How do you list cost basis of coins?
denali12
Posts: 101 ✭
Just wondering on People's register lists, how do you list your cost for a coin? Do you list just the price you paid? or do you also factor in the shipping cost( ie ebay)? or if an auction like great collections the winning price plus shipping and auction fees?
Just curious as to how collectors lists costs and why? thank you
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I include everything possible to reflect the true cost to me.
"If I say something in the woods and my wife isn't there to hear it.....am I still wrong?"
My Washington Quarter Registry set...in progress
I buy a lot of raw stuff so I include coin cost + approximate grading fee.
for tax purposes, total cost to buy and total cost to sell. Don't forget to include any grading fees (as well as the shipping to and from the TPG). The difference between the two is your taxable income/profit gain or loss.
If you understand what is coming, then you can duck. If not, then you get sucker-punched. - Martin Armstrong
I include everything. Shipping, insurance, sales tax, auction juice...even grading cost if I have it done again.
This makes it easier at tax time.
Lance.
If you are buying/selling coins as in investment, you can also include other costs such as safe deposit fees, etc. There are probably other costs you can factor in as well such as profit-oriented, numismatic/bullion investment newsletters. Another option is to declare a schedule C business and deduct all expenses, including travel. You could maintain a separate group of coins from the "business" inventory that are strictly for long term keeping.
http://www.rarecoinwholesalers.com/Content/pdf/tax-advan-of-rare-coins-by-armen-vartian.pdf
http://www.nolo.com/legal-encyclopedia/can-you-deduct-your-expenses-from-hobby.html
If eBay cost of item plus any shipping. Item then put in store at retail and priced at cost plus 50-100 pct.
Some I markup much higher - slabbed coin won for $4, TPG price guide price $15. Coin recently sold for $20 store BIN with about $3 ship cost incurred by me.
All costs, including any crossover, regrading, shipping, etc..."fully burdened" cost is the way I do it.
TPG costs - grading, shipping, eBay fees, Paypal fees, shipping costs on sales, books, table fees for shows, supplies all expensed on schedule C.
Hmmm , thanks had not considered grading fees also good thought
Whatever it costs me.
That includes S/H, TPG fees and storage fees.
I would assume all business owner would save every receipt for any purchase such as office supply, furniture, gas , cable bill travel expense etc.
One must first determine if inventory is for a business (Schedule C) or for investments (Schedule D). More deductions and record keeping with Schedule C and the self employment tax (social security) takes a chunk.
While the OP is asking the question of "collectors," records are important because the income from sales is required to be reported to the IRS. Since you are going to be reporting income, it makes sense to document and claim all costs and expenses related to the income. Collectors in most cases would want to do their income reporting on Schedule D, treating their collection as an investment.
Keep in mind any spreadsheet you use is to keep your tax reporting as simple as possible. It is not to satisfy an audit, the IRS will want to see the receipts for the entries.
If you understand what is coming, then you can duck. If not, then you get sucker-punched. - Martin Armstrong
I have a couple of columns in an excel spreadsheet.
The first ("Purchase Price") includes my winning bid + shipping and handling. The second ("Additional Fees") Includes TPG fees as well as shipping both ways. And of course, the last column ("Total Purchase Price") is the sum of the first two columns.
This is the reason I do not do 99 cent start bids on eBay
thanks for the good thoughts..
Also remember, one of the ways the IRS differentiates between a business (losses are deductible against other income) and a hobby is making money in 3 of 5 years.
ANA 50+ year/Life Member (now "Emeritus")
Author: 3rd Edition of the SampleSlabs book, https://sampleslabs.info/
The concept of "receipts" and "costs" for determining a basis for IRS always intrigue me.
How many dealers offer, not after being asked, but offer right off the bat, a receipt at a coin show? My experience is less than 10%.
If you buy from an individual, what is that receipt?
"June 15th, 2003, I Joe, sold Tony, some coins for $20"
Ebay purchase records are pretty good, if saved..
One guy I know loves business cards. He ALWAYS asks for a card. Later, he has friends, family members, etc. write a "receipt" on the back of the card. Bingo, he has as many receipts for whatever amount he wants, from "real" dealers who would not have a clue in the world 10 years later what they sold to who back in 2003.
