Would you take this deal?

[raulus]

Recently received an offer that intrigued me. As others have been posting about some of the moves they’ve been considering, and this one has a bit of a twist, I figured it would merit a broader discussion from the forum.

I’ve been thinking it over, and I figured some of you have probably contemplated similar deals in the past, and might have some observations to share based on your past ruminations.

A few important details:

The deal would involve me trading my current piece for a lower graded piece, and receiving a big chunk of change in exchange for my sacrifice to trade down.

In this case, the item in question is one of the Crown Jewels of my collection. I paid more for it than I’ve paid for any other single piece. And at the moment, it’s arguably the most valuable piece in my collection.

This particular piece is also very rare. For any given player, only a few are known to exist. In addition, this is a well known set that tends to be widely coveted within the hobby, so it’s not some obscure yet rare piece that no one has ever heard of. And my piece is the highest graded piece in the hobby for this player, who also happens to be an inner circle hall of famer. They don’t come to market that often, so they’re difficult to find.

I purchased my piece about 5 years ago, with a plan to keep it in my collection for a long, long time, likely until I decide to sell everything when I retire (still a long ways away).

The potential deal would involve me trading my piece for the same piece that is one grade lower. I would still have the second highest piece in the hobby for this player, which is a nice feature, and means that I don’t have to live with a gaping hole in my collection and in my heart. A close inspection of these two items suggests that they are very similar in quality. Some might even argue that the lower graded piece is as nice as the highest graded piece. And those arguments are not without merit. For purposes of this discussion, let’s assume that I’m familiar with the maxim to “buy the card, not the holder”. So for those whose response will consist of repeating this maxim, I’m hopeful that further repetition won’t be necessary. Although if I’m being honest, I’m a mindless fool when it comes to the registry.

In exchange for my “trading down”, the buyer would compensate me with some cold, hard cash. For purposes of this hypothetical situation, let’s assume that the cash component would represent about 120% of what I originally paid to acquire my piece 5 years ago. Since some of you may salivate excessively contemplating all of this cold hard cash, allow me to tip my cap to my fellow tax nerds: based on my righteous 40% tax rate on collectibles (fed + state), let’s assume that all of the cash I receive in this deal would not stay in my pocket for long, but would instead end up transiting immediately on to the tax man.

Obviously my biggest hesitation is giving up something that I haven’t planned to sell for a long time. Plus realizing that I’m giving up one of my Crown Jewels that is likely one of the best pieces I will ever own, and trading down for a lower graded piece, even if the new piece might not be very different. Plus the fact that I don’t get to really keep the cash seems to make the deal a lot less exciting to me.

What would you do?

[Mungo Hungo]

I'm not a tax nerd, but I do pay them. I'm having a hard time understanding how you wouldn't be keeping at least a significant portion of the cash you receive.

[Schwertfeger1007]

For me it depends on the player/card which you go to great lengths to not mention. Or maybe I'm just curious

Since you are worried about the tax implications, one thought would be to take another card equal to the 120% that has upside and you can hold on to in an effort to defer the taxes until you are retired and can sell while living on a lower income / tax rate.

[RCMcKenzie]

Have him throw in another card instead of cash, and ask him if it's okay to post a thread about it.

[raulus]

Originally Posted by Mungo Hungo

I'm not a tax nerd, but I do pay them. I'm having a hard time understanding how you wouldn't be keeping at least a significant portion of the cash you receive.

Well, I’m sure everyone is glad you asked, because calculating taxes is a blast.

Let’s just use some hypothetical numbers here to help frame the math.

Let’s say I bought my piece for $80.

And the piece I’m getting is worth $220. Plus $100 in cash. So my total consideration received is $320. That means my gain is $240. Keep in mind that like kind exchanges (ie trades) are no longer available for collectibles, so I get to pay tax on the full value of what I receive (less my low existing basis), even though I’m rolling most of it over into a new piece.

Based on my collectibles tax rate of 40%, that means I get to pay $96 in taxes.

If you think 40% sounds high, then the math breaks down thusly:

28% federal collectibles capital gains rate
3.8% Obamacare capital gains surcharge (for Leon’s benefit, I promise this is not intended to be political crap)
9% state tax
So actually 40.8%

If you think $320 sounds high for what I’m getting, keep in mind that we’re talking about a 300% increase in value over the last 5 years, from $80 to $320. Given the runup in prices during the pandemic, that might even be low. Furthermore, the cash is pretty easy to value at $100. The only question is how much I’m getting in trade. And I would bet good money that the replacement piece would sell around that price, potentially even higher.

