When Doing a Trade

BobC · #1 12-25-2021, 02:31 PM

Quote:

Originally Posted by Eric72

There is a taxable event in there to consider.

Trading cards and leaving cash out of the equation might turn out better, financially speaking.

That isn't entirely true. Even if you straight up trade cards for cards, and no cash trades hands, that is a barter transaction and the IRS views it as a fully taxable event.

Casey2296 · #2 12-25-2021, 02:46 PM

I've had several successful trades with members here, sometimes it's the only way you can get a specific card from another collector.

Leon · #3 12-25-2021, 03:16 PM

Quote:

Originally Posted by BobC

That isn't entirely true. Even if you straight up trade cards for cards, and no cash trades hands, that is a barter transaction and the IRS views it as a fully taxable event.

Go get 'em Bob...
.

Carter08 · #4 12-25-2021, 03:31 PM

A fun trade string I did through net54 was going from Cobb t227 to Cobb t206 red to e93 Honus and Cy Young. I will always miss those Cobbies but it was fun.

Tao_Moko · #5 12-25-2021, 05:29 PM

I have had successful trades here. Exclusively when both parties have something that doesn't fit their wheelhouse. An example is I don't collect hockey cards but end up with them at times. I do collect baseball, boxing and football though. I'm easy to deal with and can weight a trade in favor of the other party. I did trade successfully T206 in person with a member here who lived in the same town as me. RIP Dr. Manning

kmac32 · #6 12-25-2021, 05:55 PM

I trade as a collector. I look at value of the cards but more importantly I fill in holes in my own collection. I have had people offer me many times over for certain individual cards in my collection but if the trade or deals leave a hole in my collection that can�t be repaired the it is a no go.

parkplace33 · #7 12-25-2021, 06:01 PM

Problem with trading is many collectors tend to overvalue their cards.

Snapolit1 · #8 12-25-2021, 07:34 PM

I find in this market it’s often extremely difficult to value your cards. A comparable card last sold for $13,000 in June. So that means your card could be worth $17,000? Or $20,000? Or $15,000? Or $9,000?

Vintagecatcher · #9 12-25-2021, 08:18 PM

I have had many successful trades here on the forum.

I'm more than happy to give up more value in order to get a card I desire.

It's what is needed to make sure both sides end up safisfied with the deal.

Patrick

Tyruscobb · #10 12-26-2021, 11:38 AM

Quote:

Originally Posted by parkplace33

Problem with trading is many collectors tend to overvalue their cards.

This is usually the issue. Oftentimes, both parties overvalue their respective cards. Each party also wants to get the better deal. These two factors are as old as time and memorial.

Eric72 · #11 12-26-2021, 11:43 AM

Quote:

Originally Posted by parkplace33

Problem with trading is many collectors tend to overvalue their cards.

For many reasons, it helps to be objective when evaluating cards.

I always ask myself two questions when looking at a card:

What condition/value would I place on this if it was my card?
What condition/value would I place on this if I was trying to buy this card?

This simple exercise allow me to see both sides of the coin, so to speak. The true condition/value is typically on the edge of that coin, between the two sides.

Leon · #12 12-26-2021, 12:04 PM

Great comments by everyone....So getting back to my and the very nice members offer.
Here is the valuation he gave on these cards.,...

"T206 Ty Cobb Bat On Sweet Caporal
T206 Ty Cobb Green - Sweet Caporal PSA 2MC
T206 Johnson Portrait SC Over Print Sub 150 Fac 649
T206 Mathewson Portrait
T206 Cy Young PortraIt
E105 Cy Young PSA 1.5
N284 Buchner Gold Coin Wood-Sliding SGC 2

I added them all up and it comes to about $24500 or so "

.

ValKehl · #13 12-25-2021, 09:42 PM

Quote:

Originally Posted by BobC

That isn't entirely true. Even if you straight up trade cards for cards, and no cash trades hands, that is a barter transaction and the IRS views it as a fully taxable event.

Bob, this seems totally contradictory to me if one is a cash-basis taxpayer for income tax purposes, which I believe most individuals are.

