News Article About Taxes In The US

I was reading an article put out by the Wall Street Journal today mentioning tax consequences for selling collectibles. I probably need to look it up with Tax code but it seems plausible. They said that if you sell a collectible you are technically on the hook to the US govt for capital gains taxes. If you have held the item for less than a year the tax rate is 35%. But if you hold it for over a year the rate drops to 25%.

So I am guessing that if you sold stamps as a business it would be cheaper tax wize because then you would only be paying the money realized on the sale as income instead of capital gains.

Did not want to throw any water on anyone with this but I thought it was interesting that the govt would tax you more for a collectible than a straight stock investment because the lower figure would be only 15%

I mentioned something similar in a thread quite awhile ago and it met with some interesting responses. Here's the link:

https://goscf.com/t/10416&SearchTerms=tax

Don't forget that the tax only applies to any profit, not simply the amount you receive for an item. Often there is little or no profit on resale.

I keep track of what I buy, what I paid for it, when I sell it, and for how much for a lot of reasons, this being one of them.

Matt

WT1 thanks for the link.


Here is a copy of that article I found it on line

http://online.wsj.com/article/SB100...3508336.html


For me is not that I would ever evade taxes (too honest). But the fact that from a hobby standpoint if I ever decide to or my family decided to get rid of my labours. Technically someone would be liable for taxes on my collection. (provided it makes a profit)

Knowing from working at an accounting firm a while back, (not an accountant but as support staff) if someone has a problem with the IRS and irks them enough everything is fair game. Its that I would try to find some way to pay the least taxes I could.

From a Tax stand point there needs to be a certain hourly investment before you can declare yourself a business. At that point it would just be considered capital gains. Being declared as business the
amount owed would be less than if items were held as an investment or hobby.

IRS tax rules state :

"If you collect stamps, coins, or other items as a hobby for recreation and pleasure, and you sell any of the items your gain is taxable as a capital gain."

And as stated before capital gains can range between 25% and 35% of realized profit. If you declare as a hobby. If you declare as a small business such as a sole proprietor it only falls to your taxes as regular income.

My collection probably would not realize much to be taxed on. But I have not kept any if much records of transactions dating back to when I was 8 years old and started my on and off relationship with stamps.

Everybody's situation is different and it should be something that one may need to plan for if the situation arises.

If you sell your stamps as a business you'd also have to consider FICA tax on your income. Both employer and employee portion would add something like an additional 15%.

I think there might be also a dollar threshhold for that. If you are under it does not matter. Maybe just sell small amounts over long periods of time.