Selling a card you inherited - Income tax

[Peter_Spaeth]

Originally Posted by BobC

The value of household items, furnishings and stuff like that is one thing. IRS agents aren't all the pricks that many people make them out to be. At least they haven't been in the past. For things like that, as long as your valuations are somewhat reasonable, I don't think you'll get much of a hassle from them. However, a single $50K baseball card may stick out like a sore thumb to them, and could possibly trigger some inquiries.

Plus, don't forget that this recently passed Inflation Reduction Act, that is expected to shortly be signed by Biden, includes an $80 billion increase to the IRS' budget over the next decade or so. I've heard as part of this huge budget increase that they intend to hire tens of thousands of new IRS employees/agents as a result. So, how much anyone want to bet this is going to result in more audits and investigations of corporate and other high-income taxpayer returns in the near future? And along with going after the more "well-to-do" taxpayers, I can definitely see part of the IRS' expanded scrutiny focusing on estate taxes as well. Oh, and this is also just in time for the start of all the new 1099-K forms that are going to begin being sent out to people in early 2023 for their $600 or more in proceeds from sales using Paypal and other such third-party payment platform services.

And I've actually acted as an estate appraiser myself for a colleague a couple decades ago. Managing partner of a firm I was at had an unmarried dentist friend/client that passed, and he made my colleague the executor of his estate. My colleague knew I was a bit of a collector, so he asked me on company billable time to go through the deceased's collections for estate tax purposes, and figure out what they were worth Back then, Ohio had an estate tax as well, so even if we lucked out and the net value of the estate value came under the federal lifetime estate tax exemption amount, the estate was still going to get hit with Ohio estate taxes. The dentist had several things he collected. Animation cels, poker chips, a small gun collection (had a nice vintage WW II German luger), and baseball cards. The best of his collection was complete '40, '41 Playball sets, all raw and in binders. Was actually kind of fun to learn a bit about some of these other collectibles.

Peter, in your case, I think that the more time that passes, the more likely you are to be okay should you ever sell anything. It is just as hard, if not harder, for the IRS to go back and definitively prove an actual FMV of some somewhat obscure antiques and items from long ago. And don't forget, since the appraiser valued the items low, when you do sell them, the result is bigger gains, resulting in more taxes due. Assuming you even report the sales that is. LOL As I previously mentioned, as long as valuations seem to be at least somewhat reasonable, the IRS is unlikely to argue too much. Plus, the IRS has a three-year statute of limitation on estate tax returns, from the date they were originally filed. So, if these appraisal issues you mentioned were from longer ago than that, I wouldn't go worrying about it at all anymore.

Bob, I know insurance appraisals are at the other end of the spectrum and tend to be inflated, but the disparity between the estate appraisal and previous insurance appraisals was, to say the least, remarkable. I found the whole thing offensive even if it saved some money. Yes, the SOL has passed so not worried about it from a liability standpoint.