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Discussion:"Collectible" or "Not Collectible" - What's the Question?

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Discussion Forum Index --> Basic Tax Questions --> "Collectible" or "Not Collectible" - What's the Question?


Discussion Forum Index --> Tax Questions --> "Collectible" or "Not Collectible" - What's the Question?

Harry Boscoe (talk|edits) said:

5 January 2009
I don't think "What's a collectible?" is the real question. I think the real question is "What's personal use property, on which a capital loss is non-deductible?"

Here's a quote from Publication 17 [which I caveat with all the usual "IRS publication" caveats]:

"Personal Use Property - Property held for personal use only, rather than for investment, is a capital asset, and you must report a gain from its sale as a capital gain. However, you cannot deduct a loss from selling personal use property."

I'm pretty sure I know what "Property held for personal use only, rather than for investment" is. However, it sounds like IRS has made those two categories ("for personal use only" and "for investment") mutually exclusive, which might make sense, I guess, but then what the heck is that word "only" doing in there?

RoyDaleOne (talk|edits) said:

5 January 2009
Only equals not mixed use, such as, a vehicle use partially for non-personal use. That is the property has no use but personal associated with it.

Harry Boscoe (talk|edits) said:

5 January 2009
But you're not telling me that a capital loss on the sale of "mixed personal use/investment" property would be deductible, certainly not.

So what's the quote from IRS say about losses from mixed use property? Nothing?

Oh, I see now, those clever IRS people didn't put the "only" in the second sentence, the one about losses not being deductible. Are we supposed to infer from that that *any* personal use - maybe - is enough to disallow the otherwise deductible capital loss?

RoyDaleOne (talk|edits) said:

5 January 2009
Incorrect, a capital loss on the portion that is non-personal (mixed use) is deductible. Harry you know that.

Kevinh5 (talk|edits) said:

5 January 2009
If it goes up in value - it is a collectible.

Harry Boscoe (talk|edits) said:

5 January 2009
C'mon Kevin, that's too easy. It would already have answered all the questions about your Corvette and your Chippendale. According to the IRC, my Pabst Blue Ribbon is a collectible. It can't be that easy...

Harry Boscoe (talk|edits) said:

5 January 2009
Doesn't work, Roy. Like, what portion of Kevin's Corvette was non-personal (mixed use)? And what portion of his serigraphs?

EZTAX (talk|edits) said:

5 January 2009
Great follow up Harry.

On a somewhat related topic, there was an IRS case regarding a 1031 exchange on property that was occasionally used on a personal basis. The argument was that the personal use did not change the investment purpose. I don't have the case in front of me but it should not be hard to find.

Taxea (talk|edits) said:

6 January 2009
How about rather than "collectible" we call it an "investment". If I buy a 1963 Corvette because I expect that it will increase in value and I am storing it with the intention of selling it for double or more the purchase price...and can satisfy to the IRS my intentions...doesn't this make it an investment. And wouldn't I be able to deduct the loss, in this case, if I were forced to sell at a loss?taxea

RoyDaleOne (talk|edits) said:

6 January 2009
Business use, by mileage of course. Did you forget what you are reading covers mixed-use property, including business use?

Death&Taxes (talk|edits) said:

6 January 2009
Even with the Corvette and other antique and classic cars, showing them at car shows helps push their investment value, so that there will be usage, and, more important, a certain amount of personal enjoyment derived from that use.

RoyDaleOne (talk|edits) said:

6 January 2009
Personal enjoyment is a very minor factor in determining the correct tax treatment, see Barefoot Cruises, et al. I know the IRS loves the personal enjoyment angle, however, it is a very minor factor.

Harry Boscoe (talk|edits) said:

6 January 2009
"...there was an IRS case regarding a 1031 exchange on property that was occasionally used on a personal basis."

Or was it a Rev Proc, published early in 2008, about qualifying rental/vacation homes for section 1031 exchanges?

Harry Boscoe (talk|edits) said:

6 January 2009
Personally, I put *my* collectible cars on trailers when I take them to shows.....  :-)))

Pink Pearl (talk|edits) said:

6 January 2009
my collectable cars NEVER leave the Hot Wheels box...

Riki EA (talk|edits) said:

17 March 2009
Hi all,

I have an elderly client who moved, and sold two items at a loss when he downsized - sterling silver flatware & an antique dresser, both purchased in the 1970s. The loss is several hundred dollars per item. Both had personal use. Researching, I'm inclined to not take the flatware as a collectible loss, but am unsure about the antique dresser. Does the personal use totally negate any collectible loss treatment? -Riki

Kevinh5 (talk|edits) said:

17 March 2009
YES

Illini (talk|edits) said:

17 March 2009
Civil war rifle inherited and then sold 31 years later at a gain. I treated it as a collectible -- anyone disagree? If so, please let me know "how" I can change the result with a clear conscience (oh, and backup would be nice too).

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