sell by auction or not?

[wayne goerres]

most gun dealers consign your guns at 10% to 20% of the sale price. If they buy your gun collection outright they try to pay you at 60% of the greaded value. (hint watch the grade). Its been my experience that unless you have to sell quickly stay away from dealers. You will probable be looking at 50% of the actual value. They have to make a living to.

[Gerald Majors]

We have several gun dealers in the Lexington KY area that take guns on consignment. Tell them your price and let them have anything above that. But your price must give them room to make 20 - 30% or they will just sell their own guns and not yours.
Gerald

[Bill Murphy]

If I net $20,000 on the sale of some guns in an auction, I think I would have no trouble coming up with that much in expenses. The only question is will the IRS let me treat the sale of guns as a business after the fact.

[George Lander]

You may want to consider listing your guns here or on doublegunshop.com with what you would expect to be a fair price less a little.

Best Regards, George

[Bill Zachow]

Bill, if you reported the $20,000 sale proceeds from your collectible guns you would only be able to deduct their "cost". That cost, unless you were a federally licensed dealer (not a collector's license) would only be the provable price paid for the collectible. In order to deduct all of the normal business expenses-rent, storage, insurance, etc, etc, you must actually be in the business.

[ahfoxman]

My accountant said that guns are specifically excluded from being treated as capital gains. Was he correct?? He also said the same as Bill did in the previous post, in that, only the 'actual' cost of the item is deductable and that the burden of proving the cost basis was on me.

[G. Wells]

If it is inventory held in a trade or business, it is not a capital asset. Otherwise, "... Generally, property held for personal use is a capital asset. Gain from a sale or exchange of that property is a capital gain. Loss from the sale or exchange of that property is not deductible. You can deduct a loss relating to personal-use property only if it results from a casualty or theft. "

Property held for investment is also a capital asset and gain or loss from the sale is includible in income. The burden on the taxpayer is to prove that the property was actually held for investment.

Interestingly, guns are not included by the IRS on the list of "collectibles" such as art that are subject to higher capital gains rate.

So, if you are actually carrying on a trade or business the proceeds from gun sales are sales revenue and like any business you can deduct the cost of sales as well as deduct expenses necessary for the business, subject to the hobby loss regulations.

If you are not in the business, gain on sales (proceeds minus provable cost basis) is taxable. However, "collection expenses" may be deducted to the extent of gross revenue even if the activity does not qualify as a trade business or investment activity, subject to the rules for calculating the gross revenue and deduction limitations. Losses on sales are not allowed as capital losses.
This summarizes the rules and regs as I understand them altho I have never practiced tax accounting and could have missed something. The above information is worth at least what you paid for it. There is a good detailed discussion of the regulations, court cases etc. regarding collectors at http://www.pli.edu/product_files/EN0...6693/89177.pdf