$900k PSA 9 Illustrator Transaction

[EnlightenedBulbasaur]

@pokemon_matt

@EnlightenedBulbasaur

Clearly this is an area of expertise of yours and I know nothing about this.

To be clear, I was planning on hiring a professional from an established company. The spreadsheet thing I can do well enough on my own.

In any case, I would assume everything you’re mentioning is a missed opportunity for me regardless? Unless you’re saying that one could retroactively create such a company after a sale (although 2/3rds of the money is PWCC money that I will not be getting until at least mid-January).

I’m not an accountant, but everything I mentioned is what I have been advised over the years for my companies.

In terms of being too late, you’re not as it’s usually tied to a company’s financial year, but your company doesn’t exist yet. I would advise that you do it as soon as you can though as you may only be able to claim back purchases/sales in the last year (from company formation). I don’t have experience on that part though in terms of backdating so I’m not exactly sure on timeframe, but I’d say you can definitely claim the PWCC stuff.

I had been planning on seeing an accountant after the PWCC money cleared, but I’ll consider trying to meet with an accountant before the end of the year. Thanks.

[gemmintpokemon]

This thread has the “like-kind exchange” topic stuck in my head. Finally looked it up & realized it’s for real estate. Maybe there’s something similar for other investments. In short, the original tax basis won’t change, but you have flexibility on how/when to pay those taxes.

www.investopedia.com/terms/l/like-kind_exchange.asp

[pokecollectoramy]

@pokemon_matt

@EnlightenedBulbasaur

As I’ve stated, I will be using an accountant and I will try to pay the minimum that I legally owe.

But I’m curious as to how exactly you think I could avoid paying much less other than committing tax evasion / money laundering?

Spreading out the money over time wouldn’t make a particularly big difference, as the federal long-term collectibles tax is a flat 28% and for New York State and City the additional ~7% and ~4% taxes would barely change with your income level.

I don’t see how to actually avoid the vast majority of that tax legally.

I certainly hope I’m wrong and that an accountant has some good legal suggestions.

Without delving too much into the world of financials, here’s a quick example:

A good accountant would recommend that you actually set up a limited “investment” company that handles the buying and selling of your cards. The purchases are offsetting the sales profit, but ultimately you’re only subject to corporation tax (21% in America I believe). It gets a lot more creative than that in terms of how you bring that profit down, for example giving a salary for yourself, at worst to cover the tax free allowance to allow you to get money out. There’s also expenses, bills (as yours WFH so energy, phone bills etc) and also equipment purchases (laptops, phones etc). You’d expect to pay half that 21% using the methods above (and more that accountants leverage) you can also defer earnings to another financial year to better leverage things as well. Adding a lump of that to a pension pot also means you don’t pay tax on that so another way to decrease the bill.

There are even more crazier ways than that (such as your pension buying a commercial property and your business paying rent to the pension company) but none of it is tax avoidance and none of it is illegal.

When I say a good accountant, I don’t just mean the bloke from down the road who uses spreadsheets. I mean an established company that is well versed in managing finances that stretch into the millions.

Pretty much all of that above is what I do and it saves me an incredible amount of money, perfectly legally.

So the suggestion is to create a sham llc (created just to avoid taxes) AFTER the sale is already completed, offsetting the “income” (which was actually personal use items) with expenses that he didn’t actually incur, and then taking a salary as well?

[EnlightenedBulbasaur]

For what it’s worth, my brother, who is an attorney, just told me that I should be careful with such a suggestion.

He said I can’t just set up an S-Corp at the last second, because there are potentially very serious legal consequences. He said the S-Corp must be funded with money in advance and have a declared business purpose. That it can’t just be an empty vessel to pass things through for tax purposes.

So yeah, I think we should probably end the tax conversation here for now, I don’t want to de-rail the thread.

Bottom line is that I will be seeing a professional soon and do everything I can legally that will not lead to any potential legal issues. I am fine with paying the taxes I legally owe even if the risk of being caught by trying to avoid paying the taxes is small.

[pokemon_matt]

Last post from me here, but just to clarify I said the business would handle the “buying and selling of your cards”. This isn’t actually an empty vessel company. In fact, you could then use that company to purchase property/real estate and establish a rental business and further invest the money you’ve made. So it’s not just a “create and dump all my money here” which is probably the red flag your brother was talking about.

Anyway, the professional accountant will give you more information on it, whatever you do just make sure you do it as soon as you can.

Oh and Pokemon isn’t “personal use items” because we’re at the level where it can be treated as an investment (especially if it involves buying and selling.

[dog3pod]

congrats to both parties i hope boths sides are very happy with the new additions to their collections

[qwachansey]

I think that’s a great suggestion for people who regularly buy and sell cards as an income stream, or plan to in the future.

For someone with a decade-old collection trying to classify purchases from 2009 as belonging to their brand new established business, it’s an empty vessel.

[tartrate]

@EnlightenedBulbasaur

As someone who is going to be sending the government nearly half a million dollars this year, I would understand why people would want to avoid paying capital gains taxes.

I had the chance to take substantial offers for many of my cards with cash, but I passed because I didn’t want to go down that path.

But it’s probably best not to publicly accuse people of planning to commit tax evasion.

Sounds like you are doing it wrong to be giving the government 500k for them to dick around with spending months on whether we should all get stimulus checks. But then again I’m broke this holiday so what do I know.