Stampsfan · #14 12-26-2021, 01:40 AM

Whatever happened to the guy who was going to trade some obscure card up for a 52 Topps Mantle, and was tracking it. He ended up getting a lot of commons and it died slowly, IIRC.

nebboy · #15 12-26-2021, 03:13 PM

Quote:

Originally Posted by Stampsfan

Whatever happened to the guy who was going to trade some obscure card up for a 52 Topps Mantle, and was tracking it. He ended up getting a lot of commons and it died slowly, IIRC.

I was the guys that made the 1st trade with the (trade up to a 52 mantle) guy when I gave up some lesser T206 hof cards ect., for a graded 3 veg 205 Johnson, I took a little heat over that one because some felt I gave to much or they didn't like that guy or what he was trying to achieve. His quest did flame out after a few trades and I beleave after trying another hobby related start up, ended up moving away from Net54.

Still have that T206 Johnson

bnorth · #16 12-26-2021, 05:58 PM

Quote:

Originally Posted by nebboy

I was the guys that made the 1st trade with the (trade up to a 52 mantle) guy when I gave up some lesser T206 hof cards ect., for a graded 3 veg 205 Johnson, I took a little heat over that one because some felt I gave to much or they didn't like that guy or what he was trying to achieve. His quest did flame out after a few trades and I beleave after trying another hobby related start up, ended up moving away from Net54.

Still have that T206 Johnson

I believe he left after trying to screw a guy in a set break on the Mantle. After some time he finally made the person right on the card. He would buy very obvious fakes on eBay. Then come on here and complain about the scammers on eBay selling fakes for pennies on the dollar.

egri · #17 12-27-2021, 06:28 AM

Quote:

Originally Posted by bnorth

I believe he left after trying to screw a guy in a set break on the Mantle. After some time he finally made the person right on the card. He would buy very obvious fakes on eBay. Then come on here and complain about the scammers on eBay selling fakes for pennies on the dollar.

I remember him; after buying boatloads of obvious fakes off Craigslist, he�d then get pissy when members would tell him to take some time to study the cards and learn to tell a reprint from a real one. Him and Kevin would butt heads all the time; probably the only time I ever agreed with Kevin.

I�ve done a few trades here throughout the years, but the issue for me is my wantlist and my duplicates are very specific, so the odds of someone both having something on one list and wanting something on the other are pretty remote. I�ve had better luck just buying straight up.

Exhibitman · #18 12-27-2021, 09:20 AM

Bob, isn't the outcome taxable but effectively tax neutral if the parties trade evenly valued items? Isn't the income on that deal zero?

More to the OP, one of the things I've missed about shows is the ability to trade. Every year at the National there's a boxing collector who sits down with me the first evening and trades for items in my sale inventory. We throw all sorts of stuff on the trading bloc and see who gets what done. Can last for hours and get as complex as a multi-team NBA salary cap trade but usually works out because he wants rarities and I want stuff that will move at the show better than the rare items. In some ways my end is easy because I put price tags on my inventory, so what I think the item is worth is already out there and all we have to dicker over is the value of his stuff.

The difficulty that I have trading for my PC is that I've always been drawn to quirky, offbeat, non-mainstream cards and memorabilia. How do you value items that are unique or that have few known examples that haven't sold in a long time? I certainly can't rely on a single 2011 sale as a comparable. So I analogize to similar cards, but there is always that unknowable variable that only an auction result can establish. Case in point: someone recently tried to work with me on a rare card I had, but no matter what we tried we simply could not agree on a base value because the card never sells. I had a list of cards I thought were comparable but he disagreed. Ultimately, I was pleased to keep the card.

MVSNYC · #19 12-27-2021, 07:43 PM

"Trading is the most fun part of the hobby to me. I do tons of trades with my collecting buddies."

I'm with Luke...I do a ton of trades, with many members here (Hi Luke); most are top T206 collectors...and quite frankly some big cards are often involved.

Belfast1933 · #20 12-28-2021, 05:45 AM

For me, it�s an easy explanation why I haven�t made any trades here� it�s simply twice as hard as simply buying (or selling) for cash

For a trade to work, there are 2 transactions in play simultaneously - first, the value of the card I want and, at the same time, the value of the card I will give up. And then there is all the squishy, messy stuff in between those 2 values

I prefer the simplify of a straight purchase or a straight sale� it�s almost like a trade, in a way. But it involves 3 parties instead of two.

nineunder71 · #21 12-28-2021, 06:27 AM

I also do a ton of trades, and mostly with members here on N54.

