I believe the least objectionable method from the IRS point of view would be to assess the relative value to each card in the lot. So, for instance, if you paid $10,000 for a box that had 999 1987 Topps commons and a PSA 2 1933 Goudey Babe Ruth, the cost basis for the Babe Ruth would be $9999 and the remaining 999 commons would have a combined cost basis of $1. If you try to claim the Babe Ruth cost basis is $10 in that scenario, prepare for some nice penalties and interest at the conclusion of your audit.
Generally, it is your job to prove to the IRS auditor (or ultimately the tax court) that you reasonably allocated the cost basis of multiple cards in a lot. If your method sounds the least bit sketchy or skewed in your favor, it is unlikely to fly with the IRS. In fact, my limited experience in audits is that even if you do act reasonably and fairly in preparing your taxes, you have the additional hurdle of having to educate a skeptical auditor about a hobby or business that does not understand it as well as you do (which actually hurts, not helps you in most cases).
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