tax on collectibles, value <= $1000 no cap gains?

[4legsgood]

Hi,

I have 3 WWII posters and they are just folded up in a drawer and I googled them and found some similar for sale for about $1000 (a piece). A couple years back I almost sold them to a dealer for $50 but I didn't want to hassle with downtown Seattle parking!

They are very cool but for that kind of money I'd like to sell them.

I hate hate hate complicating my taxes, but I found some info that implied if the goods are sold for <= $1000, there are no capital gains.

I'd probably sell to a collectibles shop near my house, if that makes a difference.

Does anyone have experience with this?

Thank you!

 

[obsessed]

I don't know of any $1,000 threshold but there was a recent law change that lowered the requirement for 3rd party payment processors (i.e. Paypal, eBay) to issue a 1099 from $20,000 to $600 effective for the 2022 tax year. This wouldn't apply if you sold directly to a collectibles shop as no 1099 would be required.

 

[4legsgood]

I don't know of any $1,000 threshold but there was a recent law change that lowered the requirement for 3rd party payment processors (i.e. Paypal, eBay) to issue a 1099 from $20,000 to $600 effective for the 2022 tax year. This wouldn't apply if you sold directly to a collectibles shop as no 1099 would be required.

Thank you for replying. What I read was any cost basis for collectibles is rounded up to $1000 and sales price is rounded down to closest $1000, so if true canceling out the gain is possible.

I should look at the tax forms I guess...

 

[SecondCor521]

Thank you for replying. What I read was any cost basis for collectibles is rounded up to $1000 and sales price is rounded down to closest $1000, so if true canceling out the gain is possible.

I should look at the tax forms I guess...

I doubt you read any such thing on the IRS website or in any of their forms or publications, as there is - AFAIK - no such $1000 rounding rule.

Gains from collectibles appear to be taxed at a 28% rate and are reported on Schedule D:

https://www.irs.gov/pub/irs-pdf/i1040sd.pdf

It would not matter to whom you sold the collectibles; you'd report the sale the same way regardless.

 

[4legsgood]

I doubt you read any such thing on the IRS website or in any of their forms or publications, as there is - AFAIK - no such $1000 rounding rule.

Gains from collectibles appear to be taxed at a 28% rate and are reported on Schedule D:

https://www.irs.gov/pub/irs-pdf/i1040sd.pdf

It would not matter to whom you sold the collectibles; you'd report the sale the same way regardless.

It was definitely optimistic googling, not IRS web site. However, I inherited the posters not that long ago and further googling found a reliable source and I'm in the clear because collectibles enjoy the billionaires favorite loop hole, stepped-up basis.

 

[SecondCor521]

It was definitely optimistic googling, not IRS web site. However, I inherited the posters not that long ago and further googling found a reliable source and I'm in the clear because collectibles enjoy the billionaires favorite loop hole, stepped-up basis.

It's for everyone, including billionaires.

You get both a step-up in basis to the value as of the date of death (typically). You also get automatic long term capital gains treatment, although in the OP you said you've had them for years, so that really doesn't matter.

 

[pjm-7]

Currently, collectibles are subject to 28% rate. There is no LT gains for collectibles like there is for mutual funds/stocks. You may get the stepped up basis since they were inherited but do you have an appraisal or attorney's letter verifying the date of death valuation? Collectibles are so hard to value.

A couple of years ago we sold some guns of WWI vintage. Of course dad did not have any of the original paperwork. When I filed his taxes I used $0 for the basis. Since there was no way verify the purchase price, it would not been worth my time to make up a basis and try to justify it to the IRS.

 

[4legsgood]

Currently, collectibles are subject to 28% rate. There is no LT gains for collectibles like there is for mutual funds/stocks. You may get the stepped up basis since they were inherited but do you have an appraisal or attorney's letter verifying the date of death valuation? Collectibles are so hard to value.

...

Definitely no documentation on value. I grabbed the posters as a keepsake when we cleaned out my Dad's house and didn't think they were worth anything.

 

[prudent_one]

If you inherited them not long ago, I'd say your cost basis is whatever you sell them for. A collectible like a poster doesn't change value very much over time. If they are worth $1000 today, they were most likely worth $1000 a year ago.

 

[4legsgood]

If you inherited them not long ago, I'd say your cost basis is whatever you sell them for. A collectible like a poster doesn't change value very much over time. If they are worth $1000 today, they were most likely worth $1000 a year ago.

That's what I'm thinking. It's been 5 years but I don't think there's been an uptick in value.

Thanks!

 

[RunningBum]

But you said this earlier:

A couple years back I almost sold them to a dealer for $50 but I didn't want to hassle with downtown Seattle parking!

Sounds like establishing a basis there.

 

[Koolau]

If you feel "righteous" about the value AND the stepped up basis, I suppose you could sell them and list the basis as your sale price. If the IRS demands an appraisal at the time of step-up, you could say "I don't have one." IRS will probably make you pay the tax on full value (and a reasonable penalty.) Can you deal with that? I say "righteous" because it's (likely) the difference between a "mistake" and tax fraud. I sold a silver round to a coin dealer once (I think it was back when it was worth $17.) I didn't report it and for 15 years have expected IRS to kick in my door. So a clear conscience is worth its weight in, well, silver. YMMV

 

[ncbill]

In situations like these it's the seller who determines the basis.

Based in what my accountant told me years ago, there's little chance your basis estimate will ever be questioned.

 

[Jerry1]

I’m wondering what you’re comparing them to. You said they were folded up. If the ones for a grand were not folded, you might be surprised at how much “folded” takes away from the value.

For tax purposes I would take the value you sell it for and apply some form of inflation back to the time you inherited the posters. The more refined you can get, the better, but I doubt there is a collectibles CPI. I think as long as you make a reasonable attempt, the IRS isn’t going to bother you. They have no way to value it either and the really can’t argue it was zero when you inherited them.

 

[4legsgood]

This forum is such a good resource! Thanks to all who replied. I think the dealer I sell to will give me a value well below the value I see them for sale now, and I don't think WWII memorabilia has gone up in any dramatic or well-documented way. I'm the tiniest bit bummed that I'll have to fill out tax form, but hopefully TurboTax will be my guide.