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Old 11-14-2017, 07:56 AM
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Default IRS tax question

Forgive my basic question here but: There's a chance I may sell part of my collection next year via an AH. I have only done this once in my life, and even then just two lots for a total under $5000. So this would be quite new for me. I am purely a small time collector, never had a store or "business."

So: after the sale, what does the AH report to the feds, or do they send a tax document to the consignor? Or neither? Or at what dollar figure does that kick in? Then, with an official doc or not, what is consignor on the hook for reporting, and at what level does that kick in? How does IRS handle whatever you do report? Are there rules/laws you are supposed to follow, but many don't? Thanks for any replies.
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Old 11-14-2017, 09:04 AM
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I can't answer for the AH side on what gets reported to the IRS and how. I'd be interested to hear someone from an AH ring in.

Here's how it happens on your end. BB cards are considered capital assets just like shares of stock. It's up to you to keep track of three figures for each item, and report the sale no matter the amount. In the breach, I'd imagine small amounts don't get reported.
The holding period--a year or less between the purchase and the sale is short-term, more than a year is long-term.
Your basis--the purchase price plus any costs (AH purchase commission, sales tax, inbound shipping, and grading are the most likely). If you acquired something in a trade the basis of the item you gave in the trade carries over to the item you received, +/- any cash.
Your receipts--the selling price minus the costs of sale (AH seller's commission and outbound shipping are the most likely here). You'd have to check with the AH to see whether they reported your receipts as the gross selling price or net of fees. And unlike stocks, the AH has no idea what your basis is.
The dollar figures seem straightforward, but if you acquired items as part of a group you have to be careful about how you assign costs.

--From here on, this is based on the tax code as it stands right now. Who knows what will be in place for 2018.--

For any one sale you can net all the short-term results against each other; the same with the long-term results. That is, if your only sales were through a single AH one time, you can report one ST result and one LT result. If you sold on multiple occasions, each occasion should be shown separately. The info goes on Form 8949, which carries to Schedule D.

Short-term gains are taxed the same as ordinary income. Long-term gains may get special treatment. Because BB cards are considered collectibles, gains are taxed at ordinary rates up to a max of 28%. So if you're in the 15, 25, or 28% bracket you won't see any tax advantage from the sales. If you're in the 33 or 39.6% brackets then you will.

If you have a loss, you can take a max of $3000 against your 2018 income; the rest carries forward into future years.

This is not to be taken as "tax advice," but as a statement of facts. For specifics you'd need to provide the details to a tax advisor. (I could be that person in a non-public setting.)

Bill Todd
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Old 11-14-2017, 09:34 AM
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Auction houses don't report the consignment sales to the IRS as far as I am aware. At least I know Heritage doesn't. They gave me a final reconciliation sheet and I gave it to my CPA with my cost basis. He did the rest.
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Last edited by Leon; 11-14-2017 at 09:58 AM.
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Old 11-14-2017, 09:51 AM
steve B steve B is offline
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damn, I guess I'll have to be buried with mine. Most of them I have no idea what I paid, or it's so little as to make any sale almost entirely reportable.

When I was doing Ebay I was making less than 1K a month, and we just reported it as income from a hobby business. I think under miscellaneous income. Most years I "lost" money because of storage and stuff I bought and kept or didn't get around to selling. But we reported some small amount anyway. (I believe technically I should have sold the stuff I kept to myself, and "inventory" above what I had the year before should have been counted as profit. But anyone questioning it would have been welcome to count the remaining cheap cards. lets see, last year I had 15,000 81 Topps give or take, how many do I have now? )
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Old 11-14-2017, 12:27 PM
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Bill--

