Question for when you consign your sports cards to 4 sharp corners/GregMorris.
Yankees70
Posts: 1,059 ✭✭✭✭✭
Question for the guys who have consigned their cards to 4 sharp Corners, Greg Morris, and the other large auction sites. Do you pay taxes on your sales? If so how does it work? Let's say a collector purchased a card, let's use a Hank Aaron card for example. Let's say a collector purchased the card for $5,000 two years ago and sells it on consignment with a larger seller on EBAY/Auction house for $8,000.
Does the seller send any tax documents to the guy who consigned his card(s) and if so does the guy pay taxes on the entire 8K or just the profit of 3K? Any information would be appreciated.
Thank you.
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The tax law is that you always pay taxes on income (sales)...... The "seller" might send a 1099 to reflect the payment(s) for the stated tax year, usually if you surpass a certain amount. It is up to the "consignor" to then properly account for the payment in federal and state (if any) income taxes, by stating a cost and sale, thus the difference between the two (profit or loss). This is the way, regardless if you sell yourself to a friend, craiglist, ebay, auction house, etc. Income is income (well except for capital gains qualifying income)!
The seller isn't necessarily obligated to send you a 1099, but you are obligated to claim any income derived from the sale of your cards. I've moved plenty of product through consignment and keep a detailed accounting of all purchases and sales activity. It's my responsibility to provide my tax preparer with all necessary information to file on behalf of my small business. If selling cards isn't your business, you wouldn't be able to claim additional expenses related to the sale of your cards. Then it's just a simple matter of accounting for cost vs. sale price and taxing the income. Talk to an accounting pro if you can and you'll get a perfect explanation.
For an individual on a true investment held for 2 years only 15% Cap gains would apply on the profit. Trading Cards like all collectibles are taxable at your Marginal Rate which in most cases is significantly higher.
It's the singer not the song - Peter Townshend (1972)
Not even a minute do I buy the whole buh buh buh I'm a man-child japery - Me (2025)
So, a collectible like cards held 2 years or less is taxable at 15%?
If a collectible is an investment and held two (2) years or less is taxed at 15%, right?
Trading Cards like all collectibles are taxable at your Marginal Rate which in most cases is significantly higher.
It's the singer not the song - Peter Townshend (1972)
Not even a minute do I buy the whole buh buh buh I'm a man-child japery - Me (2025)
That's if the guy only sold that 1 card all year.
If the guy also sold his Wander Franco Blue Sparkle Chrome Refractor 1/1 Rookie Patch Auto Reverse Negative Image Variation SP Holiday Megabox for $10 that he bought for $3000, he could offset his yearly profit.
$10 seems too high
It's the singer not the song - Peter Townshend (1972)
Not even a minute do I buy the whole buh buh buh I'm a man-child japery - Me (2025)
No, it's 2 years or MORE, not less, to be considered capital gains... And you still have state taxes if your state has an income tax.
Rufuss,
If held 2 years or less, then there is no federal tax on the collectible (sports cards)?
Are collectors who set up at a show once every 4-5 years and selling 5-10 K worth of cards at the show actually declaring taxes? I'm not talking about dealers but the average Joe who buys a table at a small show once every 4-5 years. If they are how many out of a hundred are actually doing it? I would be surprised if even 10 percent do.
I was at the Front Row card show yesterday in Pasadena, CA and watched ample deals going down where dealers were purchasing cards from collectors. Thousands were changing hands and not once did I see a dealer give the guy a tax form (1099) and I seriously doubt many of the collectors who sold their cards will be declaring taxes on the purchase.
Take a step back for a moment and consider the world you live in. Of course there are people who will conduct their own form of business and treat it however they feel is necessary, including the decision about whether or not to declare income tax. It's a responsibility that not everyone treats the same. Consider also that the card business in and of itself was and still is a cash business when it suits the parties doing so. At that point it's up to them to decide. Nobody is handing out tax forms at card shows. That's absurd. 1099s get issued after the year is over by businesses that need to file on their own behalf to prove they are not liable for collecting someone else's tax. They pass that information on to the IRS, which maintains those records and looks for inconsistencies in filings if they feel a need to audit. The large majority of people who conduct cash business just go on about their lives as usual. But, if the man comes a calling and wants to see your documentation as to where the money came from, you'd better be ready to show proof.
You don't get them at card shows because for the most part, all the buying transactions are from individuals who don't identify as a business, and thus it is a personal transaction, or arms-lenghth and unformalized.
At the end of the day, committing tax fraud is a personal choice, but many (most) do it in the scenario that you describe. If it was all cash, there would be no audit trail.
Don't know what you are alluding to, but let's reset, as the 15% is only true for long-term capital gains on non-collectable investments AND if you are not a high enough earner to be in the 20% bracket.
Collectibles are "alternative" investments, and if held for 1 year or MORE, then the gain is taxed at 28%. If held for LESS than 1 year, it is ordinary income. You also get hit with another 3.8% tax if you are high income earner....
Now, if you do this as a business, rather than investments (schedule C), then none of this applies as it is simply total sales minus cost of goods sold to determine profit or loss. Inventory is an asset, but not really an investment.
And don't forget about state taxes.......
Yep!
Cap gains = 15% , Collectibles = 28% MINIMUM, plus in many cases giving up another 10-20% to an auction house. Its why I do not consider Collectibles to be any sort of Investment.
Please note that I'm not saying big money can't be made buying and selling Trading cards, only that I don't consider them an investment of any type.
All above assumes no illegal Tax Evasion
It's the singer not the song - Peter Townshend (1972)
Not even a minute do I buy the whole buh buh buh I'm a man-child japery - Me (2025)
I watch videos of these guys wheeling and dealing at shows and for the life of me I have no idea how they have any semblance of an accurate record of what they made or paid for what over a given weekend. It’s mind boggling.
Let's hope we stave of Central Bank Digital Currency for as long as possible.
Once that bridge is crossed, it's game over.
Erik
This reminds me of an experience I had many years ago, early 90s I believe, when I and a couple partners set up at Willow Grove for the first time. We were already quite prepared for the onslaught of people buying and selling as that time in the card biz was pretty wild and we had been warned. Many of the hobby's biggest names were there and what we witnessed kind of blew our minds but at the same time prepared us for the immediate future in dealing cards for cash. Money was changing hands everywhere. People would stand in front of our table and make deals, then turn around and try to sell us the cards! Madness!
We had a memorable 3 days in that stinky gymnasium.
Before eBay and card grading and all the modern tech we see now, baseball cards was just a rogues paradise. Accuracy was meaningful only when counting wads of dollar bills.
I've wondered about that myself.
Sorry no one yet has answered your question. I guess no one here does business with those dealers
2025 SEC bowl record 4-10
SEC bowl record vs BIG TEN last two years 2-8
Not sure why you would say that. I think we’ve made it infinitely clear that the answer is no. I’ve been doing business with GMC both as a buyer and consignor for many years. Never once received a 1099, not necessary. I track all my records efficiently and file my taxes each year.
Those companies would never send out a 1099 because they per se are only dealing with individual collectors who are in theory trying to sell part of their 'investments". Not companies or sole proprietorships that are in the business of commerce.