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#1
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Tax Expert Question
In 2023, if Married filing jointly, you pay 0% long-term capital gains tax if your income was $ 89,250 or below . So if I bought a card or set etc. maybe 2 years ago for $ 1000 and sell for $ 5000 I owe no tax on this item under these circumstances.
I'm asking is this correct or I'm I reading the tax code wrong ? thanks
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Wanted : Detroit Baseball Cards and Memorabilia ( from 19th Century Detroit Wolverines to Detroit Tigers Ty Cobb to Al Kaline). |
#2
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I'm no accountant, but I don't think cards and collectables have capital gains benefits. From what I have read, they are treated as ordinary income. I'll wait for the professionals to provide some input here.
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#3
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First question:
With respect to the cards sold, are you: 1) an investor 2) a hobbyist or personal collector 3) a dealer How you respond will affect how the gains (and losses) are treated.
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Trying to wrap up my master mays set, with just a few left: 1968 American Oil left side 1971 Bazooka numbered complete panel |
#4
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And if you just want an answer about whether collectibles gains qualify for the 0% tax rate, the answer is they don't.
"Capital Gains Tax on Collectibles But while long-term capital gains on most types of assets are taxed at either 15% or 20% (or 0% for taxpayers in the 10% or 15% ordinary-income tax bracket), capital gains on collectibles are taxed at 28% (or your ordinary-income rate, if lower)." https://www.hallkistler.com/hk-news/...-collectibles/ If you want to become a codehead, I encourage you to dig into IRC Section 1(h), and 1(h)(4) in particular (collectibles 28% rate), contrasted with 1(h)(1), which is the general capital gains treatment. The crux of the matter is that collectibles are subject to their own tax rate, and don't qualify for the general capital gains tax rate.
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Trying to wrap up my master mays set, with just a few left: 1968 American Oil left side 1971 Bazooka numbered complete panel Last edited by raulus; 12-14-2023 at 08:17 PM. |
#5
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A personal collector, not a dealer or investor. Just collect for the fun of it. I noticed that coin collections, art etc can be treated as long term capital gains, why not sports collectibles ?
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Wanted : Detroit Baseball Cards and Memorabilia ( from 19th Century Detroit Wolverines to Detroit Tigers Ty Cobb to Al Kaline). |
#6
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Quote:
https://www.irs.gov/taxtopics/tc409
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Trying to wrap up my master mays set, with just a few left: 1968 American Oil left side 1971 Bazooka numbered complete panel |
#7
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Quote:
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My avatar is a sketch by my son who is an art school graduate. Some of his sketches and paintings are at https://www.jamesspaethartwork.com/ He is available to do custom drawings in graphite, charcoal and other media. He also sells some of his works as note cards/greeting cards on Etsy under JamesSpaethArt. Last edited by Peter_Spaeth; 12-14-2023 at 09:19 PM. |
#8
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Depends how you
Quote:
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#9
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Worst advice I've seen on the topic. Congrats
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"Trolling Ebay right now" © Always looking for signed 1952 topps as well as variations and errors |
#10
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It is by far the most honest.
To the OP. Go to a real licensed tax preparer in your area. Any other advice is really pointless as you need someone who knows the rules in the specific location you live. |
#11
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It's 1,000% honest. Why anyone would hand the government a single dollar they don't absolutely have too is beyond me. And this is coming from my Tax preparer. Been audited before, never a single issue. It's wild how people feel a moral obligation to hand over their money.
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#12
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File a schedule c as a business. If not, the sale of collectibles at a profit is capital gains
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Baseball is our saving Grace! |
#13
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Calling BobC...
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#14
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And also
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#15
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Quote:
Obviously if you are a dealer, then this would make sense. But Sch C income is ordinary, and taxed at ordinary rates.
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Trying to wrap up my master mays set, with just a few left: 1968 American Oil left side 1971 Bazooka numbered complete panel Last edited by raulus; 12-15-2023 at 07:12 PM. |
#16
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Yes, but using cash basis for that year , it would all go in as sales and purchases A hobbyist shows it as ordinary income and dch as deductions up to income only Someone who randomly holds an item long term can have a CG or loss. Eg I buy a comic, which I'm not in business of selling pay 500 sell a couple years later for 6000. It is a capital asset producing LTCG. I used to be an acct 0
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Baseball is our saving Grace! |
#17
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There is a reason I said it depends.
Perhaps you're not following my point, if he is a business that is absolutely different and he should be keeping proper P&L on his business and every single item. He'd also be able to offset any gain with purchases of other items for inventory to replace it or sales of other items at net losses. As a collector, if he sells an item for cash or equivalent and isn't being issued a tax form as part of the transaction then frankly, he'd be an idiot to pay taxes on his increase as I'd bet he could easily sell any other items at a loss to offset his capital gains. If you like handing the government free money cause you made a profit on a single item, by all means, they appreciate it...those of us with any semblance of common sense or accounting knowledge will be just fine paying precisely no capital gains tax on a single transaction by being smart and understanding the system. |
#18
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Quote:
Inventory is not deductible when a dealer buys it. It’s only deductible as cost of goods sold when the dealer sells it.
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Trying to wrap up my master mays set, with just a few left: 1968 American Oil left side 1971 Bazooka numbered complete panel |
#19
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So if he is a business taxes are calculated on profits after allowable expenses, which he doesn't appear to be. |
#20
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Wonderful. When the IRS come aknockin'..unreported income could be considered fraud. What's that mean?
Well you would not only be liable for interest and penalties but they can also go back more than 7 years IF they consider it tax fraud. Risk v. Reward I guess. Sent from my SM-S918U using Tapatalk
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"Trolling Ebay right now" © Always looking for signed 1952 topps as well as variations and errors |
#21
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Capital gains are only income if it's not offset and or documented specifically as income with profit. Does OP have documents showing he paid $1,000 and sold for $5,000? If not, how would that be documented that he made a $4,000 profit? Cause he volunteered the info here? I feel like the whole point here is being missed. By your logic every collector buying, selling and trading at shows/online, through groups and message boards should be reporting capital gains/losses on everything. If so then you're delusional to reality. I am sure he's sold or traded items at a loss as we all have. So again, why would anyone would just volunteer a taxable profit on a single item is beyond me. If a tax form was generated then thats also fine, just show offsetting purchases in the same tax year and poof, there goes your "gains". Last edited by Kco; 12-18-2023 at 09:07 AM. |
#22
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IMO
not having documentation is much better than not reporting. In fact, it's the difference between what could be constituted as fraud, and what could be argued as missing documentation. Sent from my SM-S918U using Tapatalk
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"Trolling Ebay right now" © Always looking for signed 1952 topps as well as variations and errors |
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