Health of Asset Class - Over/Under 1955 Topps Koufax PSA 9

[BobC]

Originally Posted by raulus

Not to get tooooooooooo crazy here, but I suspect you'll have to comply with securities laws, which make the entire exercise a lot more exciting. Because the penalty for failure includes serious jail time, and that would end your trip real quick.

Nic, I've said that very thing before here on the forum as well. The way the card industry (and it is more of an industry now than just a hobby, sorry to say) is going today, it does seem to be only a matter of time before someone really does start treating it more like a true investment for more people, and that gets the government to eventually have to start paying more and more attention to what is going on, and eventually expand regulatory oversight to the entire industry once it does get big enough.

Truth is, before now the card hobby hasn't been big and valuable enough for anyone in government to really care. It's a hobby! But with all the increasing value, things like "vaults" being created and companies maybe now starting to push fractional interests in cards, the whole business is starting to look more and more like some investment companies. You and I are long-time CPAs, and of anyone here on this forum, you know exactly how what the TPGs do for this card hobby industry is an outright joke, with absolutely no true oversight, regulation, standardization, and with virtually no consequences or accountability whatsoever for anything they do. Yet we both know that CPAs and TPGs main purpose is to provide the exact same thing.......an OPINION on the state or condition of something! As CPAs though, we go through sooooo much more crap and oversight because our opinions can end up affecting the entire financial markets of the world. But no one in authority apparently gives a rat's ass about a bunch of nerdy collectors accumulating pieces of cardboard. At least not yet!

People on here, and elsewhere, had (and occasionally still do) talked long and hard about the FBI investigation into certain players in the card "hobby" industry, and the allegations of alteration fraud and other illegal activities they were suspected of being involved in. And since then many of those same people have bemoaned how it appears nothing has, or ever will, come or be done about any of it. If the card "hobby" industry were subject to some of these much higher levels of scrutiny and oversight as a truly recognized type of investment industry, with true governmental required oversight, like the SEC and FTC has over businesses here in the U.S., I'd venture to guess how much different those FBI investigations may have (or yet) turned out. I say "may" because technically they are still supposedly in an ongoing investigation, but nobody knows or has heard of anything new being done in regard to those investigations for some time now.

I have touted here on the forum before how any of us card collectors can be one of three different things; a dealer, collector/hobbyist, or an investor, and how technically anyone can actually be all three at the exact same time. They just have to organize and keep their activities separate, and be sure to prepare and keep as accurate and complete records and data about their separate activities as possible for if/when any of the tax authorities may come calling with questions. I've explained the main different tax consequences/attributes that go with each of these three different types of card owners they can be. And I've seen you post once or twice mentioning the same thing about card collectors being one of these three types as well, so I know we agree on that. What hasn't to my knowledge been directly challenged in tax law going up against the IRS yet is if they will truly recognize that someone selling their baseball cards could strictly be nothing more than an investor. And therefore, when they sell a card they held strictly as an investment, any profit on that sale should be subject to the same maximum 20% federal tax rate on the LTCG, just like from the sales of other traditional investments, like stocks and bonds, and NOT be subject to the currently higher 28% maximum federal tax rate on LTCGs from the sale of a collectible, such as a baseball card. The other major difference is that if a card you sell is a true investment, and not just a collectible, any losses on the sale of an investment would be potentially deductible against other gains and taxable income, but losses as purely collectibles are absolutely not deductible at all, not even against other gains from selling other baseball cards. I'm waiting for one these deep-pocket collectors/investors to sell say a T206 Wagner card for a few million of profit, and then take on the IRS and claim the most they owe in federal taxes on the gain is only 20%, and not 28%. Until you get to a case with enough potential dollars involved, I don't see anyone wasting the time and expense to fight the IRS for maybe just a few hundred or a few thousand dollars. But I firmly believe the argument is valid, and there for someone to eventually act on.

And in response to others who had asked what is maybe the difference between a baseball card being a collectible item or being an investment item, though I couldn't/still can't give them an exact, perfect and irrefutable definition and answer, the simplest way I had/have to put and describe it to everyone was, a collectible is something you would put on a shelf or hang on the wall in your man cave or office to show off and tell others about, an investment is something you'd be more likely to keep in your bank safe deposit box or in one of these new vault services that have just in recent years started operating. So when you take an operation like a PWCC or Goldin that has and operates a vault service for their clientele, and they also offer related/combined services to buy and sell those items on behalf of their clientele, it certainly starts to sound/look very similar to what you do when you call or otherwise contact your investment/financial planner/advisor/broker and ask them to buy/sell some stocks or other investments for you, doesn't it?

And what is the old saying, if it swims like a duck, looks like a duck, and quacks like a duck, it's a................................................. .....