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bergalon

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Posts posted by bergalon

  1. On 5/24/2021 at 1:08 PM, usmsci said:

    I talked to a CPA and its clear that its a long term capital gain. The question is, is it a collectible? She wasn't completely sure because theres no, what they call, "long-standing" in the market. After the original Super Marios Bros that sold for $100k two years ago, did that automatically make all other sealed video games collectible? Was that game that sold collectible, just out of the blue? 

    The other thing is, is that we pretty much know how many original Van Goghs or Mona Lisas there are in the world or a particular 1920 Gold coin that was only minted for one year but we don't know the rarity of all video games. Supposedly theres only one sealed 2nd production of Super Mario known (the one on Pawn Stars). What about the others? 

    If everything that people sell, goes for a lot of money, or people buy and trade things online for the purpose of hanging it on their wall or putting it in a showcase then by that definition, everything is collectible and the IRS shouldn't bother with their 'collectible' list. 

     

    Thanks for closing the loop on this! I would love to argue with IRS about their definition of collectible but it may depend on what HA submits more than anything? The amount I had to pay wasn't much compared to your situation (super jealous btw since one of my original goals I had back in '98 or so was a sealed BB set, which I failed totally atl) so it may be worth risking an audit, sending letters, etc.

    Here's where the vagueness is spelled out in content-less form (408m):

    https://uscode.house.gov/view.xhtml?req=(title:26 section:408 edition:prelim) OR (granuleid:USC-prelim-title26-section408)&f=treesort&edition=prelim&num=0&jumpTo=true#substructure-location_m

     

  2. On 5/21/2021 at 11:23 AM, usmsci said:

    no that is specifically for short term capital gains. thats why I am confused as well. I have a free consultation with a local CPA here on Monday. Will let you know. 

    Lets say someone who is dirt poor discovers their great grannies long lost diamond ring and sells it for $50,000 at auction. Now the government wants $14k out of that when that person might need that money for like paying bills or getting out of debt or poverty or something. Thats why it seems strange that the tax would be 28% no matter how poor or rich you are. 

    Reading articles about why they instituted the 28% really points to the wealthy people who naturally innovate, hire people, have businesses, etc. I don't think they ever considered 'normal' people having access to high dollar collectibles. If its not based on taxable income - it should be.

    My accountant said yup, they will take 28% regardless.  Worse still, if you can't show the original purchase price they will assume that all of fair market value is the "gain"; so it would be 28% of that full amount! The examples on investopedia also agree with this. It's just because a 1099K (?)  isn't auto-generated by PayPal/ebay (yet) until you go over 20k or so that we have ignored this. Apparently, we should have all been paying 28% on every Nintendo Fiber, POG, and NES cart 😕 I'll just claim the "turbo tax didn't have that box" defense in the future.

    I look forward to hearing what they say! Thanks!

  3. 3 hours ago, usmsci said:

    why does the IRS (on their own link above) say that 28% is a maximum? That means thats the most you will pay on it. Which means that it can be less than that. Its not totally clear, other than some places mentioning taxable income, how much less that can be. 

    Maybe that means its 28% maximum because you are making $3 million for the year you still pay the 28%. I think that was a bit of an oversight when making those rules. If someone who is dirt poor has a windfall of selling something valuable and needs that money to survive on - then thats pretty harsh to take 28% vs someone who is very wealthy to begin with (which this rule targets the wealthy).

    I think it's because if you sell it within a year then that will be at your own tax rate, so you could pay less than 28% if you sold that quickly.

  4. 1 hour ago, usmsci said:

    I am 100% self-employed as well but I don’t think that makes a difference. The 28% is a maximum just like regular long term capital gains. (But at 20%, if you make more than 496,600 MFJ). At least that’s what the IRS says. If there is a maximum then there has to be a minimum tax on it. They don't specify directly in the link below however, so I assume it depends on your taxable income. 


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

     

     

     

    Let us know how it goes. My understanding was all gains tax on collectibles was 28%, no graduated rate or anything based on income.

     

  5. 4 hours ago, usmsci said:

    What was your taxable income with the sale ? Even if you count the sale as added to your income that still puts me in the 15% bracket. You may have paid too much.

    The maximum tax rate is 28%. Thats the difference between capital gains taxes on collectibles and regular capital gains taxes, (which is 20% max) but they both get taxed off of your ordinary income. Maybe @arch_8ngelcan verify. 

     

    Maybe but then I want a new accountant 🙂 It was less than six figures and was about 5 years ago. I'm not sure that the capital gains on collectibles was a graduated tax. I thought it was just 28%..?

    Our taxes followed:

    https://www.investopedia.com/articles/personal-finance/061715/how-are-collectibles-taxed.asp

    I also do some consulting and get paid via a sole proprietorship LLC. Capital gains there are around 15% because it is not profit on an alternative asset. Sucks to pay so much tax without a guaranteed retirement pension or healthcare but that's the US system for you and I could rant at length if you are bored. 🙂

  6. On 5/14/2021 at 5:51 PM, usmsci said:

    yeah the way it works is that you make $X amount of money. After all deductions you have what is called Taxable Income. If you have capital gains tax to calculate. the first $80k is taxed at 0%. 

