Would you take this deal?

[parkplace33]

Originally Posted by raulus

Recently received an offer that intrigued me. As others have been posting about some of the moves they’ve been considering, and this one has a bit of a twist, I figured it would merit a broader discussion from the forum.

I’ve been thinking it over, and I figured some of you have probably contemplated similar deals in the past, and might have some observations to share based on your past ruminations.

A few important details:

The deal would involve me trading my current piece for a lower graded piece, and receiving a big chunk of change in exchange for my sacrifice to trade down.

In this case, the item in question is one of the Crown Jewels of my collection. I paid more for it than I’ve paid for any other single piece. And at the moment, it’s arguably the most valuable piece in my collection.

This particular piece is also very rare. For any given player, only a few are known to exist. In addition, this is a well known set that tends to be widely coveted within the hobby, so it’s not some obscure yet rare piece that no one has ever heard of. And my piece is the highest graded piece in the hobby for this player, who also happens to be an inner circle hall of famer. They don’t come to market that often, so they’re difficult to find.

I purchased my piece about 5 years ago, with a plan to keep it in my collection for a long, long time, likely until I decide to sell everything when I retire (still a long ways away).

The potential deal would involve me trading my piece for the same piece that is one grade lower. I would still have the second highest piece in the hobby for this player, which is a nice feature, and means that I don’t have to live with a gaping hole in my collection and in my heart. A close inspection of these two items suggests that they are very similar in quality. Some might even argue that the lower graded piece is as nice as the highest graded piece. And those arguments are not without merit. For purposes of this discussion, let’s assume that I’m familiar with the maxim to “buy the card, not the holder”. So for those whose response will consist of repeating this maxim, I’m hopeful that further repetition won’t be necessary. Although if I’m being honest, I’m a mindless fool when it comes to the registry.

In exchange for my “trading down”, the buyer would compensate me with some cold, hard cash. For purposes of this hypothetical situation, let’s assume that the cash component would represent about 120% of what I originally paid to acquire my piece 5 years ago. Since some of you may salivate excessively contemplating all of this cold hard cash, allow me to tip my cap to my fellow tax nerds: based on my righteous 40% tax rate on collectibles (fed + state), let’s assume that all of the cash I receive in this deal would not stay in my pocket for long, but would instead end up transiting immediately on to the tax man.

Obviously my biggest hesitation is giving up something that I haven’t planned to sell for a long time. Plus realizing that I’m giving up one of my Crown Jewels that is likely one of the best pieces I will ever own, and trading down for a lower graded piece, even if the new piece might not be very different. Plus the fact that I don’t get to really keep the cash seems to make the deal a lot less exciting to me.

What would you do?

Just curious, any update on this potential deal?

[raulus]

Originally Posted by parkplace33

Just curious, any update on this potential deal?

In case my earlier comments weren’t clear, the proposed deal never really went beyond the contemplative stage. It was proposed, I considered it for a moment, and then it was withdrawn, as the potential counterparty decided they weren’t actually ready to proceed.

So even if I wanted to do it (which clearly I don’t), it wouldn’t be possible without an open offer.

[JustinD]

Originally Posted by raulus

Getting a second card doesn’t solve the tax problem.

I still get to pay taxes, even on trades.

But with the all trade version, I now have no cash to pay for my taxes.

As a man reporting your gains on a straight trade, while perfectly logical and the right thing to do...you my friend are a saint.

[JustinD]

Originally Posted by Leon

+1. I vote for a law that says once something is taxed it can't be taxed again!

When I sold my first collection the tax bill was a doozy.

Sadly, the government wants all they can muster for important programs. How else would we study the feasibility of if selective crossbreeding for creating real jackalopes is sound and how we will then properly fit them with knit caps safely?

Just wait for the fun when the silliness of 'unrealized gains' slides into the picture eventually...

[raulus]

Originally Posted by JustinD

As a man reporting your gains on a straight trade, while perfectly logical and the right thing to do...you my friend are a saint.

Less a saint and more a tax professional who doesn't want to lose my CPA license and thereby kill the golden goose in order to save a bit on my taxes.

[brian1961]

You never, EVER, trade down on your crown jewel card. Afterwards, when you look at what you got in return, regardless of the cash left over after taxes, you would feel the most intense seller's / trader's remorse and regret the day you agreed to the deal.

In this day and age, or in the next few years, should you decide to replace that now-gone crown jewel with one that is very close to it in eye appeal and condition, you will spend a lot of time and effort to only find it cannot be done. You'll just feel all the more worse about your decision.

When ya get a card you consider to be a crown jewel, the time to part with it is when you're ready to call it quits and retire from collecting, and generate funds for your demise and your surviving family. Hate to say it; sell it while it's still very desirable and the price at least near its high. Sounds like a stock---but you better believe you must break off the emotional attachment you've enjoyed with the card to psychologically feel released to say goodbye to it.

These are decisions we ALL have to face one way or another. Ask God for wisdom as to what to do. --- Brian Powell