Posted By:
CoreyRS.hanus"The IRS would deem the gain to be in the year of the auction under a "constructive receipt" doctrine."
I am not a tax accountant so this point is meant to be a question, not a statement. Inasmuch as there exists a legitimate economic risk an underbidder will renege and therefore the item might not sell, couldn't one reasonably argue the sale should not be deemed to have taken place for purposes of capital gains until the consignor has been paid. Much the same way in real estate--isn't the sale deemed to have occured when the closing took place, not when the contract was signed? So going back to the auction scenario, on the date the auction closed all that was established was a promise to pay, which for tax purposes is not enough to trigger the gain being realized on that date.