Reducing the Firearms Collectibles Tax Bite

[italiansport]

There will come a time for many of us to sell off our firearms collection due to our age and/or no one in the family interested in keeping it. My understanding is that the government taxes this type of collectible at the 28% rate on gains over the years. This could be a substantial amount of money for many of us. My question is:
Does anyone know of ways to reduce this tax bite?
Jim

 

[Fishinfool]

I am no expert on tax law, but I never heard of used firearms being taxed upon private sale at any special rate as compared to selling a used car or refrigerator.

Not giving any special tax advice, but most folks I know don't claim any profits from private gun sales, especially if they are cash deals. Might be different if you sell thru a licensed auction house that has to report sales / profits? I am going to guess that most guys, if they are being 100% honest come tax time, just claim whatever profit they figure they made in private gun sales as added income when figuring their gross yearly taxable income.

Larry

 

[THE PILGRIM]

If I get a 1098-1099 or other earnings statement , I report it.
Cash? Probably not.

 

[Muss Muggins]

There will come a time for many of us to sell off our firearms collection due to our age and/or no one in the family interested in keeping it. My understanding is that the government taxes this type of collectible at the 28% rate on gains over the years. This could be a substantial amount of money for many of us. My question is:
Does anyone know of ways to reduce this tax bite?
Jim

How would they find out?

 

[FredBart]

Collectibles are indeed taxed at a 28 percent rate and this does not depend upon your income bracket like most conventional capital gains taxes ( i.e., stocks, bonds, mutual and other similar investments.) If you are selling a very expensive collection of firearms, this may be a concern to you.

The IRS code section is 1 (h) 4 (A) (i) and 5. Consult your tax advisor.

 

[italiansport]

If you were to use an auction house or consign them to a dealer they would be required to report the sales. I don't think Federal capital gains taxes could be avoided in those circumstances. Selling them yourself either privately or at a gun show is perhaps another matter entirely? I'm not sure what if any tax provisions apply in those cases.
Jim

 

[Fishinfool]

Collectibles are indeed taxed at a 28 percent rate and this does not depend upon your income bracket like most conventional capital gains taxes ( i.e., stocks, bonds, mutual and other similar investments.) If you are selling a very expensive collection of firearms, this may be a concern to you.

The IRS code section is 1 (h) 4 (A) (i) and 5. Consult your tax advisor.

I didn't know that. What, specifically defines a "collectable" firearm, as apposed to any old gun that you made a small profit on upon sales?

Larry

 

[Bullet Bob]

Since I'm a charter member of the "buy high. sell low" club, what if I didn't make a profit? Guess I'd have to have receipts to prove it, eh?

 

[BAM-BAM]

I didn't know that. What, specifically defines a "collectable" firearm, as apposed to any old gun that you made a small profit on upon sales?

Larry

Good question........... a good reason to keep track of your "acquisition" costs.......... don't want gains on a RM with a base cost of $62.

 

[eb07]

What firearms?

 

[soFlaNative]

How would they find out?

Some Fed on a Forum?

 

[pharmer]

Does anyone know of ways to reduce this tax bite? Jim

Well, when I make a sale, I put the hundreds and fifties in two piles. The hundreds for me and the fifties for the .gov. I immediately levy a 100% "because" tax on said .gov and keep it all. Been working close to 50 years. Joe

 

[Telecaster]

If I sell at a loss, will the Treasury cut me a check for 28% of the loss? Scroom.

 

[sbowenjr]

Two things that do not go together well IMHO. Gun discussions and taxes. IDK. It seems to me Taxes while vital to our nations health are already heavy enough for the working class American. It is a interesting thought. If I am blessed to live long enough, I will sell off some slowly. The rest will go to my family. But not the government. Nor the proceeds that come from selling them.But I do understand some collectors have a more valuable collection than others and do see where that could be a problem especially if they have those assets tied to a business. Another thought I have had is how to distribute my collection in my will. It would not be fair to my daughter who probably will not have a equal interest in guns as my son to give my son a high valued collection (by my standards) unless I can leave her a equal value in either cash or jelwery. Sorry for the drift.

 

[THE PILGRIM]

Tax people -
How about this-
I leave my guns (and everything else) to my kids.
They get the benefit of stepped up basis?
Like I think I paid $75 for my Outdoorsman.
$105 for my 19, and on it goes.

 

[g8rb8]

I would suggest checking this out in more detail.

I think you are worrying about something that is a non-issue.

I am not a tax lawyer and this is the internet so do not make estate planning based upon this post.

In general inherited items, including collectibles, as best I understand the situation, are valued at the time of death/inheritance so if the inherited item is sold shortly after inheriting it there likely is no profit and thus no taxes.

For example consider a relative that bought 100 shares of Microsoft stock about 30 years ago on the first day it was offered at $21 a share for $2100. Over time and through splits it's now roughly worth a million dollars. If you inherited it today your "cost basis" would be considered the value it is today (roughly a million dollars) and if you sell it the day you take possession of it you would have no profit and thus owe no capital gains taxes. Same thing happens with a collectible or a house.

 

[Maddog 521]

The real problem is where to stack/pile all the Benjamin's when you do start selling. All of those secret places fill up fast, and then you want to start buying again. It's a real dilemma.

 

[vt_shooter]

There are painfully few times when you can come into money and the government doesn't demand "their cut".

 

[sbowenjr]

When the guns and taxes subject arises I think of the movie Legends of the Fall with Brad Pitt and Anthony Hopkins. Anthony Hopkins had had a stroke and was having trouble speaking... but even while having trouble speaking the comment he made about the government was crystal clear!!!! If you have seen the movie you will remember the comment.

 

[mtgianni]

There will come a time for many of us to sell off our firearms collection due to our age and/or no one in the family interested in keeping it. My understanding is that the government taxes this type of collectible at the 28% rate on gains over the years. This could be a substantial amount of money for many of us. My question is:
Does anyone know of ways to reduce this tax bite?
Jim

IIRC the tax does not kick in until the estate is valued at over 3 million. It may be 6 million. Tax would not effect us but our heirs.