So there’s actually a chance that I might have to pay more in taxes than I get in cash.

I will admit that I do get a new higher basis in the new piece, which will reduce my taxes down the road when I sell the new piece, assuming I ever sell it, which might be decades down the road, or I might just roll it into my estate, in which case the new higher basis is meaningless to my heirs.

Moral of the story (also not intended to be political): paying taxes is no fun. Particularly when it intersects with something intended to be fun like collecting cardboard.

[raulus]

Originally Posted by Schwertfeger1007

For me it depends on the player/card which you go to great lengths to not mention. Or maybe I'm just curious

Since you are worried about the tax implications, one thought would be to take another card equal to the 120% that has upside and you can hold on to in an effort to defer the taxes until you are retired and can sell while living on a lower income / tax rate.

Getting a second card doesn’t solve the tax problem.

I still get to pay taxes, even on trades.

But with the all trade version, I now have no cash to pay for my taxes.

[BobC]

Nic,

I think you just answered your own question in explaining how the taxes may work to these others posting. If you are possibly going to trade down in condition, and the cash you get is going to go mostly for taxes, all you've accomplished is bumping up your tax basis, while lessening the quality of your collection. Why in the hell would you do that, especially since you aren't planning on selling this item anytime soon.

They only way I would ever think of doing such a deal is if you could keep the slightly lower condition item, AND now have a sizable chunk of money to go out and pick up other things you want for your collection. Based on your possibly not so great tax impact, you already know this answer yourself, and am a bit surprised you even have to ask for everyone else's help. Or was this a trick question for everyone to see who would figure it out. If so, good one. LOL

[RCMcKenzie]

I am not a tax attorney, but there are many on here who can chime in.

I don't view baseball cards as a commodity on par with gold. "I bought this gold brick of 5 ounces at x price in 2015 and I'm trading now for 8 ounces of gold." in this example, you have a gain.

If you bought an sgc 4 Ty Cobb with an Old Mill back in 2015, and today you trade it for a PSA 2 Ty Cobb with an Old Mill Back, and a Larry Doyle E103 CSG 4 undergraded, then I think you don't realize a gain until you sell, years down the road with your original buy price of your sgc 4 cobb as your basis.

[Mark17]

I'm not a tax expert and I don't play one on TV, but do you have a monster box of Gregg Jefferies rookies, or some other collectibles you could sell at a big loss, to offset this transaction? Would that work?

[BobC]

Originally Posted by RCMcKenzie

I am not a tax attorney, but there are many on here who can chime in.

I don't view baseball cards as a commodity on par with gold. "I bought this gold brick of 5 ounces at x price in 2015 and I'm trading now for 8 ounces of gold." in this example, you have a gain.

If you bought an sgc 4 Ty Cobb with an Old Mill back in 2015, and today you trade it for a PSA 2 Ty Cobb with an Old Mill Back, and a Larry Doyle E103 CSG 4 undergraded, then I think you don't realize a gain until you sell, years down the road with your original buy price of your sgc 4 cobb as your basis.

Rob,

You missed Nic's point about how there is no longer any Like-Kind Exchange tax rule in place for collectibles. If Nic just trades his card for someone else's card(s), he doesn't offset the current card values and end up with no tax due. He has to take what he originally bought his card for years ago, which then became his tax basis in that card, and compare it to the current FMV of the card(s) he trades it for. The difference in his card's tax basis, and what the current FMV of the card(s) he traded for, is current taxable gain to Nic. Even if there is no cash involved.

We both know of course that a lot of collectors doing such a private deal will likely not report anything about the trade/sale to the IRS, and thus pay no tax on it. Especially since in a trade, there really isn't any third party required to prepare and file a 1099 for either party to the trade, and then send a copy to the IRS as well. But I've said this before here on the forum, many times prior to Nic, that trades are considered the same as taxable sales of cards for cash by the IRS. And the same goes for any dealers that get involved in a trade as well. It is up to the collectors/dealers to be honest and calculate their gain/income on such a trade, and then report it on their income tax return(s) and pay the resulting taxes due.

[BobC]

I'm not a tax expert and I don't play one on TV, but do you have a monster box of Gregg Jefferies rookies, or some other collectibles you could sell at a big loss, to offset this transaction? Would that work?


Sorry Mark, nice try though. LOL

If you are a collector, selling your collectibles, you cannot deduct any losses from the sale of one against the gains from another.

