Capital Gains on muscle car (state of PA)

[ohhawk]

The Wall St. Journal had an article on the IRS and collectibles (including old cars) in their 2/14/2008 issue talking about this subject. The article was titled "If You Collect, the IRS Will Collect From You". I still have the article but it's pretty lengthy. Couple of points....

* when you sell them, you will pay a special 28% capital gains tax, nearly double the current 15% rate for long term capital gains on other investments. They said don't hold your breath waiting for this to change even though there is a bill in the senate to change this. They said most don't expect it to pass.

* IRS defines "collector" as one who buys and owns items primarily for personal pleasure. An "investor" is one who buys chiefly to make a profit. A "dealer" is in the business of buying and selling. Those are the three classifications. To prove you are an investor you have to show detail of tracking ups and downs in the value of your objects over time. Goes on to say as an investor you should be getting appraisals on a regular basis and subscribe to journals that keep a pulse on the market. If you don't keep businesslike records you will look more like a collector to the IRS. Collectors can't take a deduction for keeping up a collection because expenses are considered personal under Section 262 of the code. Investors, however, may deduct certain costs.