Anyone heard yet about DAC 7? Potential bomb for the EU collecting/flipping community?

STANDY · Mar 18, 2023

Basically they wanted multinationals to pay tax.
The multinationals agreed to collecting your tax for them.

Now they are paying tax, that’s good enough. 😉

(Funny how there is not as much about multinationals not paying tax as much as there used to be)

STANDY · Mar 18, 2023

dsio
People should be paying their required taxes whatever they may be, but its rather disappointing how frequently the EU acts without consideration of the impact of their actions on the internet in general, but more particularly on sites that don’t have the financial ability to keep up with the burden of ongoing compliance. They enact these things with big tech players in mind and don’t consider anything beyond that.

Funny now it’s better to buy from the small players than the big players with their cheaper prices. I know in knifemaking supplies the big players in the US all charge 10% GST on small amounts now.

Dan S · Mar 18, 2023

In the US, eBay was originally supposed to start reporting sales over a small threshold ($600) this past year but the US government ended up pushing it back a year. To make matters worse, the same requirements are going into effect for some payment methods, e.g. PayPal and Venmo.

TBH, what bothers me most is the US capital gains tax rules for sales of collectible items. Not only are they taxed at a very high rate, but losses do not offset gains. I guess I can understand that this closes an obvious loophole, but it seems to be an unfair penalty for sales of legitimate collectibles relative to other assets. Normally, if you win-some and lose-some, you only pay taxes on the net gain, and that seems logical to me.

gatorcpa · Mar 18, 2023

Dan S
TBH, what bothers me most is the US capital gains tax rules for sales of collectible items. Not only are they taxed at a very high rate, but losses do not offset gains. I guess I can understand that this closes an obvious loophole, but it seems to be an unfair penalty for sales of legitimate collectibles relative to other assets. Normally, if you win-some and lose-some, you only pay taxes on the net gain, and that seems logical to me.

Actually, if you are deemed to be an “investor” rather than a collector, you are allowed to offset gains and losses. It can sometimes be difficult to distinguish between the two, especially for our flipper friends (and certain squirrels).

If all your watches are safe queens, you never wear them and you frequently buy and sell (but not enough to be considered a dealer), you may qualify as an investor.
gatorcpa

Dan S · Mar 18, 2023

gatorcpa
Actually, if you are deemed to be an “investor” rather than a collector, you are allowed to offset gains and losses. It can sometimes be difficult to distinguish between the two, especially for our flipper friends (and certain squirrels).

If all your watches are safe queens, you never wear them and you frequently buy and sell (but not enough to be considered a dealer), you may qualify as an investor.
gatorcpa

Very interesting distinction, I wasn't aware of that.

gatorcpa · Mar 18, 2023

Dan S
Very interesting distinction, I wasn't aware of that.

One other condition:

You have to buy with the expectation of a profit. How one can prove this, I don’t know.

gatorcpa

Pastorbottle · Mar 18, 2023

Now that is seriously unfair….the investor pricks should be taxed to death!

Dan S · Mar 18, 2023

gatorcpa
One other condition:

You have to buy with the expectation of a profit. How one can prove this, I don’t know.

gatorcpa

The practicalities of this sound daunting. I would guess that most experienced collectors also expect/hope to make a profit eventually, even if they don't admit it on the forum. And I just read that the frequency of buying and selling can also help distinguish collectors from investors, but I'm not sure that really makes much sense in practice. Plenty of collectors buy and sell regularly, and I'm sure some investors buy and hold. And who can prove whether someone's interest in the items they buy are "passive" or "active." I wonder who has the burden of proof; if it is the investor, then an audit would be a nightmare.

I suppose that there are probably some tangible actions one might take to establish oneself as an investor, e.g. separating the investment finances from personal finances, documenting safe deposit box storage, etc. But I would still be averse to doing something likely to trigger an audit. And I guess posting wrist-shots on IG is a huge no-no.

Evitzee · Mar 18, 2023

I doubt many watch owners would pass IRS scrutiny as being investors rather than collectors. I think if you wear a watch it's going to be argued the owner is a collector. The whole idea that the long term capital gains tax on collectibles is 28% rather than the lower rate of 15% for most financial investments is convoluted, the powers-that-be have determined that they don't want people investing in collectibles, instead they want investments that grow the GDP. On papers coming out of elite universities and government think tanks that sounds good, in practice it's probably insignificant. And if you hold the collectible for less than a year it is taxed as ordinary income which, for most people, is a lot less than 28%. It's a tax aimed at the wealthy who the government always likes to tax because they are never considered to be paying their 'fair share'.

