What are experiences on finding collectors/dealers willing to "downgrade" cards?

[BobC]

Originally Posted by Eric72

If I'm not mistaken, the trade would also qualify as a taxable event.

(paging BobC)

Thanks for the introduction Eric.

Smart5051, Eric is absolutely right. (In other words he's been listening to me! LOL) The IRS views a trade or barter of goods the same as a sale of goods for cash, they're all considered taxable transactions. You may have been thinking about the old Section 1031 of the Internal Revenue Code, and transactions known as Like-Kind Exchanges. You used to be able to defer paying taxes on such Like-Kind Exchanges for pretty much anything, as long as the items being traded truly were of a like-kind. However, the Republican's 2017 Tax Cuts and Jobs Act cut back on what assets can qualify for the tax-free exchange treatment. Since 2018, the only assets you can exchange and defer the tax on are for Like-Kind Exchanges of real property (ie: land and buildings), and that is it. When you trade cards with someone, you are technically selling your card(s) for whatever the then current FMV is of the card(s) you receive in return, plus any cash they may be paying you as well. The trick is to somehow determine and then document what the then current fair market value is of each party's cards that are included in the trade, so each party knows what to report as having technically sold their card(s) for, and to also back their numbers up if the IRS ever comes knocking and asking questions.

And by the way, if you still could do a Like-Kind Exchange of cards today so you didn't have to currently pay taxes on the trade, that wouldn't work and be the case for any cash you also received as part of that trade. When you include something other than just the like-kind properties as part of a Like-Kind Exchange, like cash you may receive to equalize your trade, that other property or cash is called "boot". And in a qualified Like-Kind Exchange, you would have to currently recognize, report and pay taxes on any gain/profit you got from the trade to the extent of "boot" received. So even if a tax deferred Like-Kind Exchange of cards were still allowed, the cash you received could still cause current taxes to be due.

That is all of course assuming you and the party you're trading with bother to report such trading activities on your tax returns to begin with. Good luck!

[brianp-beme]

Originally Posted by BobC

The IRS views a trade or barter of goods the same as a sale of goods for cash, they're all considered taxable transactions. You may have been thinking about the old Section 1031 of the Internal Revenue Code, and transactions known as Like-Kind Exchanges. You used to be able to defer paying taxes on such Like-Kind Exchanges for pretty much anything, as long as the items being traded truly were of a like-kind. However, the Republican's 2017 Tax Cuts and Jobs Act cut back on what assets can qualify for the tax-free exchange treatment. Since 2018, the only assets you can exchange and defer the tax on are for Like-Kind Exchanges of real property (ie: land and buildings), and that is it. When you trade cards with someone, you are technically selling your card(s) for whatever the then current FMV is of the card(s) you receive in return, plus any cash they may be paying you as well. The trick is to somehow determine and then document what the then current fair market value is of each party's cards that are included in the trade, so each party knows what to report as having technically sold their card(s) for, and to also back their numbers up if the IRS ever comes knocking and asking questions.

Just think of what revenue the IRS could have pulled in if this had been in effect in decades past when kids were swapping cards with their friends.

Brian

[BobC]

Originally Posted by brianp-beme

Just think of what revenue the IRS could have pulled in if this had been in effect in decades past when kids were swapping cards with their friends.

Brian

Times (and card values) were a lot different back then. But now you may have guys trading rare backed T206 green Cobbs for '33 Goudey Ruths. The dollar amounts for those cards could definitely be of interest to an IRS agent, whereas they couldn't care less about the cards kids were flipping back in the day.