December 15, 2012
  • Don Larsen, former New York Yankee baseball pitcher, suddenly decides to sell the uniform he wore when he pitched a perfect game during the 1956 World Series.
  • Former NCAA basketball coach Bob Knight decides to sell all his basketball championship rings.

Also up for auction:

  • Ozzie Smith, famed St. Louis Cardinal shortstop, Gold Glove awards
  • Pete Rose's signed agreement banning him from baseball in 1989
  • Former boxing champion Evander Holyfield's championship belts

What is happening?

  1. Collectibles tax rates could be going up substantially in 2013 because the 28% tax rate on gains from the sale of these collectibles could be as high as 33-39.6%.
  2. Investment sales, like collectibles, could impact your Alternative Minimum Tax (AMT) exposure, effectively raising taxes on your other income in 2013.
  3. In addition, there could be an additional 3.8% tax on their memorabilia sales in 2013 because of a new Medicare surtax beginning in 2013 on investment earnings over $200,000 single and, with a marriage penalty, $250,000 for married couples filing joint tax returns.
  4. Even non-collectible investment tax rates are scheduled to rise. Long-term capital gains tax rates could go from 15% to 20% or higher.

Some tips

  • Review your investment portfolio for possible tax efficient transactions. This could mean selling a valuable collectible or other long-term gain investments.
  • Consider making tax projections if the sale of investments might expose your income to the two Medicare surtax provisions (.9% of wages and 3.8% of investment income).
  • Conversely, if you are an avid collector look for deals in December as other collectors sell their memorabilia to take advantage of the lower tax rates in 2012!

Marc R Barnes EA
Topic: Advice