my suggestion.

  • MCMLVToppsMCMLVTopps Posts: 4,173 ✭✭✭✭✭

    You have no idea the value of what you might have. I don't think you can assume that because you bought them as a kid that they have survived in mint+ condition over the many years that have passed. The slightest and I do mean slightest ding, mark, dented corner, anything will devalue your cards instantly. Getting any qualifier, like MC miscut, OC, off center, etc, etc, will seriously drop the value of your card.

    Raw cards, with very few rare exceptions don't hold that much value. Once your cards are graded, and if you're fortunate enought to get high grades, like 8s and above, with no qualifiers, you can then consult various websites to determine current FMV. As for taxes, I'd suggest you scour IRS.gov to seek information if you think this applies. I assume here your intention may be to sell via a consignment shop, if so, be very careful, once you're at that step, who you choose to sell for you.

    Assume for a moment you get a card back from PSA (after you pay the current $50 rate, add in shipping) and its a PSA 9. The card's FMV is $350. If you choose to have a consignment shop sell them, they will charge you between 15-20% of the final sale. If you sell on eBay, they will bite you for about $13-14% final value fee. Your best situation (IMO) is to find a buyer in a private sale and avoid all the fees and nonsense associated with the previous two scenarios. BEWARE, eBay (in case you didn't know) will NOT allow you to offer your email, phone number, or anything related to who you are and the ability of a potential buyer to contact you offsite for a private sale.
    So, until you have whatever you have graded, you have at this point nothing more than a pile of cardboard, who's value remains to be determined.
    I have managed, with some creative thinking, managed to contact potential sellers to make private sales.
    GL

  • RTB7RTB7 Posts: 10

    All of the cards I'm talking about (about 700) have been graded by PSA. And all are from late '50s to early '60s. I also keep track of the SMR and APR of them.

  • MCMLVToppsMCMLVTopps Posts: 4,173 ✭✭✭✭✭

    The SMR is useless

  • JRR300JRR300 Posts: 1,305 ✭✭✭✭

    to consider such an issue, how much are we talking about if you're worried about taxes.....6 or 7 figures???? you may be getting all worked up for nothing. Like I said earlier and echoed by Topps above, try to sell them privately. You get the best of all worlds....No fees, no commissions, no paper trails, no tax reporting.

  • RTB7RTB7 Posts: 10

    Agreed, lol! It usually lags the APR significantly. The actual recent auction results are most important, especially in high grade rookies and stars of this era.
    I'm sorry if any confusion in this post. I really enjoy the registry and I've been in it for about 17 years. I would like to find a CPA / collector with knowledge of the details in using form 8949 to handle capital gains reporting for high value sportscards.
    Thanks for your comments, and good luck to all.

  • 19591959 Posts: 462 ✭✭✭

    Jenny? is that you?

  • RTB7RTB7 Posts: 10

    I dug into this topic off and on for a week. Here's what I've learned to my satifaction. In my case, it is not a business, since I don't make any sales, and I don't intend to make it one. It is a hobby or investment, therefore I can't write off any business expenses etc. Also, taxes end up being at whatever your tax bracket is... If your in a low bracket then say 15%, if higher, then it follows suit to a max of 28%. If I sell 20 slabs, I would list them on 8949 with box F checked and the total gain would go to the long term section on 1st pg of Schedule D. On the 2nd pg of Schedule D it asks if you had any collectibles included in your total gains. If so, then it guides you to use a specific capital gains worksheet to figure your total tax. The way it works out is that if you had long term gains on stock sales you pay a much lower rate then the same gain on collectibles.
    If I had a box full of old commons that I wanted to sell lump sum, the total gain could be handled on Schedule 1 line 8 other income, and you could briefly explain what they were as a group on a separate piece of paper. Either way they are taxed at the higher rate.
    It boils down to if you want to jump through the hoops to be a business, but get business expese writeoffs, and also have to pay business taxes, or if you want to just be done with it and call it a hobby/investment.
    Anyway, if I make some money selling something, the legal and worry-free way to handle it is to pay taxes on it.
    I just wanted to put my original question to rest as elegantly as possible.

  • Mickey71Mickey71 Posts: 4,035 ✭✭✭✭

    If I sold 100 cards at a total of $20,000 and my net was $5000 after all ebay fees and the cost of the cards, postage etc. How does that all go? You mentioned stocks....I thought we were just talking about cards. Thanks in advance,

  • RTB7RTB7 Posts: 10

    I just mentioned stocks as an example that I could easily check. If the same dollar amount of long term gain from stock sales is switched on schedule D to be the amount gained from old card sales, the tax owed works out to be a lot more. There is a tremendous benefit to hold stocks for over a year before selling that you don't get from colectibles. That is because there is no tax at all on the long term stock gain until you sell a quite a bit, then only 15% for amounts above that. I tested that on the forms and that's exactly how it works out. Collectible sales do not get that benefit.
    The $5000 net in your example will end up being taxed at whatever your overall tax rate bracket is up to a max of 28% for a higher income person. But for a lower income, say retired person for example, the collectible gain would be taxed at whatever that bracket is, say 12% or whatever. It's probably best to sell collectibles in years when you have lower gains from other sources. I hate paying taxes but it's a relief to have some clarity on how to plan.

  • When you say "valuable cards", do mean the value is $20,000 ? $200,000 ? $2 million ? $20 million ? or $200 million ?

  • RTB7RTB7 Posts: 10

    It's about navigating paying taxes, regardless of whether 20k, 200k or 200 million lol.

  • TiborTibor Posts: 2,564 ✭✭✭✭✭

    Start setting up at shows. Cash is king.

  • @RTB7 said:
    I just mentioned stocks as an example that I could easily check. If the same dollar amount of long term gain from stock sales is switched on schedule D to be the amount gained from old card sales, the tax owed works out to be a lot more. There is a tremendous benefit to hold stocks for over a year before selling that you don't get from colectibles. That is because there is no tax at all on the long term stock gain until you sell a quite a bit, then only 15% for amounts above that. I tested that on the forms and that's exactly how it works out. Collectible sales do not get that benefit.
    The $5000 net in your example will end up being taxed at whatever your overall tax rate bracket is up to a max of 28% for a higher income person. But for a lower income, say retired person for example, the collectible gain would be taxed at whatever that bracket is, say 12% or whatever. It's probably best to sell collectibles in years when you have lower gains from other sources. I hate paying taxes but it's a relief to have some clarity on how to plan.

    RTB7 -
    In your case, since you are not "in business", you are correct that you would report the gains on Schedule D/8949, line by line as you mentioned. You would also get to deduct your selling costs too (Paypal fees, ebay or other platform fees, shipping costs, envelopes). I would also check your state's sales tax laws (each state is different). Sales of personal property are subject to sales tax (there are exceptions such as out of state sales).

    Consult your CPA. Depending on your income, the capital gain rate (even on collectibles) could be very tax friendly for you. Like you mentioned, if you space it out over a few years, you can mitigate taxes pretty well.

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