SC1 · Mar 18, 2023

I think this is good because governments & corporations need to make a liveable wage.

If you think I'm serious you're a dick.

STANDY · Mar 18, 2023

Looks like it’s back to meeting in person with brown paper bags like before the internet 😁

MRC · Mar 18, 2023

STANDY
Looks like it’s back to meeting in person with brown paper bags like before the internet 😁

Are those similar to the brown paper bags you needed to hide booze in so you could take a drink on the move?

I did once get an invitation to a reception at the house of a senior official in the British embassy in Canada. The house had a couple of acres of beautifully mowed lawn leading down to a lovely lake that had no other house in sight. Nor airfield, docks, faevella, etc, just in case you were wondering. We were advised that we could not take drinks out onto the lawn, but were not offered any brown paper bags. I never went back there.....

watchyouwant · Mar 18, 2023

You don't like to pay taxes ? Register a small company. Or even better: Found a Church. Call it the Brown Paper Bag Church. Or : Watch it ! / Watch HIM .... Or something. Only members, who wear vintage mechanical Watches , can pray. And the IRS can't prey.....

gatorcpa · Mar 18, 2023

Evitzee
The whole idea that the long term capital gains tax on collectibles is 28% rather than the lower rate of 15% for most financial investments is convoluted, the powers-that-be have determined that they don't want people investing in collectibles, instead they want investments that grow the GDP.

My opinion is that the prohibition on the recognition of losses on sales of collectibles is more about people actually considering their hobby as a personal activity rather than any governmental discouragement of investments in collectibles. Personal losses have never been deductible against any type of income. Gains on personal assets used to be taxed at full ordinary tax rates, so the 28% rate could be considered preferential to some people.

Remember that investments in capital assets, while having preferential rates for gains, are still limited to $3,000 in excess of gains per year.

BTW, many financial assets, especially non-IPO stocks, create zero GDP, except for commissions paid to brokers. It’s just rich people trading pieces of paper with other rich people at agreed upon values.
gatorcpa

bananapeanut · Mar 18, 2023

Is is time to reconsider watches as investment property? By doing so, selling a watch to buy another one becomes a like-kind exchange, which gives you the ability to defer the gain on the exchange:

https://www.irs.gov/instructions/i8824

watchyouwant · Mar 18, 2023

bananapeanut
Is is time to reconsider watches as investment property? By doing so, selling a watch to buy another one becomes a like-kind exchange, which gives you the ability to defer the gain on the exchange:

https://www.irs.gov/instructions/i8824

Does not matter, what you reconsider. What matters, is what the IRS considers.

bananapeanut · Mar 18, 2023

watchyouwant
Does not matter, what you reconsider. What matters, is what the IRS considers.

Yes actually. The IRS always have the last word.

Pastorbottle · Mar 18, 2023

bananapeanut
Not quite. Many texts are subject to interpretation. If your tax guy is talented, you can save a fortune. It's a misnomer to say that the super rich don't pay taxes, they just perpetually defer them by always reinvesting.

It’s still shitty

STANDY · Mar 19, 2023

watchyouwant
You don't like to pay taxes ? Register a small company. Or even better: Found a Church. Call it the Brown Paper Bag Church. Or : Watch it ! / Watch HIM .... Or something. Only members, who wear vintage mechanical Watches , can pray. And the IRS can't prey.....

I have said this to fishing buddies for years.
We call the sabbath every Sunday and go and worship the sacred waters…Surround ourselves with little colourful icons to show our faith. (Fishing lures)
All fishing gear is tax free.

Pastorbottle · Mar 19, 2023

I used to have a bait and tackle shop, and the one thing I learned from that is: all those fancy rods n’ reels, all those pretty lures, the tackle boxes, the tackle itself, the fish finders, rod holders, the fishing boats, all that gear…… none of it, not one bit is designed to catch fish……its designed to catch fishermen, because the fish aren’t the ones buying it.