Now, and I've said this on the forum before as well, if you can prove to the IRS somehow that you were not a collector, and that you actually bought your card(s) strictly as investments, then you can offset the losses against other gains, and potentially against other income as well. And if you could do that, convince the IRS you card(s) were not collectibles and were only investments, your federal long-term capital gains tax rate would be maxed at 20%, not the 28% it is for collectibles.

The problem is that the IRS has historically viewed and defined sports cards pretty much all as just collectibles. It is only most recently that sports cards are starting to look more like a possible type of investment after all. Trick is how to then convince the IRS to agree with that assessment for cards you bought strictly as investments. It will probably take someone willing to go to court with the IRS, and winning their case, for that to happen. And unless we are talking about a T206 Wagner, or some other cards in the six to seven figures, and up, range, I can't see anyone willing to spend the time and money to fight the IRS in court to prove that sports cards can also be investments as well for tax purposes. But I can see someone eventually trying to fight the IRS on this down the road.

[RCMcKenzie]

Thanks for the info, Bob. My accountant has always advised me to never sell, it's too complicated. In your scenario, I have zero interest in trading baseball cards. I thought it would be a tax free exchange, with a deferred tax due.

[jethrod3]

Given all that I've heard, I would keep the card, along with the satisfaction that I owned the best of its kind!! We are our stories, and that, and your offer, is one great story that can be told at numerous cocktail parties!

[Michael B]

After giving Bob a timeout for a double post I have a question that is more about aesthetics.

You state that you are a registry fool. I would guess that PSA's registry actually means something to you. If that is the case, my question would be: How would you feel knowing that the best card in that grade of a set I guess you collect is no longer owned by you and you only own the second best card? Or better yet - What on God's green earth are you thinking????

Why would you give up the best card in your collection for a few dollars if you do not need the money?

I read your post before anyone else answered and these were my first thoughts.

[BobC]

Originally Posted by RCMcKenzie

Thanks for the info, Bob. My accountant has always advised me to never sell, it's too complicated. In your scenario, I have zero interest in trading baseball cards. I thought it would be a tax free exchange, with a deferred tax due.

Nic mentioned this earlier, when the new tax law overhaul and changes from 2018 went into effect, they also amended Section 1031 of the Internal Revenue Code, which dealt with Like-Kind Exchanges. After the amendment to that section of the tax code, the only thing you can exchange/trade with potentially no current tax consequences is real estate (land and buildings). That is it now.

And your accountant sounds like he/she is no dummy. Let me guess, you probably don't have perfect records that show everything you ever paid for all the items in your collection, right? And you may have hundreds (or even thousands) of cards as well. If you go to sell off a big chunk of your collection, your accountant ends up potentially having to list and report every single card you sell as a separate taxable transaction on your tax return. That is if you are a collector or investor. If you're a dealer, it is actually a little easier in that you only have to report your sales in total, but the tax consequences can be even worse because now you're talking ordinary income, not capital gains, and you can be subject to self-employment taxes (social security and Medicare) on top of your income taxes as well if you're a dealer. Fun, fun, fun!

[Mark17]

Originally Posted by BobC

If you are a collector, selling your collectibles, you cannot deduct any losses from the sale of one against the gains from another.

Bob,
Suppose I trade you a green T206 Cobb and a monster box of 1988 Fleer Jefferies. I paid $3,000 for the Cobb and $25,000 for the Jefferies. My total cost basis is $28,000.

I receive from you a lower grade green Cobb, current market value $18,000, plus $10,000 cash. From a tax perspective, isn't that a break-even deal for me?

[BobC]

Originally Posted by Michael B

After giving Bob a timeout for a double post I have a question that is more about aesthetics.

You state that you are a registry fool. I would guess that PSA's registry actually means something to you. If that is the case, my question would be: How would you feel knowing that the best card in that grade of a set I guess you collect is no longer owned by you and you only own the second best card? Or better yet - What on God's green earth are you thinking????

Why would you give up the best card in your collection for a few dollars if you do not need the money?

I read your post before anyone else answered and these were my first thoughts.

Exact same thing I was thinking as well when I mentioned why would you want to trade down on your card, but really get nothing in return but an increased tax basis? He already said he wasn't going to be selling this card anytime soon, so you're absolutely right, it seems like a dumb thing to do as a collector, Registry or no Registry even.

And the double posts just happen. I only click the submit button once, but occasionally it double, or even triple posts. No idea why, but have seen it happen to others on here as well.

[RCMcKenzie]

Thanks, Bob. I feel like you should send me a bill for consulting. I don't do much selling or trading, but lots of buying. They used to have something called a casual sale. I actually have pretty good records on my cards.

