Borrowing against graded cards

[PiratesWS1979]

Originally Posted by chalupacollects

Question - Who will pay the sales tax? Someone will have to. I don't think PWCC is going to pick that up for you....

Probably nobody. They "ship" to themselves so did the transaction on eBay happen? Cards can be purchased on credit and you don't have to pay through eBay.

I've bought a Cobb six months ago and put 25% via PayPal FF. A month later I paid the remaining 75%, again PayPal FF. No credit card fees, no tax and as far as I know PWCC may have a contract with eBay far an allowance for non-paying buyers.

[Peter_Spaeth]

Originally Posted by chalupacollects

How will PWCC be able to stop the fraud???

Lets say person A sends the card to PWCC, gets a loan, keeps a scan and then puts scan on ebay.. Sells item off ebay, collect funds from Paypal or whoever, doesn't ship...and skips...

So they may lose the card if they don't pay (if not able to pay and call it back) but gets funds on loan and ebay sale.. Close shop and start again?

If I can drum that up off the cuff, what will the real scammers think of?

Why is that any of PWCC's problem? They have no potential liability to the buyer.

[chalupacollects]

Originally Posted by Peter_Spaeth

Why is that any of PWCC's problem? They have no potential liability to the buyer.

Well not sure it is their problem though they may be in possession of the card at the time of the fraud and be implicated.... In any case if a scammer times it right they can make out with loan, card and victim's money... So PWCC may get dragged into it somehow...

[chalupacollects]

[QUOTE=PiratesWS1979;1850097]Probably nobody. They "ship" to themselves so did the transaction on eBay happen? Cards can be purchased on credit and you don't have to pay through eBay.

Wouldn't ebay have a record of the transaction then? If ebay is tracking the auction then someone will have to pay the taxes..not sure how that works these days...

[vthobby]

Originally Posted by steve B

That just seems odd to me. Why not just save the scans and sell them all? It would basically be the same.


And for the record, having a tight budget has at times made me do what I call "collecting vicariously" which consists mostly of saving scans from Ebay and auction houses. Especially for stuff I'll probably never own.

But that's not the same as actually owning cards.

Steve,

You kind of answer your question to me in your last sentence. I LOVE my collectibles, but at the same time, I do not want them stolen, or burned or lost. I can hold them each week that I visit them at my bank. I also have cards at home that are not as valuable that I enjoy. I am a 24 year Army overseas combat Veteran and frankly they are therapeutic to me. If I do not NEED to sell then I do not. Sometimes like all of us, we get unexpected expenses that force us to sell. I do not like those times. Like I mentioned before, I will not send all of my cards to the Vault, just some of them. I need to see if its viable as well. Thanks!

Take care,

Peace, Mike

[PiratesWS1979]

[QUOTE=chalupacollects;1850138]

Originally Posted by PiratesWS1979

Probably nobody. They "ship" to themselves so did the transaction on eBay happen? Cards can be purchased on credit and you don't have to pay through eBay.

Wouldn't ebay have a record of the transaction then? If ebay is tracking the auction then someone will have to pay the taxes..not sure how that works these days...

That wouldn't matter at all, it happens all the time. I've bought a few time and have even sold a few times on then off eBay. Just win the auction, pay with PayPal FF and cancel the eBay transaction, easy. I'm sure most members have contacted eBay sellers giving their net54 id to avoid fees

[conor912]

If you need to take out a loan on it, chances are you can't comfortably afford to own it in the first place.

[Peter_Spaeth]

Originally Posted by chalupacollects

Well not sure it is their problem though they may be in possession of the card at the time of the fraud and be implicated.... In any case if a scammer times it right they can make out with loan, card and victim's money... So PWCC may get dragged into it somehow...

IMO there just aren't that many people out there looking to steal money through the sale of cards they don't have.

[Peter_Spaeth]

Originally Posted by conor912

If you need to take out a loan on it, chances are you can't comfortably afford to own it in the first place.

Sadly, in this country of unbelievably massive credit card debt much of which probably was not for necessary purchases, people do it anyhow. I suppose one sort of harsh way to look at it is PWCC is looking to profit off people's fiscal irresponsibility. Then again, according to PWCC, they're "investments."

[chalupacollects]

Originally Posted by Peter_Spaeth

IMO there just aren't that many people out there looking to steal money through the sale of cards they don't have.

Ohh if you want to see how many scammers are out there check out the BO Members/Sales Trade feedback forum.. Not only highly entertaining but somewhat scary at times...

Leon if not appropriate mentioning the "other place" feel free to remove...no link though!

[Peter_Spaeth]

Originally Posted by chalupacollects

Ohh if you want to see how many scammers are out there check out the BO Members/Sales Trade feedback forum.. Not only highly entertaining but somewhat scary at times...

Leon if not appropriate mentioning the "other place" feel free to remove...no link though!

Hmmm ... did not know that. I read one thread there and it made my head spin it was so visually overwhelming, not to mention hard to follow.

