Taking money out of retirement funds to purchase cards

[raulus]

Originally Posted by ullmandds

No way in hell the consigner paid auction fees on this

What about the juice? Do you think the consignor kept the bidder’s 20% premium?

[ullmandds]

Originally Posted by raulus

What about the juice? Do you think the consignor kept the bidder’s 20% premium?

I would imagine the consignor got part of that

[raulus]

Originally Posted by ullmandds

I would imagine the consignor got part of that

What percentage would you estimate that they got? 25%? 50%?

[ullmandds]

Originally Posted by raulus

What percentage would you estimate that they got? 25%? 50%?

If he did not get half of the buyers premium I say he did himself a disservice

[raulus]

Originally Posted by ullmandds

If he did not get half of the buyers premium I say he did himself a disservice

OK. Let's assume the seller got 75% of the buyer's premium, and zero listing fees. You and I aren't going to get this deal when we sell our items. Last time I consigned with this AH, they kept the juice, and I paid 7.5% listing fees. But let's just roll with this generous assumption for now.

So the sale was for $10.5M, with a bidder's premium of $2.1M, total of $12.6M. If we assume that the seller keeps 75% of the bidder's premium, then the seller nets $12.075M.

Now to the fun part - paying taxes. The seller's basis was $50k, which is well known. The gain is therefore $12.025M.

The feds get 28% for capital gains on collectibles. Plus 3.8% for the Obamacare tax on capital gains. So 31.8% to the feds.

But wait, there's more!!

The seller, as I understand it, lives in New York. The top marginal rate for the great state of New York is 10.9%. I thought I also read that this seller also lives in New York City, which adds another 3.8%. So state + city gets you another 14.7%. And under the new tax law, it's not deductible on your federal return either. Brilliant!

So all-in, taxes are 46.5% on a gain of $12.025M, which gets you to taxes of $5.6M. Seller nets right about $6.425M after taxes. Even with very generous assumptions about who gets the juice, and no listing fees.

If the seller was in a zero tax state (and city), then that would help. The seller would net $8.2M in that scenario. Hopefully this seller moved to Florida last year, although I'm guessing that Governor Hochul will still work like the dickens to get NY's cut in that scenario.

But whether we're talking about $8.2M or $6.425M, it's still a lot less than $12.6M.

[Johnny630]

Originally Posted by raulus

OK. Let's assume the seller got 75% of the buyer's premium, and zero listing fees. You and I aren't going to get this deal when we sell our items. Last time I consigned with this AH, they kept the juice, and I paid 7.5% listing fees. But let's just roll with this generous assumption for now.

So the sale was for $10.5M, with a bidder's premium of $2.1M, total of $12.6M. If we assume that the seller keeps 75% of the bidder's premium, then the seller nets $12.075M.

Now to the fun part - paying taxes. The seller's basis was $50k, which is well known. The gain is therefore $12.025M.

The feds get 28% for capital gains on collectibles. Plus 3.8% for the Obamacare tax on capital gains. So 31.8% to the feds.

But wait, there's more!!

The seller, as I understand it, lives in New York. The top marginal rate for the great state of New York is 10.9%. I thought I also read that this seller also lives in New York City, which adds another 3.8%. So state + city gets you another 14.7%. And under the new tax law, it's not deductible on your federal return either. Brilliant!

So all-in, taxes are 46.5% on a gain of $12.025M, which gets you to taxes of $5.6M. Seller nets right about $6.425M after taxes. Even with very generous assumptions about who gets the juice, and no listing fees.

If the seller was in a zero tax state (and city), then that would help. The seller would net $8.2M in that scenario. Hopefully this seller moved to Florida last year, although I'm guessing that Governor Hochul will still work like the dickens to get NY's cut in that scenario.

But whether we're talking about $8.2M or $6.425M, it's still a lot less than $12.6M.

I've always said this, cards may in theory seem easy and profitable when the time comes to liquidate, until you see that tax bill, ugh. That being said a net of $6.425 million ain’t too shabby for a 30-year investment of $50,000. I'd take that return everyday of the week and twice on Sunday's !

[raulus]

Originally Posted by Johnny630

I've always said this, cards may in theory seem easy and profitable when the time comes to liquidate, until you see that tax bill, ugh. That being said a net of $6.425 million ain’t too shabby for a 30-year investment of $50,000. I'd take that return everyday of the week and twice on Sunday's !

If we could get that return on all of our cards, then there’s no doubt that we would all retire comfortably.

[soxinseven]

Originally Posted by ullmandds

If he did not get half of the buyers premium I say he did himself a disservice

This.