[RCMcKenzie]

On a similar topic to Nic's.

A board member is working on a mid-tier hofer back run. He reaches out to me to see if I have a dupe of a rare card from T213-2 Coupon. I do. I paid $90 12 years ago from a BIN from Joe's Vintage. It has a sticker on the back that states "90-" in Joe's handwriting. SGC 10 with paper loss on front.

He offered a raw T213-3 common with front and back damage. I am thinking about it, and asked him to to throw in a low grade common t206. I haven't heard back. Should I forget about it?

[BobC]

Originally Posted by Mark17

Bob,
Suppose I trade you a green T206 Cobb and a monster box of 1988 Fleer Jefferies. I paid $3,000 for the Cobb and $25,000 for the Jefferies. My total cost basis is $28,000.

I receive from you a lower grade green Cobb, current market value $18,000, plus $10,000 cash. From a tax perspective, isn't that a break-even deal for me?

Mark,

I see what you're trying to do, hopefully bundle a couple items together as one combined tax basis to take advantage of the taxable loss on part of what you are looking to trade. Technically, the IRS would still view the Cobb and Jeffries cards as separate collectibles items, which should then be reported on your tax return as separate sales, even though you traded them both together for something else. You'd end up allocating the sales price, which would be the current FMV of the card(s) you traded for, based on the then current FMV of the items you are trading. Or at least that is what you should be doing.

Now if you were to try listing the Cobb and Jeffries cards together as though they were just one item being sold on your tax return, say you called it "sports card collection" as the item being sold, and listed the tax basis as the $28K in your example, you might be able to get away with it if the IRS doesn't come calling for clarification on what is in the card collection? You basically end up playing what is commonly referred to in the tax world as the IRS "audit lottery". You file a knowingly false return, and pray you don't get caught/picked and audited by the IRS. I would never recommend or advise anyone to be doing that. But I also know that many, many people do just that kind of thing on their tax returns all the time.

[Mark17]

Originally Posted by BobC

Mark,

I see what you're trying to do, hopefully bundle a couple items together as one combined tax basis to take advantage of the taxable loss on part of what you are looking to trade. Technically, the IRS would still view the Cobb and Jeffries cards as separate collectibles items, which should then be reported on your tax return as separate sales, even though you traded them both together for something else. You'd end up allocating the sales price, which would be the current FMV of the card(s) you traded for, based on the then current FMV of the items you are trading. Or at least that is what you should be doing.

Now if you were to try listing the Cobb and Jeffries cards together as though they were just one item being sold on your tax return, say you called it "sports card collection" as the item being sold, and listed the tax basis as the $28K in your example, you might be able to get away with it if the IRS doesn't come calling for clarification on that is in the card collection? You basically end up playing what is commonly referred to in the tax world as the IRS "audit lottery". You file a knowingly false return, and pray you don't get caught/picked and audited by the IRS. I would never recommend or advise anyone to be doing that. But I also know that many, many people do just that kind of thing on their tax returns all the time.

Thanks Bob. I'm not in that situation, but I would've thought what I proposed would've been OK to do, and not a "trick." I appreciate your clarification. I do agree with you that when it comes to the IRS, it's best to play by the rules and sleep well at night.

[Michael B]

Originally Posted by BobC

Exact same thing I was thinking as well when I mentioned why would you want to trade down on your card, but really get nothing in return but an increased tax basis? He already said he wasn't going to be selling this card anytime soon, so you're absolutely right, it seems like a dumb thing to do as a collector, Registry or no Registry even.

And the double posts just happen. I only click the submit button once, but occasionally it double, or even triple posts. No idea why, but have seen it happen to others on here as well.

I was thinking that it must be some quirk in the system, possibly the isp.

[BobC]

Originally Posted by RCMcKenzie

Thanks, Bob. I feel like you should send me a bill for consulting. I don't do much selling or trading, but lots of buying. They used to have something called a casual sale. I actually have pretty good records on my cards.

LOL

Don't worry, no bill is coming.

