Tonight, my partner and i were watching Antiques Roadshow on PBS. At the end they had one of their “Antiques Roadshow Treasures” flashback sections, where they show a really nice piece from an old show. This one was from 1999.
The guy had a carved medallion of George Washington, and the appraiser (one of the Keno brothers, if you’re a Roadshow regular) estimated that it was worth about $70,000. After the segment, however, they flashed up a notice that it had sold at auction in Massachusetts in 2000 for $286,000.
Now, the piece had been in this guy’s family for a long time, probably for generations, and we were wondering how much (if any) tax would be payable on the income earned from selling the medallion. Obviously the auction house took a cut, but we’re more interested in how much the IRS and/or the state of Massachusetts might want.
Also, if it was taxed, would it be plain old income tax? Capital gains tax? Or is there some other category that applies to situations like this?
The sale of antiques count as capital gains (or losses) for tax purposes. However, the sale of collectibles (including antiques) is a special category for federal and Massachusetts capital gains - they’d pay 28% federal tax, 12% state tax.
But if this is a capital gains tax, how do they calculate the “capital gain” on something that has been in the family for so long. Do they just assume that the whole $280,000 was a capital gain? After all, i’m not sure what (if anything) the guy’s family paid for it all those years ago.
I believe your cost basis is the value at the time you inherit the asset. The administrator of the estate should provide a valuation. (Cite) So the capital gains tax would be due on the difference between the cost basis and the current value.
If you discover that something you’ve inherited long ago is valuable, you may be able to research what the value was at the time you inherited it and use that as the cost basis. This is easier when it’s something like a stock, where you can look up historical values.