Discussion - Member to Member Sales - Research Center
Discussion - Member to Member Sales - Research Center
12:43:18am
Also for members of other countries, perhaps those with knowledge in this area can share their experience or information.
Kelly
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01:04:12am
In the USA your gain is taxable as income. For example, if you sold a stamp for $1000, and the stamp originally cost you $400, and the cost of the sale (fees, commissions, etc.) was $200, you would have a gain of $400 ($1000 minus $400 minus $200). It is my understanding (but I am not a tax professional) that realizations from selling stamps do not qualify as a capital gain, so your net gain would be taxable as regular income.
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01:35:44pm
Yes, technically in the US you are supposed to keep track of all your sales and purchases to determine the net income. But I think you can claim some of the expenses of selling beyond just the sales commission.
The expense of mailing or shipping, possibly a pro-rata share of any insurance that specifically covers the collections, a part of phone expenses if the phones or an internet connection was used to sell or to facilitate the sale. A part of all household expenses especially if you use a room as the center of the buying and selling business. that might include a portion of property taxes, of a monthly exterminator's fee that protects the albums from the ravages of glue hungry insects, there are a lot of reasonable expenses we take for granted that might be shared by the process of making a profit selling a collection.
The main thing is to have receipts, plenty of them and be prepared to defend your tax decisions. A smart tax professional is a good idea if you are buying and selling a substantial dollar volume.
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Charlie and Bobby are correct. However, you should be careful with the large amount of deductions taken to arrive at the gain (or loss) as IRS can declare you to be a business operating as a sole proprietorship if you do this regularly on your tax returns. That will require you to register as a business and pay self-employment taxes (Social Security and Medicare taxes), along with federal state and local income taxes (as applicable), which will effectively give most of what you earn to your political heroes.
The best advice given was by Charlie. If you think this applies to you, consult with a tax professional or tax attorney.
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The line between business and hobby income in the U.S. is fuzzy. The IRS fact sheet at http://www.irs.gov/uac/Business-or-Hobby%3F-Answer-Has-Implications-for-Deductions provides a good example of why you might need to follow Michael's advice to consult with a tax professional.
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06:45:11pm
You guys have given great advice for the US.
I've heard from some Canadian dealers and friends that stamp collections sold at auction houses are not considered taxable income and are a non-issue. Any Canucks (Canadians) who can weigh in on this topic?
Kelly
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Hi,
I am not an expert, but we had a tax expert once give a presentation at our local club.
As I understood it, under Canadian tax law, buying and selling prices are deemed to have a minimum value of $1,000. What this means, is that if you buy a stamp for $10 and sell it for $50, you owe no tax, as you are deemed to have bought it for $1000 and sold it for $1000, so no net gain.
If, however, you buy a stamp for $200, and sell it for $1500, you owe tax on $500 gain ($1500-$1000).
There are complications, so you should get expert advice. Don't rely on the above details, as I may not have my numbers correct.
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12:48:16am
Thanks for the answer. I don't keep any records for what I buy so I haven't a clue as to what I've paid for the majority of my collection.
Kelly
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Or, just do as Bobby suggested on another discussion, move to the Cayman's and have a ball.
For those of you that are perchance taking a cruise to the Western Caribbean, there is a very nice stamp shop just to the right of the cruise ship dock in Georgetown, Grand Cayman called the "Penny Black" (imagine that). He is on the second floor and has a pretty good sized sign advertising his business, visible from the dock area. Don't forget to be careful when crossing the street there, since it is a British island and they drive on the "wrong" side of the street there. That single little tip could help prevent you from ruining a perfectly good day or even an entire vacation. LOL He has a wonderful stock available to offer and is a very friendly gentleman, as you would expect from a stamp dealer.
Mike
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Mike, does he have a web site?
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I believe I picked up one of his cards, but have no idea where to find it. I have found an email address that you might use: caymanpennyblack@yahoo.com I tried to Google it, but there wasn't much there either. Hope this helps.
Mike
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Okay, thanks. Doesn't look like he has a web site. Here are a couple of links about the store. One is from tourists, and the other from the Caymans (doesn't say much, though.
http://www.tripadvisor.com/ShowUserReviews-g147366-d2550236-r147716783-The_Penny_Black-George_Town_Grand_Cayman_Cayman_Islands.html
http://www.caymanbuzz.com/directory/Cayman-Islands-Businesses/The-Penny-Black-Stamp-Shop/
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Yes, I found those, but didn't include them since they provided so little information. Someone should have at least provided a website or at least a web address, but of course didn't. After all, if you are going to give a place of business a 5 star rating, at least provide some decent information.
I inquired of the owner if there were enough collector's on the island to keep him busy and he replied that he was well satisfied with the number of local collectors that he had. Grand Cayman really is a high end island, with a lot of banking and insurance businesses established there, all to circumvent the US tax system, thus raising their per capita income figures, very similar to Bermuda.