And the concept of casual sales still exists, but as I would try to explain it to clients, think of a casual sale as like a garage sale to clear stuff out of the house. You don't continuously do it all the time, so you aren't a dealer in a trade or business. And you're usually just selling your old used clothing, furniture and other junk that you originally paid a lot more for. In which case you are basically selling everything for a loss anyway, so why waste yours and the IRS's time by having to go through the trouble of reporting it all on your tax return when nothing will ever be owed? But now you're talking collectibles that aren't just used personal items that depreciate in value over time. Plus, with the way card prices are today, the values and amounts are no longer insignificant. And couple all that with people using online venues and platforms to sell a lot of their stuff nowadays, like Etsy, Ebay, Comc, etc. These are all initially assumed by the IRS, and many others, as more like dealers in business who use the online services to sell their stuff. Think of it this way. With that new lowered reporting standard that went into effect, starting this year, anyone selling $600+ worth of stuff on Ebay is going to get a 1099-K form reporting their total sales for the year of $600 or more, and a copy will be sent to the IRS as well. Now maybe you only used Ebay for a couple "casual sales" and only sold two or three cards this whole year, for a total of say $800 in sales. When the IRS gets that 1099-K form next January with your name on it, showing you had $800 in sales to report, want to bet if the IRS assumes you are a dealer or a collector selling collectibles? They are going to initially assume you are a dealer, unless you properly file your tax return and accurately report at least the total of those $800 in sales shown on your 1099-K form as gross receipts from individual collectibles sold.

So with the advent of online and other related types of sales and sales venues, the idea of "casual Sales" has been altered a little in the way it is viewed nowadays.

And keep up with the records. And if/when the time comes to have to report things on your tax return, estimate the tax basis of some cards if you have to. Just do the best you can. The IRS can, and does, work with people more than you may think when it is difficult to find every single record or receipt.

[BobC]

Thanks Bob. I'm not in that situation, but I would've thought what I proposed would've been OK to do, and not a "trick." I appreciate your clarification. I do agree with you that when it comes to the IRS, it's best to play by the rules and sleep well at night.


Very true Mark, very true.

The real trick is to make sure you get everything onto your tax return that the IRS knows about and has record of (W-2s, 1099s, etc.), and to then make sure you have everything reported in the right place, on the right forms, nothing is missing, and all the numbers add up properly (ie: you didn't screw up the math). When you electronically file your return, no person at the IRS actually looks at it. It goes into their automated system and is processed by their computers. It will automatically check for missing items, bad math, missing forms, and so on, and if it finds something is off, will generate a letter/notice to you about what they found wrong. So you want your return to be able to go through the IRS's computer checking system without a glitch. It is usually better to use a tax software program to do your return (if not an accountant/tax preparer) as the software typically makes sure the math is good, and usually alerts you to missing od otherwise deficient things on your tax return. It also then usually lets you electronically file your return so it goes right into their system, untouched by human hands. LOL

It is when you prepare your return and paper file it, actually mail your return into the IRS, that a human has to go ahead and enter everything into the IRS's system for you. Obviously, you now have a human looking at your tax return, and they can possibly make a mistake in entering it into the IRS's computer system for you. Don't worry though, these aren't going to be actual tax auditors entering your paper filed returns into the IRS's system, but still, the more hands that have to touch your return, the more chances for errors.

[BobC]

Originally Posted by Michael B

I was thinking that it must be some quirk in the system, possibly the isp.

Yeah, Leon said something like that to me once. Saw that was happening to him also.

[ALBB]

Nic,
good luck with decision

But it would be much more fun/ interesting/ easier ..for guys reading this if you could say -

For Ex - Im giving up my 33 G Nap Lajoie...for a 52 T Mantle and $150,000

[bnorth]

If it was just a simple trade with cash yes. With all the added BS involved not a chance.

[FrankWakefield]

Anyone here ever trade down, and then 3 years later be glad that they did?


If you really need the money, you need to trade, or maybe just sell the card outright.

I've sold a few cards that I wish I still had. A factor in that is that I still collect. If I was selling off the cards I have, I'd probably still miss whatever it is that you have, but I'd be missing all of my cards.

For you, if you're continuing with collecting, then that trade down card will always be there to remind you of what you once had, that'll be slightly more annoying, I suspect, than just having the memory alone.

In conclusion; if you're selling your collection then don't trade down, or trade down if you think that the trade down card plus the side money exceeds what you'd get in an outright sale. If you're going to continue with collecting, then don't trade...


Again, anyone here ever trade down, and then 3 years later be glad that they did?

And, do you guys really let tax factors dictate whether you buy, sell, or hold a card??? Really?

[bnorth]

Originally Posted by FrankWakefield

Anyone here ever trade down, and then 3 years later be glad that they did?


If you really need the money, you need to trade, or maybe just sell the card outright.

I've sold a few cards that I wish I still had. A factor in that is that I still collect. If I was selling off the cards I have, I'd probably still miss whatever it is that you have, but I'd be missing all of my cards.