[bnorth]

Originally Posted by Peter_Spaeth

Hmmm ... did not know that. I read one thread there and it made my head spin it was so visually overwhelming, not to mention hard to follow.

They have a off topic section with a NSFW funny picture thread that is simply amazing. I highly recommend it to anyone with a sense of humor that is not easily offended.

[Leon]

Originally Posted by chalupacollects

Ohh if you want to see how many scammers are out there check out the BO Members/Sales Trade feedback forum.. Not only highly entertaining but somewhat scary at times...

Leon if not appropriate mentioning the "other place" feel free to remove...no link though!

I don't care if you (or anyone) mention other forums. I post on BO a little bit.

[mantlefan]

This whole concept is hinky!!

Send my cards to someone? Borrow money off them and pay interest? The Vault?

Stick to pumping up your auction prices and leave my cards and finances to me!

[stlcardsfan]

Originally Posted by RedsFan1941

what could go wrong?

As a banker speaking, plenty! Whoever enters into this endeavor better have an understanding of the Dodd Frank Act. Good luck!

[Leon]

Originally Posted by stlcardsfan

As a banker speaking, plenty! Whoever enters into this endeavor better have an understanding of the Dodd Frank Act. Good luck!

Well, there is that. But my guess is someone (or business) can loan someone money if done the right way. I have to think there are some lawyers and/or financial fiduciary types looking at the business.
I don't do lending or intend to but for tax and accounting purposes I just give everything to my CPA. It's fairly easy.

[glynparson]

Originally Posted by chalupacollects

Question - Who will pay the sales tax? Someone will have to. I don't think PWCC is going to pick that up for you....

Oregon does not have a state sales tax therefore when they receive a shipment there should be no state sales tax.

[Aquarian Sports Cards]

Originally Posted by Leon

Well, there is that. But my guess is someone (or business) can loan someone money if done the right way. I have to think there are some lawyers and/or financial fiduciary types looking at the business.
I don't do lending or intend to but for tax and accounting purposes I just give everything to my CPA. It's fairly easy.

I'm pretty sure I remember reading they went through all the regulatory hurdles for securities.

[autograf]

I used to have L+ loans against company stock to buy more company stock. While it was ultimately a good deal and a vehicle to buy a lot more stock in an era when it was going up significantly faster value-wise than the L+ amount was, it was riskier than probably we all realized. Fortunately, those loans are all gone now. The L+ rates were typically L+1 or less depending on the amount borrowed so much better than L+6 or L+8. When L is steady or declining, it's a much more attractive proposition than when it's rising or fluctuating wildly. Borrowing against cards would have to be a much riskier proposition than against a stock obviously. Guessing that's why the number is so much higher. Good luck........

[Exhibitman]

Mike, insure. It isn't expensive and the application is easy. It buys the peace of mind you want. Plus you get to have your cards. I personally do not want to own a card that I don't feel I can secure properly. But that's what a safe deposit box is for. Insure 'em, keep 'em in a safe deposit box, fugedaboutit.

Other factor to consider: if something 'bad' happens to PWCC and someone seizes their assets, the cards may go with them unless you have some sort of UCC filing in Oregon to establish your ownership of the cards. That was one of the problems that consignors to Mastro had when it went belly up: the cards became potential assets of the entity for bankruptcy purposes even though they were consigned.

[obcbobd]

Originally Posted by sphere and ash

Imagine that you could borrow against graded cards. The minimum loan would be $25,000. Loan-to-value would be 50%. Rates would be L+6% to L+8% (L is currently 2.5%).

What is your best guess as to how much would be borrowed in a year? Could you see borrowing against your graded cards under these terms (I recognize the minimum is prohibitive for some)?

Thanks for your help. I’m a memorabilia guy with very limited knowledge of cards, but I’m intrigued by the business opportunity. Any other thoughts would be appreciated. Thanks.

I'm a big fan of "don't spend what you don't got", so I'm a big no. 8.5% to 10.5% seems an awfully high interest rate.

[BobC]

Originally Posted by AddieJoss

I trhink part of the reason folks will use the “vault” is due to the fact they can ship their winnings from pwcc or other auction houses there not pay the sales tax. On larger purchases that will save a lot. Those items will also be available for sale to those that want to. Also, safer than some folks homes. The lending does not need to be to just buy other cards but can be for college costs, mortgage, etc, and just not wanting to liquidate just yet. The shear volume will not be mandatory as it is ancillary business for pwcc. I think it will make sense for folks in certain situations and bother option is not bad.
Cory Weiser

Not so sure that is a way to get around the sales taxes. The buyer's address is already listed in Ebay records, so I believe that is the address they would use for determining sales tax liability, not where PWCC has their "Vault". Simply telling PWCC to hold onto the cards in their "Vault" in Oregon may sound like a way to escape sales tax, but i doubt that would work. You would have the ability to ask for your cards to be sent to you at any time, so sticking them in PWCC's "Vault" for a while to escape sales tax from where the buyer really lives would eventually get picked up by those states getting cheated out of sales tax as well. And PWCC could get their neck in the wringer with those other states by helping to hide the true nature of the transaction and assist these buyers in not paying the proper sales tax.