As I purchase condition upgrades or back upgrades for the PC, typically something becomes a duplicate and that heads to the trade pile. I usually look for trades long before I decide to post to the BST with a price tag.

Also, I don’t at all mind ‘loosing’ a bit in the trade, value wise, to not have to come out of pocket any cash. Oh, and this is a good way to start making some friends, ie- trade buddies for life! I value building my collection more than I care about $10 and $20 here and there. If I need your $80 card, I will happily trade one of my $100 trade cards for it. Same deal $800 vs. $1000

To the OP, my advise; Leave the comps out of the negotiations all together when trying to trade. You know what you value the Cobb at, and the person on the other end of the trade knows how they value the same card. If either party feels the need to look up comps to feel better educated then so be it, but leave that part out of the negotiations.

I use a ‘value range’ instead. You like my Ruth, I value him at $2000-$2500, what value range do you see your Cobb in??

This is how I would start a trade. Then, I can decide if the range you provide is something that I could work a trade around, or I can just move on..

Bickering about what a different card (comp) sold for, seems like a waste of time to me... Best of Luck

Leon · #22 12-28-2021, 07:25 AM

Quote:

Originally Posted by nineunder71

I also do a ton of trades, and mostly with members here on N54.

As I purchase condition upgrades or back upgrades for the PC, typically something becomes a duplicate and that heads to the trade pile. I usually look for trades long before I decide to post to the BST with a price tag.

Also, I don�t at all mind �loosing� a bit in the trade, value wise, to not have to come out of pocket any cash. Oh, and this is a good way to start making some friends, ie- trade buddies for life! I value building my collection more than I care about $10 and $20 here and there. If I need your $80 card, I will happily trade one of my $100 trade cards for it. Same deal $800 vs. $1000

To the OP, my advise; Leave the comps out of the negotiations all together when trying to trade. You know what you value the Cobb at, and the person on the other end of the trade knows how they value the same card. If either party feels the need to look up comps to feel better educated then so be it, but leave that part out of the negotiations.

I use a �value range� instead. You like my Ruth, I value him at $2000-$2500, what value range do you see your Cobb in??

This is how I would start a trade. Then, I can decide if the range you provide is something that I could work a trade around, or I can just move on..

Bickering about what a different card (comp) sold for, seems like a waste of time to me... Best of Luck

There was no bickering in our attempted trade. Our valuations were just off. It wasn't a big deal and still fun to try.
.

BobC · #23 12-26-2021, 06:16 AM

Quote:

Originally Posted by ValKehl

Bob, this seems totally contradictory to me if one is a cash-basis taxpayer for income tax purposes, which I believe most individuals are.

Hi Val,

The IRS views businesses and people as keeping their records in one of two acceptable manners, either on an "accrual basis" or a "cash basis". Both of these refer to when a taxpayer, an individual or business, recognizes income or expenses for tax purposes. If you are on the "accrual basis", income or expense is recognized when a taxpayer becomes liable for the receipt or payment of some bill or invoice. If on the "cash basis", it is recognized when actually paid or received.

A company/individual selling cards that is on the accrual basis for tax purposes sends cards and an invoice to a customer dated today, 12/26/2021, and the customer receives it and sends payment back to the company/ individual on 1/5/2022. Because the seller is on the accrual basis, they recognize the sale of those cards on 12/25/2021 as taxable income in 2021 (assuming the company/individual uses the calendar year as its taxable year), even though they didn't receive payment of their invoice till the following taxable year. Had the seller been on the cash basis instead, they wouldn't recognize the income from the sale until the following year, 2022, when the payment was actually received.

The term "cash basis" itself refers to the timing of when a taxpayer recognizes income and expenses for income tax purposes, it does not necessarily refer to or just mean actual cash paid or received.

Now take the card selling company/individual in my example. Instead of being paid in cash for the cards they sold, they could agree to be paid in goods or services instead. And by goods, that includes cards they received as payment for the cards they just sold. You, or others, may call that a trade, but the IRS calls it a taxable sale or exchange. It doesn't matter if it is individuals or companies involved in such a deal/trade, it is still considered a taxable exchange to both parties by the IRS. There is also the possibility that some people think such a trade isn't taxable because it is considered as a like-kind exchange, where the tax liability is deferred, but under current tax law, like-kind exchanges only apply to real estate.

