Is a BATF Tax Stamp, Tax Deductable?

Daddydogg · 04-07-2010, 07:22 PM

Well I hope there is someone knowlegable enough on U.S. Federal Income Tax Law to answer the question. Is the Bureau of Alcohol Tobacco and Firearms $200.00 tax stamp for class 3 items tax deductable? Noboby I have talked to seems to know but it always results in "That's a good question". I 'm hoping that somebody here can give me a good answer. CPA's, feel free to comment one way or the other. Thanks.

Daddydogg

azlaw · 04-07-2010, 10:47 PM

Funny you should ask. The answer is "probably not, but depends".

Per IRC section 164(a):

"... any tax ... which is paid or accrued by the taxpayer in connection with an acquisition... of property shall be treated as part of the cost of the acquired property..."

In other words, the tax is part of the price of the gun from a taxation standpoint, so deduction from income is only permitted if the purchase itself is deductable - possible, but not bloody likely.

H

P.S. The above is not tax advice, consult a licensed tax attorney or CPA for actual tax advice - blah, blah, blah...

DavidJayUden · 04-07-2010, 11:42 PM

I can not imagine why the tax stamp would be deductable, unless the gun was a tool for work and considered a legit work expense, or the gun was inventory for sale at a gun shop, etc. Then all expenses acquiring it would be deductable.
Too many hours sitting with the accountant it would seem...
dju

alanint · 04-08-2010, 06:41 AM

The stamp itself is rare enough in its circulation that stamp collectors will often pay up to its face value to obtain one. The downside is that you can only technically sell a stamp once you have divested yourself of the firearm it taxed.
The underlying intent of the NFA act of 1934 was that every time a weapon changed hands, the current owner would roll the $200 tax into the sale price of the gun, eventually pricing them out of most people's reach. $200 was a whole buttload of money back in 1934. While the $200 has become a more or less acceptable cost for a transfer in this day and age, other market forces have exponentially pushed the cost of such guns up, thus for all practical purposes fullfilling the original underlying intent of the 1934 NFA act.

lew1 · 04-08-2010, 06:57 AM

The tax is not deductible per se. It would be added to the basis of the weapon so as to deteremine gain or loss on the sale of the weapon. (If you sell it and make a profit, the government expects its share.)

Daddydogg · 04-08-2010, 11:52 PM

Thanks to all who responded with the answer!

DavidJayUden · 04-09-2010, 07:30 AM

In 25 years of full auto dabblings, I have never actually received a "Stamp", only the BATF forms that show that the transfer has gone thru making it all legit. Why do some buyers get a cute little stamp and I do not? Am I not sending the right kind of flowers to the BATF? Now my day is ruined...
dju

alanint · 04-09-2010, 09:19 AM

I assume you have a class 3 dealer's license? ALL form 4s, (transfers to individuals) have the stamps affixed to them.

alvin · 04-09-2010, 09:37 AM

Since the price of pre-1968 fully transferrable machine guns are so high, I heard one workaround being getting a "dealer license", the purpose is not to act as a middleman but with dealer license people can play those post-1968 guns at ligher financial burden. Not particularly attractive to me because of tough state law, but curiously, is it hard to get a machine gun dealer license at federal level??

DavidJayUden · 04-09-2010, 10:10 AM

Not much harder than getting an FFL. But when I did it, in the 1980's it was $200/yr, then it jumped to $500/yr. so I bailed. I did go thru the individual purchase of a Maxim gun a few years ago, and still no pretty stamp.
dju

alanint · 04-09-2010, 10:32 AM

The law clearly stipulates penalties for anybody adopting a license to "enhance a personal collection" versus conducting legitimate business.
Unlike David's experience going back some years, even obtaining an FFL is no longer as easy as it used to be. About 10+ years ago the Feds purged something like 1/4 MILLION FFLs, who were "doing business" out of their garages or homes, mainly buying guns for themselves and their friends, or selling guns for 10% over cost. Today a commertially zoned property and building are usually required, along with insurance and security arrangements and visible, ongoing business being evident. The SOT is $500 additional to the FFL, which is usually not a problem for someone actively buying and selling NFA items regularly at today's prices.

lew1 · 04-09-2010, 11:16 PM

Quote:

Originally Posted by DavidJayUden

In 25 years of full auto dabblings, I have never actually received a "Stamp", only the BATF forms that show that the transfer has gone thru making it all legit. Why do some buyers get a cute little stamp and I do not? Am I not sending the right kind of flowers to the BATF? Now my day is ruined...
dju

Cookies should also be sent.

alvin · 04-11-2010, 07:31 PM

Since we are in the full auto topic, there is one even though I cannot get, but definitely eye catching. This is supposed to be pre-1968 registered.

Link: Nazi's ZB-26 Light Machine Gun, Minty

alanint · 04-11-2010, 09:23 PM

There are many ZB-26s in the registry. An excellent light machine gun from which the British BREN was derived..

04-07-2010, 07:22 PM	#1
Daddydogg User Join Date: Apr 2007 Location: Washington State Posts: 69 Thanks: 35 Thanked 11 Times in 9 Posts	Is a BATF Tax Stamp, Tax Deductable? Well I hope there is someone knowlegable enough on U.S. Federal Income Tax Law to answer the question. Is the Bureau of Alcohol Tobacco and Firearms $200.00 tax stamp for class 3 items tax deductable? Noboby I have talked to seems to know but it always results in "That's a good question". I 'm hoping that somebody here can give me a good answer. CPA's, feel free to comment one way or the other. Thanks. Daddydogg

04-08-2010, 06:41 AM	#4
alanint User Join Date: Mar 2008 Location: Marco Island, Florida Posts: 4,867 Thanks: 1,685 Thanked 1,917 Times in 1,193 Posts	The stamp itself is rare enough in its circulation that stamp collectors will often pay up to its face value to obtain one. The downside is that you can only technically sell a stamp once you have divested yourself of the firearm it taxed. The underlying intent of the NFA act of 1934 was that every time a weapon changed hands, the current owner would roll the $200 tax into the sale price of the gun, eventually pricing them out of most people's reach. $200 was a whole buttload of money back in 1934. While the $200 has become a more or less acceptable cost for a transfer in this day and age, other market forces have exponentially pushed the cost of such guns up, thus for all practical purposes fullfilling the original underlying intent of the 1934 NFA act. Last edited by alanint; 04-08-2010 at 09:25 AM.