My father struggled with this, only with his stamp collection. He had literally a pile several feet thick of folders of receipts dating back into the 1930's. But many of the stamps had been sold or traded along the way, so how do you state THIS receipt for Stamp X is truly THAT stamp, not a different Stamp X that is in the album.
Sadly, the entire situation was resolved when he died 9 days after being diagnosed with cancer, and I was named the executor of his estate, so his collection was valued using the Scott Catalog values, and most of the stamps will never sell for even 50% of that value, so there never will be a profit selling any of the stamps.
Similar situation with a stock fund. My dad had invested in the 1960's in a fund, and every month he paid in and the fund "bought" shares. I did not have 45 years of records, and the thought of trying to piece together how much had been spent each month, which meant how many shares at that price were purchased each month, times 12 months per year times 45 years was basically impossible. I could not calculate a basis for each of the shares. Fortunately, my family is generous in charitable contributions, so instead of cash, I had my mom donate the same value in stock. The receiving charities were all set up to accept stock, sold it, got the full proceeds, my mom got the full 100% charitable contribution, and the problem of how to calculate the tax disappeared.
If running a business (coins or other), it pays to either learn - in depth - the tax laws, or employ an expert. Sure, it sounds simple, however, there are so many who have 'paid the price' for thinking it is simple and progressing under that assumption. Cheers, RickO
While tax code is complex and massive, it is not that hard for the average tax payer to learn what they need to know from the IRS website. All the info is there, but one must read and understand it.
If you understand what is coming, then you can duck. If not, then you get sucker-punched. - Martin Armstrong
I can never keep up during a show, so now I carry several self sealing envelopes.
If I buy four raw IHC's for $80... Put them in envelope with date, cost and a few notes. I can recreate an individual cost basis later.
Stuff them in my Manbag... rinse and repeat.
At home I sort them and log them into a spreadsheet.
On the sell side, I break out listing fees, Ebay commissions, shipping,
Ebay Store fees, flea market rental fee, cost of mailers, flips, and grading fees are considered before listing anything for sale.
All those are accounted for monthly, printed out on a hard copy and kept in a notebook.
I make copious notes in the margins.
As Dave Ramsey says, give every dollar a name and it can be frightening to know how much I spend.
The whole reason of the 99 cent auction is to gather bids, which in turn gathers interest, which in turn gathers more bids, most of the time resulting in a higher selling price.
I run 99 cent start auctions every week for the last 18 years ...
Inherited stock, stamps, coins, real estate, etc. are valued at fair market value at the time of death of the decedent (stepped up basis) . So sales at fair market value after that would be tax free. Sales below fair market value would actually generate a tax loss that could be used to offset other gains.
If the stamps were valued a Scott the time of death of your father they can actually be sold for less than that and the beneficiaries of his estate can take the tax loss.
it's crackers to slip a rozzer the dropsy in snide
I have read that some eBay sellers (maybe it was you in a previous post) do well with the .99 cent start price. I just don't have the courage to take the risk of a loss. But I agree it could actually bring a better price due to more bidders and/or a potential bidding war.
Having recently handling the estate of a relative this is what I learned after much research:
A new basis (cost) is established at time of inheritance and it is the current fair market value. This new "cost" is used by the estate if it disposes of the property to a non-heir and it is used by individual heirs who take take possession of the property and later dispose of it. For items that have gained value since original purchase the new value results in the heir looking at a higher cost basis (reduces net profit). For items that have lost value since purchase, the heir is stuck with a higher than original cost (increases net profit).
To take full advantage of losses from an estate, I found it is best for the heirs to transfer ownership of the estate items to the individual heir(s) per the terms of the will. When an item is is owned by an heir, then any gain or loss from its sale is applied to the heir's income (and tax return) in the year disposed of by the heir.
When an estate itself disposes of property to a non-heir the gain or loss is then applied to the actual estate's income/loss (and tax return). Tax losses from property disposed of by the estate in this manner will provide limited tax advantage (losses) to the individual heirs, but only if the estate issues a Schedule K-1 to the heir.
Always consult a tax professional for advice on tax matters.
If you understand what is coming, then you can duck. If not, then you get sucker-punched. - Martin Armstrong