Posted By:
Frank WakefieldInsurance, a reason to have cards graded.
Folks should think twice before insuring cards. And maybe think some more if they are still considering it.
If I buy a drawing by Marc Chagall, and insure it, that drawing would be listed on a separate schedule. And periodically I'd pay the premium. Again and again. One day, if I quit paying, I've created a presumption that maybe I've sold it. And since a Chagall is likely to appreciate in value, I'd be owing taxes on the ordinary income, the difference between the sale price and my basis in the drawing, its purchase price. If I die and the drawing is not in my estate, then I must have sold it, and my estate would owe taxes on that.
Insurance creates a paper trail for the tax man.
Since I collect cards for the cards, and not for their value, I don't worry much about all of that. But for folks who focus on certain cards in certain conditions because "that's where the money is", well that is where the tax man will go.
So think, guys. And maybe think some more.