Record keeping for collectibles

Weg · September 28, 2010 1:37AM

I collect, buy, and sell notes, coins, and PMs and know little of tax law. I keep records of what I paid and sold things for and now I'm looking at a pile of receipts from the post office from shipping items to TPGs and items sold. It would be easier to just toss all this paper out, but it may not be the smartest.

I know that as a cost of investment I can write off the cost of Barrons magazine, CDN, BNR, ect.
Can postal cost and TPG cost be subtracted from any profit as far as the IRS is concerned?

ModCrewman · September 28, 2010 1:41AM

Absolutely...but better hold onto that pile of receipts.

Coinosaurus · September 28, 2010 1:56AM

A lot of collectors think the best way to keep records is to deal in cash. Not necessarily recommending this, just sayin'......

ProofCents · September 28, 2010 2:03AM

I have never kept records. I'm concerned come the day i have to sell and do my taxes

Billet7 · September 28, 2010 2:52AM

Keep your reciepts.

yellowkid · September 28, 2010 3:05AM

<< <i>A lot of collectors think the best way to keep records is to deal in cash. Not necessarily recommending this, just sayin'...... >>

It is better to have records that you may not need down the road, than to have no records. Who knows how you may have to sell your collection down the road??

renomedphys · September 28, 2010 3:07AM

I keep receipts. I have thought about reporting gains / losses / expenses, but at this stage of the game, gains are generally met with equivalent loss. That will definitely change when I sell my whole collection... which is why I keep receipts.

derryb · September 28, 2010 3:21AM

Keepiing the receipts is only the first step. You need to develop a spreadsheet (I use Excel) to keep the following line item records: current inventory - cost, date purchased, sale price, date sold, paypal fee and postage. The spreadsheet will give you your net per coin. Once sold cut line item and paste to inventory sold spreadsheet.

In addition i keep the following expenses in their own spreadsheet because it's just to much hassle to assign them to each line item: ebay fees, grading fees, professional memberships and publications, mileage, internet fee, supplies, etc.

Your goal is to have a written, and hopefully electronic, record of all your sales and all your expenses.

My spreadsheet is set up to do all the calculations, I just enter the data. For graded coins the last 5 digits of the serial number are my inventory control number and also the number I use to identify pics in my photo database.

Once data from receipts, printouts, etc. is entered into the spreadsheet just file the hard copies away for proof. The spreadsheet is your info for your schedule C tax form.

And to those that think they don't need to do this because they are just collectors: The day will come when you either sell your collection or leave it to your heirs. At some point the collection will be sold and whoever is selling it will need expense records to avoid unnecessary taxes on any gains.

SlangNRox · September 28, 2010 3:41AM

If you leave your collection to your heirs is there a stepped up cost basis to the date of your death like there is on stocks?

I say keep all receipts. Unfortunately I know that I don't have copies of all my receipts especially ebay purchases and transactions done through this forum

Elcontador · September 28, 2010 4:53AM

Collectibles are treated like securities re estate tax purposes, so your answer is 'yes.' However, your estate better be willing to pay for a qualified appraiser's valuation of your coins, whose appraisal should be attached to the Estate Tax Return which is filed, if such a filing is necessary.

Weg · September 28, 2010 11:14AM

So it sounds like postage, postal insurance, TPG fees can be used so I should keep those records. I imagine not having ANY records could create a collection with a zero cost bases. Depending how it is sold by myself or heirs if anything is sent to the IRS a zero cost bases would hurt, big time. Anything to raise the cost bases will help lower taxes.

I'm just happy to hear postal fees and TPG fees can be used. I really need to learn Excel.

Durmex · September 28, 2010 11:30AM

Let's see......I get a gift. I use it one year.
I sell it at a yard sale.
Do I report it?
Did I take up coin collecting several decades ago to benefit the IRS?
I think the answer to both questions is the same.
If there are any agents on the Forum, I have yet to sell any of my collection.

derryb · September 28, 2010 11:59AM

<< <i>So it sounds like postage, postal insurance, TPG fees can be used so I should keep those records. I imagine not having ANY records could create a collection with a zero cost bases. Depending how it is sold by myself or heirs if anything is sent to the IRS a zero cost bases would hurt, big time. Anything to raise the cost bases will help lower taxes.

I'm just happy to hear postal fees and TPG fees can be used. I really need to learn Excel. >>

Any costs associated with purchasing, improving (grading fees), storing (safety box), marketing (ebay fees) and delivery (postal fees) are expenses that can be taken against the sale price of the item. To do this you will need documentation.

Weg · September 28, 2010 12:59PM

Thanks derrby, this is just the info I was looking for. I do like to hope for the best (pay no tax), but prepare for the worst (be prepared for the tax man).

derryb · September 28, 2010 1:33PM

<< <i>Thanks derrby, this is just the info I was looking for. I do like to hope for the best (pay no tax), but prepare for the worst (be prepared for the tax man). >>

Best way to be prepared for the tax man is to know the rules he expects you to play by. Got to the IRS website and study up on "Schedule C."

Record keeping for collectibles

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