When I was working in Bermuda I was chatting with a warehouse manager about the average income in Bermuda being $70K a year and he told me that between his wife and him they just barely made that figure. When I asked how they could even afford to live there on that income he replied "from hand to mouth". He also said that all of these big insurance company people are the ones that made the big bucks totally falsifying the figures for the rest of the islanders. I do know that if you are not in the upper income brackets over there you certainly must have to grow a lot of your own food and such because a 6 pack of Coke was $6.05 (even though they make it locally), while a 6 pack of beer (not premium brand) was $10.05 and the average loaf of bread was $4.50. Cigarettes were $8.50 a pack or $85 a carton and I couldn't believe the number of people that smoked there.
Mike
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Those are US prices in stores here, right? (yeah a joke, but for how long?)
The Caymans do hold many US drug lords as well. No extradition to the US. But, you have to keep at least $250,000 on deposit in the Cayman Bank in order to be allowed to stay.
If memory serves, don't tourists have to have a return ticket home before they are allowed to even set foot on the Caymans? (I may be confusing this with Pitcairn Island tourism law.)
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A return ticket is probably necessary, but I have never flown to the Cayman's, always have arrived by cruise ship. But that is very true of Bermuda, assuming you fly in. They are very protective of their island and it's citizens and don't want anyone coming there looking for a job. They will hold you at the airport and then ship you right back on the next flight available. When we went there, as a team of 20, the work permits were inspected very thoroughly and all of our equipment was inspected upon arrival, also at departure, since they have very heavy import fees on everything that enters the country, at their discretion of course.
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A Service Dog gives a person with a disability independence. Never approach, distract or pet a working dog, especially when (s)he is in harness. Never be afraid to ask questions to the handler (parent).
19 Feb 2013
12:43:18am
On the heels of Steve's article regarding investments, came a question that popped into my mind several months ago. No doubt it is different for each country, however, my question is this: If you sell a collection through an auction house, is that considered income to be claimed on a tax return? I'm in Canada, so perhaps our laws are different than that of the US. Any Canucks here who can weigh in on this question?
Also for members of other countries, perhaps those with knowledge in this area can share their experience or information.
Kelly
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They who would give up essential Liberty, to purchase a little temporary Safety, deserve neither Liberty nor Safety. -Benjamin Franklin
19 Feb 2013
01:04:12am
re: Stamp Auctions and Taxes
In the USA your gain is taxable as income. For example, if you sold a stamp for $1000, and the stamp originally cost you $400, and the cost of the sale (fees, commissions, etc.) was $200, you would have a gain of $400 ($1000 minus $400 minus $200). It is my understanding (but I am not a tax professional) that realizations from selling stamps do not qualify as a capital gain, so your net gain would be taxable as regular income.
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Silence in the face of adversity is the father of complicity and collusion, the first cousins of conspiracy..
19 Feb 2013
01:35:44pm
re: Stamp Auctions and Taxes
Yes, technically in the US you are supposed to keep track of all your sales and purchases to determine the net income. But I think you can claim some of the expenses of selling beyond just the sales commission.
The expense of mailing or shipping, possibly a pro-rata share of any insurance that specifically covers the collections, a part of phone expenses if the phones or an internet connection was used to sell or to facilitate the sale. A part of all household expenses especially if you use a room as the center of the buying and selling business. that might include a portion of property taxes, of a monthly exterminator's fee that protects the albums from the ravages of glue hungry insects, there are a lot of reasonable expenses we take for granted that might be shared by the process of making a profit selling a collection.
The main thing is to have receipts, plenty of them and be prepared to defend your tax decisions. A smart tax professional is a good idea if you are buying and selling a substantial dollar volume.
Login to Like
this post
06:09:50pm
re: Stamp Auctions and Taxes
Charlie and Bobby are correct. However, you should be careful with the large amount of deductions taken to arrive at the gain (or loss) as IRS can declare you to be a business operating as a sole proprietorship if you do this regularly on your tax returns. That will require you to register as a business and pay self-employment taxes (Social Security and Medicare taxes), along with federal state and local income taxes (as applicable), which will effectively give most of what you earn to your political heroes.
The best advice given was by Charlie. If you think this applies to you, consult with a tax professional or tax attorney.
Login to Like
this post
re: Stamp Auctions and Taxes
The line between business and hobby income in the U.S. is fuzzy. The IRS fact sheet at http://www.irs.gov/uac/Business-or-Hobby%3F-Answer-Has-Implications-for-Deductions provides a good example of why you might need to follow Michael's advice to consult with a tax professional.
Login to Like
this post
A Service Dog gives a person with a disability independence. Never approach, distract or pet a working dog, especially when (s)he is in harness. Never be afraid to ask questions to the handler (parent).
21 Feb 2013
06:45:11pm
re: Stamp Auctions and Taxes
You guys have given great advice for the US.