The other states would argue that there is no real purpose for keeping the cards in Oregon, other than to get around the sales tax. And if you did argue that you keep them there to facilitate PWCC being able to resell them quickly and easily for you, then the states could argue that you are actually acting like a dealer in that case and should probably be registered and filing sales tax returns yourself. And that also likely means you should be giving sales tax exemption certificates out to sellers when you buy items to begin with so you wouldn't be paying sales tax on anything anyway, but now you're in a business that should be filing and reporting what you're doing, which could lead to more trouble and work than it is worth.

The courts would have a field day with this. Saying you don't owe the sales tax because you told someone to hold the items for you in a non sales tax state would hold water like a sieve. This would likely be viewed as a "step transaction" where the buyer gets the item, has it shipped to them and then turns around and sends it to PWCC in a non-sales tax state. The fact that you tell PWCC to hold on to the item for you doesn't mean the buyer still didn't go through technically receiving the item and then deciding to have PWCC holding it. Unless it was for a "business purpose", which I already noted earlier would mean you probably should be registered and filing sales sales taxes as a dealer, the other states would argue the idea of holding your cards in Oregon is a deceptive practice meant only to beat the states out of the sales tax they are due.. What you are proposing is an out and out scam to defraud states of sales taxes due them, and would likely get anyone involved in trouble if caught. And I'm talking possible criminal prosecution for the parties involved as that borders on tax evasion.

Think about it. If what you suggested would work to escape sales tax, why wouldn't someone set up a company in a non-sales tax state and instead of acting like a consignor and selling items for people, like PWCC does, this company instead buys items on behalf of their clients so they don't have to pay sales tax. The company charges a fee, say 1%-2% of the value of items they buy, and argue it is for their services in purchasing items for their clients and not a portion of the sales tax they saved them. The item goes to them at their address in a non-sales tax state, and they simply turn over the items to their clients once they receive them, sans any sales tax. Because of the shipping/postage costs involved it wouldn't make sense to do on small, nominal valued items, but for a big dollar item it could make a lost of sense.

The problem with this idea is that the company doing the purchasing would likely be determined to be acting as an agent for the real buyers, and doing so purposely to get around paying the sales tax. Or, the states would argue that the company doing the purchasing was in effect a dealer themselves ans that when they got reimbursed for their purchases on behalf of their clients that were effectively selling those to the clients and therefore they should be collecting and remitting sales tax to all these other states themselves.

Oh, someone doing this would likely get away with it for a while, but once a state got wise, I wouldn't want to be the parties involved in defrauding the states of their sales taxes.

[BobC]

As for the idea of getting a loan on ones cards, those are not cheap rates. If it truly is only for some temporary period of time, it isn't much different than going to a pawn shop, is it? However, having said that, they may actually be some tax advantages for such a loan.

If the cards are kept by you as a collector for investment purposes, the interest being paid could be deemed as "investment interest expense", which is allowable as an itemized deduction on Schedule A of your federal tax return, but only to the extent you have net investment income that same year. (Any excess, non-deductible investment interest expense in a given year can then be carried forward and deducted against net investment income in future years.) However, you would have to use the proceeds of any borrowing to purchase additional cards for investment purposes, as in the example of one poster who suggested buying a $1,000 card and then borrowing half that amount to go out and then buy a $500 card. You would also want to be sure to properly report the sales activity on your federal tax return for any such "collectibles" you had bought and sold then, and on which you claimed an investment interest deduction to purchase them with.

And if you're actually a dealer and in the business of selling cards, the interest expense in that case could be treated as a straight-up operating business deduction. Same thing as buying inventory on credit. You can write the interest expense off against you income from sales.

[Leon]

Sounds no different than writing off property taxes as an expense on a rental property. Thank God for CPA's .

Originally Posted by BobC

As for the idea of getting a loan on ones cards, those are not cheap rates. If it truly is only for some temporary period of time, it isn't much different than going to a pawn shop, is it? However, having said that, they may actually be some tax advantages for such a loan.

If the cards are kept by you as a collector for investment purposes, the interest being paid could be deemed as "investment interest expense", which is allowable as an itemized deduction on Schedule A of your federal tax return, but only to the extent you have net investment income that same year. (Any excess, non-deductible investment interest expense in a given year can then be carried forward and deducted against net investment income in future years.) However, you would have to use the proceeds of any borrowing to purchase additional cards for investment purposes, as in the example of one poster who suggested buying a $1,000 card and then borrowing half that amount to go out and then buy a $500 card. You would also want to be sure to properly report the sales activity on your federal tax return for any such "collectibles" you had bought and sold then, and on which you claimed an investment interest deduction to purchase them with.

And if you're actually a dealer and in the business of selling cards, the interest expense in that case could be treated as a straight-up operating business deduction. Same thing as buying inventory on credit. You can write the interest expense off against you income from sales.