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Jeff LichtmanAl, sales of cards are taxed as capital gains -- assuming there are gains. But imagine this scenario: a collector doesn't declare to the IRS his gains in 2007-2011, assuming he won't be caught. In 2012 paypal sales are forwarded to the IRS and the IRS audits the collector for 2011. During their audit they decide to go back a few years and look for other paypal transfers or other puzzling deposits into the collector's checking account. If the collector has large gains not reported for multiple years he better hope his name is Geithner, Daschle or Rangel because that collector otherwise is getting indicted.