Quote:
Originally Posted by Leon
Bill- great stuff and thanks for posting. So I have a question as a layperson. As I said before, I have a CPA and another (EA) accountant who do my taxes and books so I won't personally make mistakes (and they are pretty good and don't make many). But if I buy a near set of 520 T206s, and ascribe my cost basis of $50 for each one, and add or subtract the sale price of each one, why wouldn't that work?
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Think of it this way, by using an extreme example. let's say you arrange a purchase of a T206 Plank for $50,000. But right before the purchase is completed you ask for the seller to throw in 4 T206 beaters that are essentially worthless. By using this method you have given yourself 5 cards with a $10,000 cost basis each.
During the next 4 years when you are in a 30% tax bracket you sell other cards and make a profit of $10,000 but also sell one of those T206 beaters for 1 cent. Your profit becomes $0 for each of those 4 years. 10 years later you eventually sell the Plank for $60,000 which gives you a $50,000 profit but you sell it the year after you retire and are in a 10% tax bracket.
Years 1-4 profit should be $10,000 and if in 30% tax bracket = $12,000 taxes.
Year 15 profit should be $10,000 and if in 10% tax bracket = $1,000 taxes.
Instead you have $50,000 profit in 10% tax bracket = $5,000 taxes.
So, in other words, if you apply high and low valued cards the same you can manipulate sales to lower your tax bill.