IRS Form 1099 from Mastro Auctions

[Archive]

Posted By: Eric Brehm

You don't have to have a baseball card 'business' in order to be able to offset your gains with your losses on baseball card transactions each year. Use Form 1040 Schedule D to report both your gains and losses on sales of all capital assets (including stock and bonds, etc., as well as collectibles) and you will pay capital gains tax only on the net gain for all assets combined. For example, if you make $1000 on one card sale and lose $400 on another, your net gain is $600 and that is what you pay tax on. The tax rates that are applied to your net gains depend on the type of assets you have sold and how long you have held them (long term = more than one year): net short term gains are taxed at ordinary (non-gain) income tax rates (which vary with your taxable ordinary income bracket), net long term gains on non-collectibles are taxed at either 5% or 15%, again depending on how much taxable ordinary income you have, and net long term gains on collectibles are taxed at 28%. (However, you are never taxed on any capital gains at a higher rate than you would have been if those gains had been included in your taxable ordinary income.) Also, beginning in 2008, long term capital gains on non-collectibles that would have been taxed at 10% or 15% if they had been included in your ordinary income are taxed at 0% instead of 5%.

The only capital asset class for which losses cannot be deducted or used to offset other gains are so-called 'personal use' assets, such as your house, automobiles, etc. Baseball cards and other collectibles are not considered personal use property; if you buy and sell them you can consider yourself to be 'investing' in them and can treat them for tax purposes just like stocks and bonds.