The seller, Brian Seigel, bought the card in 2000 for $1,265,000 and sold it for $2,300,000. Is this a long-term gain or a capital gain?
Moderator: Honus Wagner was an early 20th centruy Major League Baseball player. He tied with Babe Ruth for second place on the first Hall of Fame Ballot in 1936.
In response to the OP: when you purchase an asset with the intent of making a profit, the subsequent sale is either a capital gain or a capital loss.
This is a collectible so the tax rate is 28% verses 15%. Correct? Carl
It's a long-term capital gain, but my question is whether it's a "collectible." taxed at 28%. I have no experience with collectibles, but it sure sounds like one. However, it's not included in the (nonauthoratative, I know) list in Pub 550, unless you consider it a "work of art."
-- Phil Marti Clarksburg, MD
After looking into it further, the question arises as to the tax rate on the sale of the card. Of course, the answer is "It depends". In this case, it depends on whether or not the seller is a dealer. If so, it is business income. Then there is the issue of when a collector such as Brian Seigal becomes a dealer. But note, the sale of a work of art, rug, antique, metal such as gold, silver, and platinum bullion), gem, stamp, coin, or alcoholic beverage held more than one year is classified as a collectible gain or loss and the gain is taxed at 28% rather than 15%. (See Pub 550)
IMO the card could easily be classified as an antique if not just lumped in as a collectible. But his gain was $1,035,000 and afterall what's a $134,500 (the 13% difference) amongst friends.
After reading the appropriate passages in Pub 550, Susan (my child bride), who is also an auditor, smiled and said "If it's valuable, it must be a collectible."
Dick
This puts me in mind of my 1913 Royal typewriter prominently displayed on my really old wooden desk at the office. I bought it for 45$ maybe 12 years ago, and it may be worth more. But besides the old 1967 SCM electric still in the back room, it's the only good looking one I have. Now then, since I have two typewriters, does that make me a collector? Let's say the Royal's value is 125$ and I sell it. Capital gain I'm thinking and not a collectible. Same with a Honus WAgner card. If it were the only one I owned and did not actively collect others, would it be a collectible? Would I then BE a collector? ChEAr$, Harlan
Moderator: I'm with you on this one, Harlan. But I don't think the Service will agree with us. Their position will almost certainly be "You don't have to be a collector to own a collectible."
Thanks, I am a law student in Federal Income tax and my professor will give me big brownie points for this.
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