For you, if you're continuing with collecting, then that trade down card will always be there to remind you of what you once had, that'll be slightly more annoying, I suspect, than just having the memory alone.

In conclusion; if you're selling your collection then don't trade down, or trade down if you think that the trade down card plus the side money exceeds what you'd get in an outright sale. If you're going to continue with collecting, then don't trade...


Again, anyone here ever trade down, and then 3 years later be glad that they did?

And, do you guys really let tax factors dictate whether you buy, sell, or hold a card??? Really?

I have traded down many times and have never regretted it. For me it was usually going from a graded to ungraded example. I have also done the 1 expensive card for several lesser cards many times with no regrets.

[parkplace33]

Very hard to give an opinion without knowing a) the specific card and b) the amount of cash you will be getting. But I will try

My concern is when you say "In this case, the item in question is one of the Crown Jewels of my collection. I paid more for it than I’ve paid for any other single piece. And at the moment, it’s arguably the most valuable piece in my collection." I think you have your answer there. Keep it and enjoy. And maybe let go of another piece if you want the cash.

[mrreality68]

Originally Posted by parkplace33

Very hard to give an opinion without knowing a) the specific card and b) the amount of cash you will be getting. But I will try

My concern is when you say "In this case, the item in question is one of the Crown Jewels of my collection. I paid more for it than I’ve paid for any other single piece. And at the moment, it’s arguably the most valuable piece in my collection." I think you have your answer there. Keep it and enjoy. And maybe let go of another piece if you want the cash.

I tend to agree with Drew and say keep it and enjoy it and enjoy knowing you have the highest graded.

But you cannot lose in either way which depends on the cash getting back which we do not know and what your plans might or might not be.

[steve B]

I think I would keep the card I have if I might not end up with money to spend once it's all settled.

I mostly do low end stuff, so low we just include any hobby money I get as misc income(the gross, like if I sell a card for $10 i report $10. Yes, we pay extra in taxes, but in most years it's not even enough to worry about. And figuring out a reasonable cost for things bought in large lots 40 years ago seems crazy. Like is my Gretzky rookie the $50 the entire 5000 count box of hockey cards cost? Or is it .01 ...........

Of course this has brought up many questions for me, since I've collected for decades. I essentially have no records pre-Ebay. And after Ebay only have a messy archive of "you won!" emails.

And how does cost basis work trading the other way. Like I buy a lot of stamps on Ebay, $40 for six. They have a wide range of catalog values, all have varieties making them more valuable than the basic ones they were described as. Some aren't cataloged and are hard to place an accurate value on. One is around $2000 catalog value. Two years later I swap that stamp plus cash for a different stamp that has a slightly higher catalog value. ( literally the only way I could have ever gotten one) How the _ do I figure that one someday when it gets sold. Or more likely how do my kids figure the value.

[raulus]

Originally Posted by ALBB

Nic,
good luck with decision

But it would be much more fun/ interesting/ easier ..for guys reading this if you could say -

For Ex - Im giving up my 33 G Nap Lajoie...for a 52 T Mantle and $150,000

Totally understand and agree.

Part of the fun is that I'm trying to keep some of the details obscure to protect the innocent.

Another part of the fun is that I had hoped that each of you could personalize it a bit by thinking of your own crown jewels and whether you would trade them down in exchange for some cash. As you note, leaving it this mysterious in some ways detracts from the exercise, because by not knowing the precise cards and details, it seems less real, and perhaps more difficult to really conceptualize.

[raulus]

Originally Posted by FrankWakefield

And, do you guys really let tax factors dictate whether you buy, sell, or hold a card??? Really?

I think for a lot of us, we pine for the good old days when lame adult stuff like taxes didn't matter. We could sit at home and trade cards all day long with our friends, and probably not even worry about stuff like centering and corners. And we sure didn't fuss about something as ludicrous as taxes. I suspect that a lot of the posts around here lamenting the current sad state of affairs are largely a mawkish plea for a return to the simplicity of childhood.

But returning to the here and now, when it comes to taxes, I'll admit to being a bit of an odd duck this way.

Part of the added fun here is that I really wasn't looking for this hypothetical deal. It came to me, rather than me seeking it out. I think if I had independently decided that it's time and I'm ready to sell this piece, or sell my collection entirely, then I would just sort of take the tax consequences and live with them.

