Rec'd non-cash gift, then sold it

Lucky you. And what a nice gift that was! The purist answer would, of course, be that you might consult the "reputable firm" for a professional opinion on the value of such items at the time of the gift, and use that for your cost basis when you report the proceeds on Schedule D, as an "LT" gain.

I will watch the professional's responses to this with great interest. One can take the philosophical position that a gift is a gift ... and the disposal of personal property is not normally a taxable event. There is not a _normal_ expectation that items in one's possession will at some time become highly valued. However, that has certainly been the case with many people who have "discovered" that the old item in the attic, inherited from Aunt Susie, turns out to be worth six figures or more -- when they take it to the Antiques Road Show. I don't have any idea -- in my own amateurish "semi-pro" status -- of what on earth the practice is with those situations. So I'll join you in awaiting expert analysis. Meanwhile, I want to thank you for posting a most _interesting_ question. Bill

wrote

Gifts carry the cost basis if the person who gave them to you, so their value when given to you is not at issue.

Yes. But these are collectibles, which get taxed at no more than 28%, not teh 15% attached to long-term gains of a stock perhaps.

Schedule D.

Do you have any clue as to how the books were acquired by the person who gave them to you? If he purchased them, what did they retail for back then? It'd be tough to prove one way or the other, but if you have something, it's a starting point that's better than nothing.

-- Paul A. Thomas, CPA Athens, Georgia

Yes, of collectibles so you don't get the lowest rate.

I don't know how you'd value them back when they were gifted. Maybe an appraiser would give you an estimate. Seth

First, your "cost basis" in this gift IS NOT their value at the time you received them, but rather the giftor's adjusted cost basis. That may be what he/she paid for them, received them as a gift, or something completely different. If you cannot reasonably determine your cost basis, the IRS default is -0-, and all proceeds of sale are taxable.

Yes, but as 28% "collectibles".

You are posting on a PUBLIC forum/user group. You think the IRS doesn't read these? Playing dumb, alright.

I bet they were worth more when you received them! So, what profit? I am just kidding, but it is entirely possible. I got some gems as collateral on a loan 8 years ago and they are now worth half of what they were worth then. See if the firm will provide an estimate of their value 15 years ago.

Thanks for all the helpful replies, you guys are very good!

Just to fill in some details of the story for anyone who's interested: The giftor was my mother-in-law at the time. She bought the books in the 50s for her husband, my father-in-law, with whom I was very close. When he died in the early 90s, she gave the books to me. A few years later, her daughter and I divorced and have not spoken in years. The giftor died some years ago and even the house she lived in has been razed. So, it's impossible to even begin to find out her cost basis from 50 years ago. Considering the run-up in value of these sorts of things, I will assume a cost basis of zero and pay the 28% tax. I assume that I pay tax only on net proceeds, after subtracting associated costs (seller's fees, shipping and insurance, etc.). Thanks again!

You pay a special 28% "collectible" capital gain tax on the increase in value while you held the books. You can ask the agent what the value would have been when you received the gift. If the money is anything but cash in hand, there is a record of it. You are also creating a record right now on this newsgroup.

It is a taxable event. However, a loss cannot be taken; and personal property generally sells for less than cost. Seth

Thanks, Seth, for that helpful clarification. The distinction is important, and I appreciate it. Bill

Ok, that puts a whole new spin on this. If this was originally a gift for her husband, and she got it back when he died, the basis becomes the value on the date of your father-in-law's death. An appraiser should be able to tell you what that is.

Cost basis is the value at FIL's date of death. So chances are your taxible income will be fairly small.

Right.

Stu