I don’t know much about retirement accounts outside of typical company 401ks, but are there IRAs that you can put money in before the end of the year to offset taxable income? 529plans if you have kids? I dunno but if your accountant has legitimate ways of reducing your overall taxable income this year that would behoove you.

[elshod]

Literally no one is going to provide a better path to legally paying the least amount of taxes other than an accountant who has all the information and time to process it all. Let’s leave it there. Congrats ebulb!

[chappo]

tfw you live in a country with 0 taxes on capital gains

[gottaketchumall]

@chappo I’m sure that comes with some downsides too? Country?

There definitely is a lot of opportunity in the largely digital world we live in where many things can be done remotely from anywhere with an internet connection to geographically arbitrage tax rates and it is a common theme among those with lots of wealth and income is to find ways around having it taxed.

[EnlightenedBulbasaur]

I feel like the last 2 pages has been everyone basically telling me that I’m a sucker for paying taxes, yet I don’t see any concrete and viable suggestions.

[r2d287]

@EnlightenedBulbasaur

I feel like the last 2 pages has been everyone basically telling me that I’m a sucker for paying taxes, yet I don’t see any concrete and viable suggestions.

Honestly man. You are doing the right thing. There are certainly ways to avoid, sometimes legally. But at the end of the day, is it worth the risk, the hassle and penalties if you get popped. Armchair QBs always have the best advice right? But if it’s their balls in the vice grip, they are doing the same thing as you 9/10 times. This isn’t like you sold 20k, and it’s not like you are a card flipper who has been planning his exit. You also live in a state that is having lots of avoidance issues, so I’m sure there is a lot more scrutiny.

There is also the moral dilemma. In this case, any avenues that eliminate tax by a large margin, are at best, questionable.

[smokemon]

@EnlightenedBulbasaur

I feel like the last 2 pages has been everyone basically telling me that I’m a sucker for paying taxes, yet I don’t see any concrete and viable suggestions.

It’s just noise. You’re playing it right and you’ll get it sorted out with your accountant.

[gottaketchumall]

@hyruleguardian in hindsight sell on Virbank Fnf only you pay fees or if you wanted expert tier you should have raffled them.

Honestly sitting down with a tax professional at their hourly rate ASAP ideally before year end is your best bet. They only get busier as tax filing season approaches and certain things are time sensitive and go by the calendar year and certain things deadline at the filing deadline. There most certainly are ways to legally reduce your taxable income and a good accountant/CPA can likely pay many multiples of their fee in reducing your tax. When you are on the hook for hundreds of thousands of dollars of taxes as it currently sits I would not remotely balk at “gambling” a couple grand on a few different sit downs to explore your options immediately.

[parkermrparker]

@aj84

Charizard PSA 10 1st edition alone will be worth more if not already.

Welcome to the forum!

[EnlightenedBulbasaur]

@lowpopping

@EnlightenedBulbasaur

I feel like the last 2 pages has been everyone basically telling me that I’m a sucker for paying taxes, yet I don’t see any concrete and viable suggestions.

I can’t advise you my friend because I’m not an accountant and I don’t know your state law.

I’m based in the UK and my particular case is different to yours and you are in the US and probably have varied state laws I imagine?

Do you not have a government website with some advice on this. That could be a start, then do some further reading into it. After that speak to a few accountants about your position and get their opinions.

I don’t think many people here can give you proper accounting advice especially if it varies by state, you need to independently look into it mate! But we can just tell you that there might be options. Down here in the UK we can operate our business structure via a company too which can have more favourable taxation depending on your case!

I understand that I made a mistake in not setting up a company some time ago, but it’s probably too late to do that at this point.

As I’ve said many times, I will be speaking to an accountant(s). Already have one appointment set up for next week.

[professoroakcali]

@EnlightenedBulbasaur

@lowpopping

I can’t advise you my friend because I’m not an accountant and I don’t know your state law.

I’m based in the UK and my particular case is different to yours and you are in the US and probably have varied state laws I imagine?

Do you not have a government website with some advice on this. That could be a start, then do some further reading into it. After that speak to a few accountants about your position and get their opinions.

I don’t think many people here can give you proper accounting advice especially if it varies by state, you need to independently look into it mate! But we can just tell you that there might be options. Down here in the UK we can operate our business structure via a company too which can have more favourable taxation depending on your case!

I understand that I made a mistake in not setting up a company some time ago, but it’s probably too late to do that at this point.

As I’ve said many times, I will be speaking to an accountant(s). Already have one appointment set up for next week.

Setting up a company only protects you from liability, few real benefits if you don’t have employees or any long term liability. The taxes on the income is the same if it’s your personal income or the income of the company you own (or setup). Don’t worry about it.

Make the $$$$ money and let your tax people get creative with the numbers to help save you from paying max taxes. You will not regret anything and at the end of the day you will sleep easy.

Congrats man! You did well and very good move going with PWCC. It’s a good thing for the hobby to see legitimate sales on a platform like PWCC.

[aj84]

I will be paying taxes as well whenever I sell.

However, the tax authorities will argue that it is not a capital gain but business income if you are actively involved in selling cards.

[aj84]

@parkermrparker

@aj84

Charizard PSA 10 1st edition alone will be worth more if not already.

Welcome to the forum!

If this card went up on EBAY no reserve - what do you think the price would be?
900K? Not even close.

He understands the trade that’s why he made it.