I will also confess that I have an added overlay as a tax professional. I've worked pretty bloody hard for the last 20 years to get to where I am today as a senior partner at a top-30 CPA firm, and the pecuniary rewards for that hard work are pretty substantial. For the average American who takes a little more risk in being aggressive on their taxes, the consequences of getting caught usually aren't too severe. Pay your back taxes plus some penalties and interest. And a judge yells at you a bit about the importance of being a good citizen and paying your fair share. I think we can all agree that following the law is always a good idea, although for some of us, the risks of a little noncompliance are not quite so harrowing.

For a CPA, particularly one in my position, the consequences are typically a lot more severe, potentially even including some jail time, although that wouldn't necessarily be the worst of it. Among other things, if I were to blatantly cheat on my taxes, I would undoubtedly lose my license. And losing my license means that I get fired, and no one will ever hire me again.

So for me, the tax issues are generally front of mind, and can make a big difference in my approach.

[whiteymet]

If you are a COLLECTOR If I don't need the $$$ I hold on to my crown jewel.

Should things change down the road where you need money, which in your described position does not seem to be expected, you will still have the highest graded card which over the years should, as history has shown, increase even more in value.

But then you will have even MORE taxes to pay down the road when you sell it!

[raulus]

Originally Posted by whiteymet

If you are a COLLECTOR If I don't need the $$$ I hold on to my crown jewel.

Should things change down the road where you need money, which in your described position does not seem to be expected, you will still have the highest graded card which over the years should, as history has shown, increase even more in value.

But then you will have even MORE taxes to pay down the road when you sell it!

HA. Thanks Fred. You're right that I don't need the cash. And I need it even less if I'm just turning around and giving it to the tax man.

One potential saving grace when I do sell is that I can first move to a state with no state income tax, thereby saving myself the 9% that I would otherwise have to pay if I sell whilst living here in the great state of Oregon.

Of course, there's always the real possibility that federal income taxes will rise in the next few decades, thereby offsetting some or all of the savings that I might otherwise enjoy by moving to another state with zero income tax.

And there's also the possibility that states like Oregon will enact some of the exit taxes that they've been threatening to levy. When you move out of a high tax state to a low tax state, the general concept is that they tax you on everything you own that has appreciated while you've lived in the high tax state. That way you can't just move to another state and sell it without paying the old state. I know that it's been proposed in a few states, but to my knowledge hasn't been implemented just yet.

[BobbyStrawberry]

" A close inspection of these two items suggests that they are very similar in quality. Some might even argue that the lower graded piece is as nice as the highest graded piece"

If YOU would argue this, then I say: do it!

[Exhibitman]

One of the reasons I operate an actual card/collectibles business with a resale permit and Schedule C filing every year is so I don't have to get into this "collection-investment" quagmire. I sell it through the business at the cost basis I paid for it. No games, no nonsense. I take my hits on profits, and offset it with whatever losses. If a taxing entity wants to challenge my status, bring it. I have an unlimited budget for litigating.

I know the tax jocks outweigh my puny lawyering understanding, but if it was my deal, I'd keep it simple and clean: sell the item for an agreed price and purchase the other one for an agreed price. Put it in writing, and pay whatever taxes are due on the profit. Not worth your ticket to play around. Mechanically, you can do it as a trade with cash boot, but contractually, just make it two sales.

Now, as far as whether I would make the trade, probably not under the scenario laid out. If I care about the registry and I don't want to eat a ton of taxes, it isn't worth it to me. The fact that Nicolo (forgive the 3rd person usage) has trepidations about it to the point of posting it here tells me that he doesn't really want to do the deal anyway. I am the same way. If you want one of my Maltese Falcons, the price is going to be stroke-inducing to make it worth my while, and if I feel bad about it, nope. Life's too short for regretting a card deal.

[atx840]

Originally Posted by RCMcKenzie

I haven't heard back. Should I forget about it?

Rob, I wouldn't forget about it, they might have been traveling for work and then stuck on bed rest for a few days

[Touch'EmAll]

You have to consider eye appeal of the 2 cards in question, especially centering, and of course color, focus, print blips, tilt cut, etc.

If the card you currently have is better eye appeal - absolutely keep what you have.

[raulus]

Originally Posted by Exhibitman

The fact that Nicolo (forgive the 3rd person usage) has trepidations about it to the point of posting it here tells me that he doesn't really want to do the deal anyway. I am the same way. If you want one of my Maltese Falcons, the price is going to be stroke-inducing to make it worth my while, and if I feel bad about it, nope. Life's too short for regretting a card deal.

Honestly, my motivation was mostly to give us something else to think about and to talk about. Plus I figured I would learn a few things from my fellow collectors, which I definitely have.

