Heritage Rosen Mantle - Greatest Card Ever Auctioned?

[BobC]

Originally Posted by clamendo

Yes. But as I read this thread there is one scenario that has not been brought up but is very realistic. Medicaid! I wonder if you can put a card collection in an irrevocable trust? If you are unfortunate to have you or your spouse end up in a nursing home for any length of time, Medicaid will force the remaining spouse to spend down all your assets to about $80k. If your by yourself and you try to pass it down in a will you would be subject to Medicaid recovery. At $14k/month … you get the picture.


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Wow Carl, that is a whole different topic, and not actually tax related. If you really want, start a new thread in the watercooler section so we don't keep hijacking Jeff's thread. Quick answer though is there is a definite look back period, 5 years I believe. So if you made the transfer/gift more than 5 years before needing to apply for Medicaid to take over paying the bills, they can't touch you and come after the gift/transfer. That is why a lot of people with significant assets, and some dubious medical history or prognosis, often plan ahead and as they are getting older and proactively put all their assets into an irrevocable trust to get the clock ticking on that Medicaid lookback period.

Doing so though is considered a potential gift to the ultimate beneficiaries of the irrevocable trust. So depending on what you gift and how much it is currently valued at, and how many beneficiaries there are, you may have to file a federal gift tax return, and could end up having some gift tax implications and liability as well.

[mrreality68]

Originally Posted by BobC

Wow Carl, that is a whole different topic, and not actually tax related. If you really want, start a new thread in the watercooler section so we don't keep hijacking Jeff's thread. Quick answer though is there is a definite look back period, 5 years I believe. So if you made the transfer/gift more than 5 years before needing to apply for Medicaid to take over paying the bills, they can't touch you and come after the gift/transfer. That is why a lot of people with significant assets, and some dubious medical history or prognosis, often plan ahead and as they are getting older and proactively put all their assets into an irrevocable trust to get the clock ticking on that Medicaid lookback period.

Doing so though is considered a potential gift to the ultimate beneficiaries of the irrevocable trust. So depending on what you gift and how much it is currently valued at, and how many beneficiaries there are, you may have to file a federal gift tax return, and could end up having some gift tax implications and liability as well.

Well Since he is talking about an 80K Mantle Card All Good

[BobC]

Actually need to correct some of what I said in post #181 a little bit. No one actually comes after you to get the money/property back if it has been improperly spent or you gifted some of it away during the five year period before you file for Medicaid. Instead, what the Medicaid people normally do is figure out how much you spent/gifted and divide that total amount by the average daily/monthly amount it would cost to have someone cared for in a nursing home or like facility. That way they then figure out how many days/months of care what you gave/gifted away would cover, and delay the start of your Medicaid coverage by that same period of time. So you and your family basically have to somehow cover your nursing and all other costs till that time is made up. And then Medicaid will take over and start to pay for things.

Sorry for not explaining it as clearly before.

[oldjudge]

Bob—If you had a client auctioning off a card like that and he lived in a state with onerous capital gains taxes, would you recommend that he plan ahead and spend 6+ months as a resident of a state with no capital gains before he sold the card? Seems like he could save a ton of money even if he rented a palace for that period.

[BobC]

Originally Posted by oldjudge

Bob—If you had a client auctioning off a card like that and he lived in a state with onerous capital gains taxes, would you recommend that he plan ahead and spend 6+ months as a resident of a state with no capital gains before he sold the card? Seems like he could save a ton of money even if he rented a palace for that period.

Absolutely. Had a client company a few years ago owned by two brothers-in-law and a couple others, who sold a majority interest in it to a New York investment firm that infused more money to do acquisitions, leaving the current owners in charge. The plan was to build the business' EBITDA up even further, and then resell everything to an even bigger buyer in a 5 - 7 year period, at an even bigger multiple (of EBITDA) than they had bought it for.

I also did the personnel taxes for the brother-in-laws, and one of them had a Summer home in Florida, in addition to his regular home here in the Cleveland, Ohio suburbs, where the company was headquartered. We talked about him changing his legal residence from Ohio to Florida, and I gave him a list of things to do about a year or two before they expected the New York firm to pull the trigger on the resale of the business. After the New York investment firm took over, they took the original business from $80M in gross sales yearly to just over $500M a year in about 5 years, and then found a buyer. The one brother-in-law who I helped change his residence to Florida ended up with a LTCG from the subsequent sale of a little over $15M. Ohio has a top individual income tax rate of about 5%. Florida has no income taxes, state or local, whatsoever. So simply having my old client change the mailing address on where his mail and bank statements get sent, getting a driver's license from Florida instead of Ohio, having the company put his Florida address in his checks, having him start filing as a Florida resident on his personal tax returns a year before the sale, and a few other fairly simple things, and we figured he ended up saving approximately $750,000 in state taxes.

LTCG from the sale of a business, or LTCG from the sale of a baseball card, same result and tax savings by changing one's residence to a state with no income taxes. And the brother-in-law still kept and stayed at his Ohio residence as well. Just made sure he stayed there in Ohio less than half the year the year of the sale, which was easy as he traveled and worked outside the office mostly anyway.

Here's a list of the US states, and the current top tax bracket in each one. Those with a 0.00% tax rate have no individual state taxes, and would be the perfect candidates for doing something like you're suggesting. But moving from a high taxing state, like California or Oregon, to a much lesser taxing state, would pose a similar tax savings as well.


Alaska 0.00%
Florida 0.00%
Nevada 0.00%
New Hampshire 0.00%
South Dakota 0.00%
Tennessee 0.00%
Texas 0.00%
Washington 0.00%
Wyoming 0.00%
North Dakota 2.90%
Pennsylvania 3.07%
Indiana 3.23%
Michigan 4.25%
Colorado 4.55%
Ohio 4.80%
Utah 4.95%
Illinois 4.96%
Alabama 5.00%
Kentucky 5.00%
Massachusetts 5.00%
Mississippi 5.00%
Oklahoma 5.00%
North Carolina 5.25%
Missouri 5.40%
Kansas 5.70%
Georgia 5.75%
Maryland 5.75%
Virginia 5.75%
Arkansas 5.90%
New Mexico 5.90%
Rhode Island 5.99%
Louisiana 6.00%
West Virginia 6.50%
Delaware 6.60%
Nebraska 6.84%
Montana 6.90%
Idaho 6.92%
Connecticut 6.99%
South Carolina 7.00%
Maine 7.15%
Wisconsin 7.65%
Arizona 8.00%
Iowa 8.53%
Vermont 8.75%
New York 8.82%
Minnesota 9.85%
Oregon 9.90%
New Jersey 10.75%
Hawaii 11.00%
California 13.30%

[Gary Dunaier]

Here's a couple of looks at the card when it was on display in Heritage Auctions' New York office last week.

[GasHouseGang]

With all of the smash-and-grab robberies they've had lately in LA, I would not fill comfortable with those expensive items out on the floor.