The parties (usually individuals) in a card trade don't normally have either side reporting the trade to the IRS, so the IRS normally has no other way to know about such activities, and doesn't really have the time or resources to go after these people. But that doesn't mean you're still not supposed to report such trades as taxable sales on your income tax returns. It is kind of similar to how people that win something from an AH that doesn't charge them sales tax for the state they're in normally don't bother to voluntarily report and pay the resulting sales/use to their state, like they're supposed to. People know that in either instance, the chances of them getting caught is almost nil, so they don't bother.

As you said, pretty much all individuals are considered "cash basis" taxpayers, and generally only actual registered businesses can get treated as either "cash basis" or "accrual basis". And for the record, when someone does execute a taxable trade of one card for another, if no cash is involved, you are supposed to assume that the current FMV of the card you received at the time of the trade is equal to the amount of cash you would have received had you just sold the card outright. And you use that FMV to report the deemed sale on your tax return, and to then figure any gain or loss you may have for tax purposes.

Piratedogcardshows · #24 12-26-2021, 06:27 AM

I have pulled some trades off as recently as this year on the site. I always enjoy trading and have benefited and been on the lesser side. Yin and yang.

Bram99 · #25 12-26-2021, 08:29 AM

The problem that has been described here is ancient. In fact, it gave rise to the concept of money as a medium of exchange. It can be substituted for very diverse goods.

The first known form of currency was the Mesopotamian Shekel from around 5,000 years ago. Likely there were similar quibbles to the one in this thread, when a wheat farmer had too much wheat but really wanted some goat milk.

Today, it can be used as a medium of exchange (to buy or sell) a PSA 3 T206 Ty Cobb with poor centering. The money proceeds from a sale like this could be used to buy a different T206 Ty Cobb graded by a different TPG. Or it can be used to even out a trade involving the two cards in the example.

The key issue in any of these examples is the need to come to an agreement on relative value. That problem is also ancient and didn't arise with the advent of price guides, the rise of card "investors" or card dealers, or third party grading.

So if you can't think of a fair trade, try using cash to help even things out! If that doesn't work, you probably weren't likely to have a meeting of the minds in a buy/sell transaction either, so might as well move on and find a new trading partner!

LincolnVT · #26 12-26-2021, 08:50 AM

This thread brings me back to the hobby in the late 80s when nothing was graded, very little was sold, everyone traded and we all relied on the latest issue of Beckett to see if our Billy Ripken variation still had a little black arrow pointing up next to the $50.00 price. Back then if you had a decent Mantle from the 50s or 60s you were king...nobody cared about the stuff that we all chase today. I love to trade still...would still much rather work a trade deal with a collector than sell what I have just to buy another piece at auction.

Yoda · #27 12-26-2021, 08:55 AM

Way back, trading was the heart and soul of the hobby, kids had no money and trading was was really the only way to get desired cards after meagre allowances were exhausted. I got my first Mantle Bowman rookie through a trade. I was 7 years old at the time.

ValKehl · #28 12-26-2021, 11:42 AM

Bob, I was 99.9% certain that after I commented about cash-basis taxpayers, you would respond with a dissertation re cash basis vs. accrual basis, and I wasn't disappointed.

Although my comment may come across as "snarky," I truly appreciate and respect your immense knowledge of taxation and the governmental regulations pertaining thereto. While an accountant for most of my career, I never got much into taxes, so I only know enough about taxes to be "dangerous." Hence, I also truly appreciate your many efforts enlighten all of us with your tax knowledge. And, I enjoy reading whatever you post re any topic because of you excellent writing skill.

You mentioned that, "there is also the possibility that some people think such a trade isn't taxable because it is considered as a like-kind exchange, where the tax liability is deferred, but under current tax law, like-kind exchanges only apply to real estate." I resemble your remark in that I never realized that a cashless trade is taxable. I guess the real property lobby has been a much stronger influencer on Congress than the personal property lobby (if there even is such an organization).

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