04-08-2010, 06:57 AM	#5
lew1 Lifer Lifetime Forum Patron Join Date: Aug 2002 Location: Kentucky Posts: 1,108 Thanks: 82 Thanked 204 Times in 112 Posts	The tax is not deductible per se. It would be added to the basis of the weapon so as to deteremine gain or loss on the sale of the weapon. (If you sell it and make a profit, the government expects its share.) __________________ charlie

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04-07-2010, 10:47 PM	#2
azlaw User Join Date: Mar 2007 Location: Tucson, AZ Posts: 207 Thanks: 1 Thanked 4 Times in 4 Posts	Funny you should ask. The answer is "probably not, but depends". Per IRC section 164(a): "... any tax ... which is paid or accrued by the taxpayer in connection with an acquisition... of property shall be treated as part of the cost of the acquired property..." In other words, the tax is part of the price of the gun from a taxation standpoint, so deduction from income is only permitted if the purchase itself is deductable - possible, but not bloody likely. H P.S. The above is not tax advice, consult a licensed tax attorney or CPA for actual tax advice - blah, blah, blah...

04-07-2010, 11:42 PM	#3
DavidJayUden Patron LugerForum Patron Join Date: Nov 2008 Posts: 4,047 Thanks: 578 Thanked 1,414 Times in 887 Posts	I can not imagine why the tax stamp would be deductable, unless the gun was a tool for work and considered a legit work expense, or the gun was inventory for sale at a gun shop, etc. Then all expenses acquiring it would be deductable. Too many hours sitting with the accountant it would seem... dju

04-08-2010, 11:52 PM	#6
Daddydogg User Join Date: Apr 2007 Location: Washington State Posts: 69 Thanks: 35 Thanked 11 Times in 9 Posts	Thanks to all who responded with the answer!

04-09-2010, 07:30 AM	#7
DavidJayUden Patron LugerForum Patron Join Date: Nov 2008 Posts: 4,047 Thanks: 578 Thanked 1,414 Times in 887 Posts	In 25 years of full auto dabblings, I have never actually received a "Stamp", only the BATF forms that show that the transfer has gone thru making it all legit. Why do some buyers get a cute little stamp and I do not? Am I not sending the right kind of flowers to the BATF? Now my day is ruined... dju

04-09-2010, 09:19 AM	#8
alanint User Join Date: Mar 2008 Location: Marco Island, Florida Posts: 4,867 Thanks: 1,685 Thanked 1,917 Times in 1,193 Posts	I assume you have a class 3 dealer's license? ALL form 4s, (transfers to individuals) have the stamps affixed to them.

04-09-2010, 09:37 AM	#9
alvin User Join Date: Jul 2007 Location: US Posts: 3,843 Thanks: 132 Thanked 729 Times in 438 Posts	Since the price of pre-1968 fully transferrable machine guns are so high, I heard one workaround being getting a "dealer license", the purpose is not to act as a middleman but with dealer license people can play those post-1968 guns at ligher financial burden. Not particularly attractive to me because of tough state law, but curiously, is it hard to get a machine gun dealer license at federal level??

04-09-2010, 10:10 AM	#10
DavidJayUden Patron LugerForum Patron Join Date: Nov 2008 Posts: 4,047 Thanks: 578 Thanked 1,414 Times in 887 Posts	Not much harder than getting an FFL. But when I did it, in the 1980's it was $200/yr, then it jumped to $500/yr. so I bailed. I did go thru the individual purchase of a Maxim gun a few years ago, and still no pretty stamp. dju

04-09-2010, 10:32 AM	#11
alanint User Join Date: Mar 2008 Location: Marco Island, Florida Posts: 4,867 Thanks: 1,685 Thanked 1,917 Times in 1,193 Posts	The law clearly stipulates penalties for anybody adopting a license to "enhance a personal collection" versus conducting legitimate business. Unlike David's experience going back some years, even obtaining an FFL is no longer as easy as it used to be. About 10+ years ago the Feds purged something like 1/4 MILLION FFLs, who were "doing business" out of their garages or homes, mainly buying guns for themselves and their friends, or selling guns for 10% over cost. Today a commertially zoned property and building are usually required, along with insurance and security arrangements and visible, ongoing business being evident. The SOT is $500 additional to the FFL, which is usually not a problem for someone actively buying and selling NFA items regularly at today's prices.

04-11-2010, 07:31 PM	#13
alvin User Join Date: Jul 2007 Location: US Posts: 3,843 Thanks: 132 Thanked 729 Times in 438 Posts	Since we are in the full auto topic, there is one even though I cannot get, but definitely eye catching. This is supposed to be pre-1968 registered. Link: Nazi's ZB-26 Light Machine Gun, Minty

04-11-2010, 09:23 PM	#14
alanint User Join Date: Mar 2008 Location: Marco Island, Florida Posts: 4,867 Thanks: 1,685 Thanked 1,917 Times in 1,193 Posts	There are many ZB-26s in the registry. An excellent light machine gun from which the British BREN was derived..