I've heard from some Canadian dealers and friends that stamp collections sold at auction houses are not considered taxable income and are a non-issue. Any Canucks (Canadians) who can weigh in on this topic?
Kelly
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this post
12:13:14am
re: Stamp Auctions and Taxes
Hi,
I am not an expert, but we had a tax expert once give a presentation at our local club.
As I understood it, under Canadian tax law, buying and selling prices are deemed to have a minimum value of $1,000. What this means, is that if you buy a stamp for $10 and sell it for $50, you owe no tax, as you are deemed to have bought it for $1000 and sold it for $1000, so no net gain.
If, however, you buy a stamp for $200, and sell it for $1500, you owe tax on $500 gain ($1500-$1000).
There are complications, so you should get expert advice. Don't rely on the above details, as I may not have my numbers correct.
Login to Like
this post
A Service Dog gives a person with a disability independence. Never approach, distract or pet a working dog, especially when (s)he is in harness. Never be afraid to ask questions to the handler (parent).
10 Mar 2013
12:48:16am
re: Stamp Auctions and Taxes
Thanks for the answer. I don't keep any records for what I buy so I haven't a clue as to what I've paid for the majority of my collection.
Kelly
Login to Like
this post
re: Stamp Auctions and Taxes
Or, just do as Bobby suggested on another discussion, move to the Cayman's and have a ball.
For those of you that are perchance taking a cruise to the Western Caribbean, there is a very nice stamp shop just to the right of the cruise ship dock in Georgetown, Grand Cayman called the "Penny Black" (imagine that). He is on the second floor and has a pretty good sized sign advertising his business, visible from the dock area. Don't forget to be careful when crossing the street there, since it is a British island and they drive on the "wrong" side of the street there. That single little tip could help prevent you from ruining a perfectly good day or even an entire vacation. LOL He has a wonderful stock available to offer and is a very friendly gentleman, as you would expect from a stamp dealer.
Mike
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12:04:27am
re: Stamp Auctions and Taxes
Mike, does he have a web site?
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re: Stamp Auctions and Taxes
I believe I picked up one of his cards, but have no idea where to find it. I have found an email address that you might use: caymanpennyblack@yahoo.com I tried to Google it, but there wasn't much there either. Hope this helps.
Mike
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04:12:01pm
re: Stamp Auctions and Taxes
Okay, thanks. Doesn't look like he has a web site. Here are a couple of links about the store. One is from tourists, and the other from the Caymans (doesn't say much, though.
http://www.tripadvisor.com/ShowUserReviews-g147366-d2550236-r147716783-The_Penny_Black-George_Town_Grand_Cayman_Cayman_Islands.html
http://www.caymanbuzz.com/directory/Cayman-Islands-Businesses/The-Penny-Black-Stamp-Shop/
Login to Like
this post
re: Stamp Auctions and Taxes
Yes, I found those, but didn't include them since they provided so little information. Someone should have at least provided a website or at least a web address, but of course didn't. After all, if you are going to give a place of business a 5 star rating, at least provide some decent information.
I inquired of the owner if there were enough collector's on the island to keep him busy and he replied that he was well satisfied with the number of local collectors that he had. Grand Cayman really is a high end island, with a lot of banking and insurance businesses established there, all to circumvent the US tax system, thus raising their per capita income figures, very similar to Bermuda.
When I was working in Bermuda I was chatting with a warehouse manager about the average income in Bermuda being $70K a year and he told me that between his wife and him they just barely made that figure. When I asked how they could even afford to live there on that income he replied "from hand to mouth". He also said that all of these big insurance company people are the ones that made the big bucks totally falsifying the figures for the rest of the islanders. I do know that if you are not in the upper income brackets over there you certainly must have to grow a lot of your own food and such because a 6 pack of Coke was $6.05 (even though they make it locally), while a 6 pack of beer (not premium brand) was $10.05 and the average loaf of bread was $4.50. Cigarettes were $8.50 a pack or $85 a carton and I couldn't believe the number of people that smoked there.
Mike
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08:01:28pm
re: Stamp Auctions and Taxes
Those are US prices in stores here, right? (yeah a joke, but for how long?)
The Caymans do hold many US drug lords as well. No extradition to the US. But, you have to keep at least $250,000 on deposit in the Cayman Bank in order to be allowed to stay.
If memory serves, don't tourists have to have a return ticket home before they are allowed to even set foot on the Caymans? (I may be confusing this with Pitcairn Island tourism law.)
Login to Like
this post
re: Stamp Auctions and Taxes
A return ticket is probably necessary, but I have never flown to the Cayman's, always have arrived by cruise ship. But that is very true of Bermuda, assuming you fly in. They are very protective of their island and it's citizens and don't want anyone coming there looking for a job. They will hold you at the airport and then ship you right back on the next flight available. When we went there, as a team of 20, the work permits were inspected very thoroughly and all of our equipment was inspected upon arrival, also at departure, since they have very heavy import fees on everything that enters the country, at their discretion of course.
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