It's a chat board, after all!

Almost as soon as it was proposed, the hypothetical deal was withdrawn by the counterparty. As a result, I didn't have much of a chance to really get deep into an exercise in omphaloskepsis.

And I suppose if I'm being honest, my penchant for voyeurism and over-sharing needs an outlet somewhere. Since I'm not on any social media channel, this is kind of the only club that will put up with my lunacy.

[BobC]

Originally Posted by RCMcKenzie

On a similar topic to Nic's.

A board member is working on a mid-tier hofer back run. He reaches out to me to see if I have a dupe of a rare card from T213-2 Coupon. I do. I paid $90 12 years ago from a BIN from Joe's Vintage. It has a sticker on the back that states "90-" in Joe's handwriting. SGC 10 with paper loss on front.

He offered a raw T213-3 common with front and back damage. I am thinking about it, and asked him to to throw in a low grade common t206. I haven't heard back. Should I forget about it?

No, I wouldn't forget about doing such a trade, assuming you are happy to get the two cards you're trading for. The only thing is, you technically end up owing income tax on the difference between the $90 you originally paid for the T213-2 Coupon card you're now trading away, and whatever the then current FMV is of the T213-3 and T206 cards you traded for, as of the date you made the trade.

Just remember to keep track of/a record of the trade so you know what your tax basis going forward is for the two cards you just traded for. It should be the FMV of both cards at the time of the trade you then use to figure out how much in sales proceeds you'll be reporting on your tax return from the deemed sale of the T213-2 card you just traded away.

[Gorditadogg]

Originally Posted by steve B

I think I would keep the card I have if I might not end up with money to spend once it's all settled.



I mostly do low end stuff, so low we just include any hobby money I get as misc income(the gross, like if I sell a card for $10 i report $10. Yes, we pay extra in taxes, but in most years it's not even enough to worry about. And figuring out a reasonable cost for things bought in large lots 40 years ago seems crazy. Like is my Gretzky rookie the $50 the entire 5000 count box of hockey cards cost? Or is it .01 ...........



Of course this has brought up many questions for me, since I've collected for decades. I essentially have no records pre-Ebay. And after Ebay only have a messy archive of "you won!" emails.

You can request spreadsheets from ebay now, that show all your transactions, I think going back to 2000. It is in your member area somewhere. If you can't find it, PM me, and I will walk you through it.

Sent from my SM-S906U using Tapatalk

[Exhibitman]

Originally Posted by BobC

assuming you are happy to get the two cards you're trading for.

Yep, thats the bottom line: does it make you happy? This is supposed to be fun. A card collection is:

"a magic carpet that takes you away from work-a-day cares to havens of relaxing quietude where you can relive the pleasures and adventures of a past day—brought to life in vivid picture and prose." --Jefferson Burdick.

[Yoda]

Screw the deal. Keep the card and you won't regret it. Plus you can stop agonizing about it. There are a thousand stories from folks on the Board, including me, about cards they have regretted selling or trading.

[mq711]

This thread Gotta be about some super cool Willie Mays card! Wish we could see it because probably pretty rare.

[Casey2296]

It's unfortunate that the deal breaker is "the Government" .

[Leon]

+1. I vote for a law that says once something is taxed it can't be taxed again!

When I sold my first collection the tax bill was a doozy.

Originally Posted by Casey2296

It's unfortunate that the deal breaker is "the Government" .

[insidethewrapper]

I don't sell anything. My heirs will inherit at market value and pay no taxes and I don't have to worry about taxes by selling.

[steve B]

Originally Posted by Gorditadogg

You can request spreadsheets from ebay now, that show all your transactions, I think going back to 2000. It is in your member area somewhere. If you can't find it, PM me, and I will walk you through it.

Sent from my SM-S906U using Tapatalk

I didn't know they did that now.
I haven't sold on there in years, not since a stage when they changed rules what seemed like weekly.
Having my paypal hacked was another strike against, my using them. They were useless in resolving it, and their 2 factor authentication was worse that useless. Like the next scam was at 4 AM our time, and they allowed it to go through after an hour because we didn't reply saying it was false. Plus for some reason they said it fit my normal pattern of use or some rubbish. Like I sat up until 4am to send money to someone in africa...
Anti virus/anti malware - multiple different ones over multiple scans found no malware or viruses, and yet things were still compromised.
I buy occasionally, but have my wife do the actual buying through her far more secure work computer.

I may return to Ebay at some point, but not for anything "good"