Collectibles or not ????

[sdtaxman]

I have a client that had an auction sale that had items selling from $2.00 to $61,000.00. The items consisted of old tractors, various parts for these tractors, tools (new and old), gas tanks, covers, ingintor, rods, pistons, etc. I think that gives a good idea of the various items sold. The questions are (1) does all of this classify as collectibles ? (2) could we try to seperate the items and say the items sold for over $1,000 are collectibles and the rest is just personal property subject to the 15% instead of 28% (3) how to you determine basis on the items since they resulted in a lifetime accumulation and there are no receipts ? would it be fair to have the owner conservatively value what he thinks he paid for items?

One other question that comes is can the gains and losses on personal use property be netted together to determine taxability of the gain or non deductability of the losses.

If anyone has experience with this I will greatly appreciate a little direction.

[JG EA]

Are you sure it is not farm equipment that was depreciated out long ago?

[Kram BergGold]

collectibles

Collectibles are rugs, antiques, paintings, coins, stamps, etc not old farm equipment. Unless, your client intentionally deals in old farm equipment selling it to restaurants for decor, then maybe it could be seen as a collectible.

[sdtaxman]

The items are not farm equipment that were depreciated as the individual was never a farmer he was a delivery truck driver.

[ChEAr$]

Ah SO!

The items are not farm equipment that were depreciated as the individual was never a farmer he was a delivery truck driver.

Then it is his job to come up cost of the items. And his job alone.

[erchess]

You don't say how he obtained the stuff

but that obviously would determine how we calculate his basis (if any). For example, if he inherited anything that had significant value at that time, his basis would be the value on date of death or alternate valuation date chosen by whomever settled the estate and above all said value would be in the paperwork on file at the county courthouse from the settlement of the estate. If he acquired the property when he bought a home, then I would argue that he has no basis in things that were lying around in the buildings unless some value is specified in the sales contract.

However, unless he took awfully good care of all this junk, none of it could possibly have been worth recently as much as it would have been worth years ago. If it was in his house or some other climate controlled building, then fine, but if it was in a typical barn or basement, then it surely depreciated while in his custody. In the latter case, would we not have the sale of personal property at a loss with no tax consequences?

[OldJack]

I agree with Kram that these are not collectibles as defined in the tax code, rather since the items were not in a business or trade they are simply personal property that would be reported on 1040 Sch-D subject to the 15% or less max tax. The taxpayer has the burden to prove any cost basis or otherwise the item sales prices are all capital gains.

[MomBob]

I agree with erchess. You need to now how he acquired the property and for what purpose. I don't want to offend anyone but people can be pack rats and when they actually clean out stuff they may have quite a collection. I worked for an auctioneer for years and you would be surprised at the stuff people collect and the prices you get for the items.