Thanks for your lengthy and mostly clear reply. But perhaps one example might help a little. Let's say you sell 30 cards via an AH for let's say $30,000. They take their $6000 which I can you report as fee or whatever. Of the $24,000 you get you judge that you only made about $4000 above what you paid for those same cards. However, each card is different--on some you made big profit, on others loss; some you purchased ten years ago, others in past year. The ones from long ago you may not even recall what you paid so you are guessing. So what do you report here? Just a straight $4000, or $24,000 minus whatever, or you submit a breakdown of all 30 cards as best you can? Thanks.
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Old 11-14-2017, 01:03 PM
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Quote:
Originally Posted by birdman42 View Post
Here's how it happens on your end. BB cards are considered capital assets just like shares of stock. It's up to you to keep track of three figures for each item, and report the sale no matter the amount. In the breach, I'd imagine small amounts don't get reported.
The holding period--a year or less between the purchase and the sale is short-term, more than a year is long-term.
I am not an accountant, but this is not how it has been explained to me. AFAIK, the sale of baseball cards falls under "collectibles" which are all taxed as short term capital gains (ordinary income) - 28% -, no matter the holding period.

Please verify all of this with your CPA.

Last edited by Baseball Rarities; 11-14-2017 at 01:13 PM.
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Old 11-14-2017, 01:27 PM
sb1 sb1 is offline
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Quote:
Originally Posted by Baseball Rarities View Post
I am not an accountant, but this is not how it has been explained to me. AFAIK, the sale of baseball cards falls under "collectibles" which are all taxed as short term capital gains (ordinary income) - 28% -, no matter the holding period.

Please verify all of this with your CPA.
That is what I believe to be correct, further you cannot deduct any "expenses" incurred such as bank box, insurance, grading, etc.
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Old 11-14-2017, 01:29 PM
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Quote:
Originally Posted by Baseball Rarities View Post
I am not an accountant, but this is not how it has been explained to me. AFAIK, the sale of baseball cards falls under "collectibles" which are all taxed as short term capital gains (ordinary income) - 28% -, no matter the holding period.

Please verify all of this with your CPA.
As a tax person I can tell you for certain that the short-term gains are taxed at the same marginal rate as your other ordinary income--wages, rental, interest, etc. That type of income caps out at 39.6%, the max for anyone. This is the same treatment as for capital gains from non-collectibles.
Long-term gains on collectibles are also taxed at the same marginal rate as ordinary income except that the rate is capped at 28%. If you're single, and your only income for the year is a net of $60,000 from selling cards held long-term, then the first $9325 of taxable income is taxed at 10%, the next $28625 is taxed at 15%, and anything over that is at 25%.
If your net income from cards were $260,000, then the amount at 25% would be $54950. The rest would be at 28%, even though the 28% bracket for ordinary income ends at $191650.
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Old 11-14-2017, 01:37 PM
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Quote:
Originally Posted by GregMitch34 View Post
Bill--

Thanks for your lengthy and mostly clear reply. But perhaps one example might help a little. Let's say you sell 30 cards via an AH for let's say $30,000. They take their $6000 which I can you report as fee or whatever. Of the $24,000 you get you judge that you only made about $4000 above what you paid for those same cards. However, each card is different--on some you made big profit, on others loss; some you purchased ten years ago, others in past year. The ones from long ago you may not even recall what you paid so you are guessing. So what do you report here? Just a straight $4000, or $24,000 minus whatever, or you submit a breakdown of all 30 cards as best you can? Thanks.
Greg,

You can report two figures that are the net of all transactions--one for the long-ago purchases and one for the previous-year purchases. You just need to be able to support your numbers if your return were ever questioned. For example, I have paper receipts for many of my cards, but for others the only record I have is the amount I entered on an Excel spreadsheet. Those numbers are generally in line with the ones I do have receipts for regarding appreciation over the years, so I'd like to think the spreadsheet would be accepted as evidence.

Bill

Bill
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Old 11-14-2017, 01:40 PM
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I did not see where you mentioned that the maximum rate is increased from 15% to 28% for long term capital gains.

Last edited by Baseball Rarities; 11-14-2017 at 01:47 PM.
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