What will happen to your collection when you die? 4 4

[Math Teacher]

Here's my only issue about selling my collection. If I bought my copy of Amazing Fantasy #15 in the early 2000s for $600, then, as I understand it, I will have to pay capital gains tax on my profit. Here's the worst part - I have several key issues, such as Fantastic Four #1, that I have absolutely have no idea where I bought it or how much I paid.

If I sell a book to an fellow collector, I'm not worried about capital gains. The only people who know about the transaction are the buyer and the seller (me).

If I was to sell my entire collection right now, I would place the value at around $150,000+. If I sold this to a dealer, I <might> get $90,000, as I have a lot of Silver Age keys that are already slabbed. No dealer is going to pay me $90,000 in cash - most likely he would use a check or wire transfer. However, both of these leave a trail that the IRS can find. And I would have to pay 15% of that $90,000 in taxes, which leaves my proceeds at approximately $76,500.

However, if I hold onto my collection until I pass away, that is quite advantageous regarding taxes. My heirs would be given a new "cost basis," which is the value of my collection at the time of my death. They could then sell the collection and keep all the proceeds, because if they sell it soon after my death, there would be little time for my collection to appreciate. I was the co-executor of my Mom's estate. She owned 80 acres of prime Iowa farm land. If she had sold this land while she was alive, she would have to pay 15% in capital gains tax, as the land was just given to her by her father. Since she held onto this land until her death, the value of the land had a new cost basis. We sold the land for $9,500 an acre for a total of $760,000, which was evenly distributed to the heirs with no taxes due.

As many of you have stated, I have left very explicit instructions on how to sell my comics, original art, and statues. I have one local dealer I trust, along with Comiclink as an auction house. I also mentioned several silver age dealers with whom I have done business. My family knows exactly where these instructions are, both in my house and in my safe deposit box.

When my collection is sold, I want to maximize the amount of money my family will receive. I feel that selling the collection after my death will achieve that goal.

 

Joe

[Math Teacher]

14 minutes ago, lou_fine said:

Well, if one of the data points on your sticker is current value, how often are you updating your stickers since this market is pretty red hot and can be quite volatile in terms of current market price?  

I have a spreadsheet that lists my 100 most valuable issues; most of these are slabbed by now. I use GoCollect and GPAnalysis to update the value of these issues every two months. I then send this spreadsheet to my wife, son, and daughter. I also print out a copy of this list, scan it, and send it to my comic book insurance company, Collectibles Insurance Service.

 

Joe

Edited January 3, 2020 by Joe Ankenbauer

[lou_fine]

30 minutes ago, Joe Ankenbauer said:

However, if I hold onto my collection until I pass away, that is quite advantageous regarding taxes. My heirs would be given a new "cost basis," which is the value of my collection at the time of my death. They could then sell the collection and keep all the proceeds, because if they sell it soon after my death, there would be little time for my collection to appreciate. I was the co-executor of my Mom's estate. She owned 80 acres of prime Iowa farm land. If she had sold this land while she was alive, she would have to pay 15% in capital gains tax, as the land was just given to her by her father. Since she held onto this land until her death, the value of the land had a new cost basis. We sold the land for $9,500 an acre for a total of $760,000, which was evenly distributed to the heirs with no taxes due.

Are you sure this is the way personal income taxes work in the United States?  

If so, it would make no sense for anybody to ever sell off any of their taxable assets such as stock equity investments, property, comics, etc. unless they needed the specific funds to pay for something at a particular point in time.  Everything else would then be simply left to the heirs to sell completely tax free.  

If so, then I am moving down to the States before I die.  

Edited January 3, 2020 by lou_fine

[Math Teacher]

15 minutes ago, lou_fine said:

Are you sure this is the way personal income taxes work in the United States?  

If so, it would make no sense for anybody to ever sell off any of their taxable assets such as stock equity investments, property, comics, etc. unless they needed the specific funds to pay for something at a particular point in time.  Everything else would then be simply left to the heirs to sell completely tax free.  

