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Tax Tip of the Week
For the week of
July 5th, 2010



Collectibles face special tax rules

Thinking of selling part of your memorabilia collection or investing in an exchange traded gold fund? While these items are generally considered capital assets, tax rules can differ from those that apply to other investments.

Differences include:
  • Special long-term capital gain tax rate. The maximum federal capital gain tax rate for sales of collectibles you own more than a year is 28%. The actual rate you pay may vary.
For example, say your entire 2010 capital gain is from the sale of a collection of antiques you've owned for two years. You're single and your taxable income is in the 15% bracket (up to $34,000). You'll pay tax on the gain at the lower 15% rate.

A reminder: The zero-percent federal long-term capital gain rate in effect during 2010 for the 10% and 15% tax brackets does not apply to collectibles.
  • Rules for certain exchange traded funds. Exchange traded funds (ETFs) are securities similar to mutual funds. Some ETFs invest in collectibles such as gold and other precious metals. Depending on the structure of the ETF, gains from sales of your shares may be taxable at the 28% capital gain tax rate.
The same result could occur when the ETF itself sells gold or other metals.

Whatever you collect, please call to discuss the tax consequences. We're here to help with planning, inventory, appraisals, and basis issues.

Click here to view previous tax tips.


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