Here's one possible positive outcome from people using vaults, it makes it much more obvious and clear that people holding their cards in vaults instead of at home are considering them as true investments and not just hobby collectibles. The big federal tax difference between selling a true investment, like stocks and bonds, versus selling a hobby collectible, like baseball cards, is that the current maximum federal long term capital gains tax rate for selling investments is 20%, but 28% for selling a collectible.
And long term means you would have had to own the stocks or cards for at least a year or more for these capped max rates to be applicable. If you own either for less than a year before selling for a profit, the profit is all just ordinary taxable income, subject to whatever the max individual income tax rate is, which is currently at 37%.
So let's say someone has a card that has been sitting in a vault for well over a year, and they sell it for a $1 Million profit. Currently, the IRS would likely say all baseball cards are collectibles by definition, and therefore the seller could owe up to $280K of federal capital gains tax from the $1M profit on selling the card. But if they could successfully argue to the IRS that their baseball card they sold was actually held as a true investment and not as just a collectible, the max federal capital gains tax on that $1M profit would only be $200K, an $80K difference to the seller's/taxpayer's advantage. To my knowledge, I've not yet heard of a case where someone has made such an argument, and prevailed. I suspect the 8% spread between the max federal long term capital gains tax rate between investments and collectibles likely doesn't generate enough of a potential tax savings for someone to want to take the risk on the legal cost and expenses, plus potential interest and penalty charges, of taking up such a fight with the IRS. At least not yet. But with the continuing rising prices of cards, it seems like it is only a matter of time before someone does try to make this argument with the IRS and claim a 20% max federal tax rate on the profit from selling a card. Who knows, if questioned by the IRS about taking such an investment versus collectibles stance, upon presentation of enough supporting evidence, like always having kept the card sold in one of these vaults, the IRS could surprise people and agree with the taxpayer's argument and just acquiesce the point. But somehow I doubt they would. LOL
Of course, this entire point is moot if the person selling the card operates as a dealer in business, and the card being sold was currently part of their business inventory. In which case the net profit from the card sale is all just ordinary business taxable income, and there are no maximum federal capital gains tax rates involved.
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