If so, then I am moving down to the States before I die.  

I'm no accountant, but my experience as an executor of my Mom's estate made me to believe this to be true.

My parents owned two pieces of land; 80 acres in central Iowa and 160 acres in southwest Iowa. The 80 acres were owned by my Mom personally, while the 160 acres was owned by my Mom and Dad's farm corporation. As I mentioned before, we were able to sell the 80 acre farm for $760,000 and the heirs paid absolutely no sales tax. When we sold the 160 acre farm, there was a record of how much my parents' farm corporation paid for the land. We sold the farm for $640,000, but the corporation bought it for $100,000. My Mom's estate had to pay $81,000 in capital gains tax, leaving $559,000 to be divided equally by the heirs. We actually received less money, as the auction company charged 4% for advertising and hosting the auction. All my brothers were extremely fortunately to inherit so much money, but I no longer feel guilty about this, as I remember how many hours I spent working on our farms.

The same was true for my parents' home. The corporation owned the house, and there was a record of what it was purchased for. Once again, the purchase price was subtracted from the realized price, and my Mom's estate had to pay 15% in taxes on the gain.

Like I said, if you sell fellow collector to fellow collector, I don't think you have to worry about the proceeds. If there are records of the proceeds you earned, I would not feel comfortable in omitting this on my tax return. As someone who just ended a two-year fight with the IRS concerning our inheritance, I have no desire to deal with this type of situation again.

Unfortunately, there is probably someone here that works for the IRS, and s/he will report our transactions to his/her superiors. 

 

Joe

Edited January 3, 2020 by Joe Ankenbauer

[thehumantorch]

1 hour ago, lou_fine said:

Well, if one of the data points on your sticker is current value, how often are you updating your stickers since this market is pretty red hot and can be quite volatile in terms of current market price?  

About once a year.  It's not so much a hard and fast $$ amount but an indication to my wife that certain books have value and if a dealer offers her a lot less than the sticker price she'll know it's a bad offer.

Other's have mentioned detailed instructions about selling the collection and I think that's a great idea.  Our families likely have no idea who to contact or where to sell and it can't hurt to specify dealers or auctions sites that are reputable.  

[lou_fine]

1 hour ago, Joe Ankenbauer said:

However, if I hold onto my collection until I pass away, that is quite advantageous regarding taxes. My heirs would be given a new "cost basis," which is the value of my collection at the time of my death. They could then sell the collection and keep all the proceeds, because if they sell it soon after my death, there would be little time for my collection to appreciate. I was the co-executor of my Mom's estate. She owned 80 acres of prime Iowa farm land. If she had sold this land while she was alive, she would have to pay 15% in capital gains tax, as the land was just given to her by her father. Since she held onto this land until her death, the value of the land had a new cost basis. We sold the land for $9,500 an acre for a total of $760,000, which was evenly distributed to the heirs with no taxes due.

 

49 minutes ago, Joe Ankenbauer said:

The 80 acres were owned by my Mom personally............................ As I mentioned before, we were able to sell the 80 acre farm for $760,000 and the heirs paid absolutely no sales income tax.

I believe you meant income tax here.

The only question I have here, is that if this is so straightforward as you claim, then why did you have to go through a 2-year tax fight with the IRS concerning your inheritance, as per your statemment here:  

53 minutes ago, Joe Ankenbauer said:

As someone who just ended a two-year fight with the IRS concerning our inheritance, I have no desire to deal with this type of situation again.

 

[PunisherPunisherPunisher]

I've given detailed instructions on what to do  and if they don't follow the instructions, I'm going to rise from the ashes and sell them myself 

[rjpb]

The older I get the less interest in material possessions I have. That doesn't mean I've been able to completely quit collecting, but I've slowed way down on adding, and shed more every year than I pick up. I long ago got rid of all my vinyl and 90% of my books (non-comic). I find myself getting nostalgic for those days of my youth, when I could move everything I owned in a single car load. 