    So if you make $200K on game and your taxable income is $50k, $30K will be taxed at 0% and $170K would be taxed at 15%, which would be $25,500. If your Taxable Income is already of $80k then the full amount would be taxed at 15% (200,000 * .15) which is $30,000. 

    thats the way I understand it anyway. Its 28% unless you ordinary tax income bracket is lower. So if you made $1 Million(40% tax income bracket) your rate on the capital gains would be 28%. 

    https://1040return.com/collectibles-tax-collector/
     

    Collectibles tax rate good or bad. The 28 percent capital gain tax on collectibles is the maximum tax rate. For example, if you are in the 15 percent income tax range, your collectible gain is taxed at that rate. If your income tax bracket is higher than 28 percent, the collectibles tax rate is capped at 28 percent. This results in a potentially lower tax rate versus ordinary income taxes.

    Acutally it looks like I might be in the 12% tax bracket (Married Filing Jointly) with a taxable income less than $81,050, including calculating QBI. 

    https://www.kiplinger.com/taxes/tax-brackets/602222/what-are-the-income-tax-brackets-for-2021-vs-2020

    My experience (in IL) and for an order of magnitude less sale than yours was this wasn't the case. I did my usual Schedule D and had to pay 28% since I had the item for more than a year. I was able to prove my net profit was a little less than the sale price but that's about it. Hopefully you found a work around (it's painful to pay 28% on a sale but only 15% on grant money!). I have an LLC, but perhaps if you make an s corp you can do something to reduce the rate and pay yourself as an employee type thing. Given the large sum I'd definitely get some professional advice, although maybe stressing out isn't the best way to enjoy a bunch of cardboard becoming worth a house 🙂

    We talked to a few accountants but were still stuck with over 50k in self-employment and capital gains taxes.

    Congrats again on the sale!

  7. On 4/6/2021 at 11:56 AM, DrMario said:

    Hey everyone, sorry had a busy week on call! 

     

    I am definitely thinking of grading it. To be honest I don't really like the idea of grading, but I understand why it exists.

    I understand not liking grading. I survived VGA grading and laughed at 10k for SMB sealed for years because I thought giving in would change game collecting and turn it into an "investment opportunity" for speculators, which it absolutely did IMHO.  I think the point here is that if you want the benefits of Pokemon and WATA hype then you have the responsibility of putting up with the annoying/slow submission process, HA fees, etc.

    If on the other hand you want to sell if for the $2500 I have my old NA paypal fired up 🙂

     

     

  8. On 11/17/2020 at 4:21 PM, RH said:

    Yeah, I got my first offer. Straight up trade for a switch lite for $600 of PS1 games. Thanks, but no thanks. I wasn't rude, and neither was he. I kind of expected that too, but if that's all I get, I'll pass on FB.

    Yeah the switch for retro games is essentially a youtube meme at the moment. Lots of folks show hauls worth hundreds and hundreds for a switch lite with nba9k or whatever. Some of my friends who sell all the time get really annoyed at the lowball offers but it's all part of the fun IMHO 🙂

  9. I haven't had much luck on marketplace (i.e. lots of work for little gain) but Facebook groups have worked out well for me.  They do have their own hassles but I've found they are easier for moving larger lots. Just don't expect it to be a small amount of effort. I have hundreds of small items too and I've been slowly dribbling them out on ebay because I can post and forget. On FB I have to constantly push so it doesn't fall down on the post list. 

    Other options Mercari, offerup, etc. are all useful sometimes but it all depends.  I used to like LetGo (bought by offerup I think?) but now find the second rate sales platforms to be slow slow slow. Honestly, my happiest sales are with other collectors where I can just say sell a lot at 20-30% off price charting and be done.  Resellers will want at least 50% off to make taxes work out.

    What are you selling anyway? 🙂

  10. 34 minutes ago, austin532 said:

    I don't have enough data yet but it seems like it went small hole, then big hole, and then some games went back to small hole.

    The later bags feel a little different. They look more clear and feel thinner.

    I'd like to second this. I have a urban champion with circle seal which has all factory stuff (99% sure, purchased like 20 years ago and it was sealed when I purchased it as I recall) and it has a thicker bag than later releases (e.g. even later black box games).  I'd have to find pictures to remember the hole size now though.

  11. 3 hours ago, jnak25 said:

    Just got my first ever graded game back from Wata. I was worried about the Manual because it was nicked up a little, but was super happy with the overall grade. I would love to find a 9.4 Manual. 😀

     

    zelda-wata-front.jpeg

    zelda-wata-back.jpeg

    What a wonderful copy and congrats! I sent my first order in September and did the how-slow-can-we-go method so I doubt I'll see mine back this year. I had a kid icarus in similar condition to your Zelda with the cello and I'd be super pissed if they removed it 🙂

    Congrats!

    • Like 2
  12. 2 hours ago, 3rdStrongestMole said:

    In a case like this, does the cellophane add anything to the CIB score? If not, might look fresher without it and the sticker if you ever find a manual and upgrade it eventually.

    Anyways, awesome box/cart scores. Great one to start with!

    Please don't remove that cello! I'm addicted to the stuff and tend to pay a premium for it

    • Like 1
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