If I make it normal life expectancy, I'll probably have sold everything. If I go early, my wife and/or kids will probably just call around to get the best lump sum deal, and really, why would they care that much if it's 50 cents on the dollar, it will seem like free money to them. 

[Timely]

2 hours ago, Joe Ankenbauer said:

Here's my only issue about selling my collection. If I bought my copy of Amazing Fantasy #15 in the early 2000s for $600, then, as I understand it, I will have to pay capital gains tax on my profit. Here's the worst part - I have several key issues, such as Fantastic Four #1, that I have absolutely have no idea where I bought it or how much I paid.

If I sell a book to an fellow collector, I'm not worried about capital gains. The only people who know about the transaction are the buyer and the seller (me).

If I was to sell my entire collection right now, I would place the value at around $150,000+. If I sold this to a dealer, I <might> get $90,000, as I have a lot of Silver Age keys that are already slabbed. No dealer is going to pay me $90,000 in cash - most likely he would use a check or wire transfer. However, both of these leave a trail that the IRS can find. And I would have to pay 15% of that $90,000 in taxes, which leaves my proceeds at approximately $76,500.

However, if I hold onto my collection until I pass away, that is quite advantageous regarding taxes. My heirs would be given a new "cost basis," which is the value of my collection at the time of my death. They could then sell the collection and keep all the proceeds, because if they sell it soon after my death, there would be little time for my collection to appreciate. I was the co-executor of my Mom's estate. She owned 80 acres of prime Iowa farm land. If she had sold this land while she was alive, she would have to pay 15% in capital gains tax, as the land was just given to her by her father. Since she held onto this land until her death, the value of the land had a new cost basis. We sold the land for $9,500 an acre for a total of $760,000, which was evenly distributed to the heirs with no taxes due.

As many of you have stated, I have left very explicit instructions on how to sell my comics, original art, and statues. I have one local dealer I trust, along with Comiclink as an auction house. I also mentioned several silver age dealers with whom I have done business. My family knows exactly where these instructions are, both in my house and in my safe deposit box.

When my collection is sold, I want to maximize the amount of money my family will receive. I feel that selling the collection after my death will achieve that goal.

 

Joe

Comics are taxed at a 28% rate.

Collectibles are considered alternative investments by the IRS and include things like art, stamps & coins, cards & comics, rare items, antiques, and so on. If collectibles are sold at a gain, you will be subject to a long-term capital gains tax rate of 28%, if disposed of after more than one year of ownership.Dec 6, 2019

[lou_fine]

22 minutes ago, Timely said:

Comics are taxed at a 28% rate.

Collectibles are considered alternative investments by the IRS and include things like art, stamps & coins, cards & comics, rare items, antiques, and so on. If collectibles are sold at a gain, you will be subject to a long-term capital gains tax rate of 28%, if disposed of after more than one year of ownership.Dec 6, 2019

Yes, thatis the way I understood it with respect to the 28% capital gains tax rate on collectibles.  

Since I don't live in the land of the free though and hence, don't follow the tax laws too closely, what is the significance of the December 6, 2019 date that you posted?  Is this a change in the tax laws whereby Joe's assertion that cost base for the heirs is reset to zero upon death comes into play?  

[HRCostigan]

Maximum rate of 28%.  Will match your marginal rate if lower, as I understand it.

https://www.irs.gov/taxtopics/tc409

[GreatCaesarsGhost]

28% is an absolute outrageous rate. I am stunned. I was giving heavy consideration into leaning in on a big key, but now forget it. I’ll leave my money where it is. What ery. The IRS can bite me

im so glad the tax burden got shifted from the oligarchs to those of us who dabble in fine arts

I will now have to consider leaving my collection to my heirs. I think the 28% bite gets avoided when the collection goes thru inheritance, as discussed above

Edited January 3, 2020 by GreatCaesarsGhost

[Math Teacher]

3 hours ago, lou_fine said:

The only question I have here, is that if this is so straightforward as you claim, then why did you have to go through a 2-year tax fight with the IRS concerning your inheritance, as per your statement here:  

 

We weren't fighting with the IRS over the sale of our farms. Our dispute with the IRS was in regard to whether some of the accounts my mother had were qualified or not. Qualified accounts require you to pay taxes when you take money out of inherited accounts, since it was put into the account pre-tax. Non-qualified accounts, such as brokerage accounts or just regular investments, are not required to be taxed when inherited, as the money was put in post-tax.

The first letter I got from the IRS claimed that I owed $26,000 in back taxes. Throughout this two-year period, we were forced to hire an attorney to assist us. Each subsequent letter we got from the IRS reduced the amount of back taxes, until approximately March of 2019. Since March, the amount we owed was increasing due to fines and interest. In August, we basically gave up and paid the amount due in full. Our attorney kept working on our case after this. Finally, we received a flyer from our congresswoman, Cindy Axne. On this flyer were highlights of how congresswoman Axne had helped her constituents when dealing with government agencies. In early November, I contacted her local office and explained our situation, along with providing the name and phone number of our attorney. Lo and behold, the IRS accepted our claim, and we were given a refund for the money we paid in August, plus interest.

I understand - no one enjoys paying taxes. However, taxes are the price you pay to live in a first-world country. However, the part that bothers me most about the IRS is that you are guilty until proven innocent. A murderer is not treated like this - innocent until proven guilty. I don't understand why the IRS doesn't have to follow a basic rule of our judicial system.

 

Joe

[Math Teacher]

2 hours ago, Timely said:

Comics are taxed at a 28% rate.

So, this is even worse than I thought. It would be interesting to find out if the cost basis is reset when the assets are transferred to heirs.

Is anyone here a tax attorney?

 

Joe

[batman_fan]

I plan to sell off a lot of what have over the next 5 years.  Would like to get down to a 1000 to 1500 books that are mostly slabbed.  Same for original artwork, sell off the stuff that I will never frame.  For toys, that is going to be a challenge but I may sell them on eBay by doing some bundling.  For what is left, I will leave instruction for who to contact to get rid of what is left.

[Robot Man]

Lordy, this thread has gotton down to not only death but taxes.

I read and collect comics to escape these thoughts. I guess I should move over to the Funny Animal thread...

[szav]

9 minutes ago, Robot Man said:

Lordy, this thread has gotton down to not only death but taxes.

I read and collect comics to escape these thoughts. I guess I should move over to the Funny Animal thread...

Just wait till someone asks what happens to their collection when they get divorced!

Edited January 4, 2020 by szav

[Robot Man]

3 minutes ago, szav said:

Just wait till someone asks what happens to their precious valuable comic book collection when they get divorced and she wants half...

I know that this has happened to a few board members here. My wife has threatened to chain saw my Indian motorcycle and electric guitars as well as burning my comics. Hell hath no fury... Cheaper to keep her!

[Kevin.J]

My missus knows nothing at all about comics, I have left her instructions on who to contact when the time comes, a dealer I trust to give her a fair shake but I know he would probably not take them all.

I do worry that she will just ring a certain dealer as his adverts are the biggest and first in a lot of listings, he would probably take them all but would be stealing them off her.

In an ideal world I would sell all before the time comes but I just cant bring myself to do it.

It is a dilemma I have thought of a lot in middle age and not to great health

[Robot Man]

2 minutes ago, Kevin.J said:

My missus knows nothing at all about comics, I have left her instructions on who to contact when the time comes, a dealer I trust to give her a fair shake but I know he would probably not take them all.

I do worry that she will just ring a certain dealer as his adverts are the biggest and first in a lot of listings, he would probably take them all but would be stealing them off her.

In an ideal world I would sell all before the time comes but I just cant bring myself to do it.

It is a dilemma I have thought of a lot in middle age and not to great health

I have given my wife and kids a list of three very reputable, fair dealers I know and like who could handle a collection like mine. Also, one I don't like very much, but is very prominent in the hobby. I told them to send them my spread sheets and have them make an offer for everything. Highest offer brings the moving van. At the end of the day, it's all free money to them...