Article on Collectible Guns

[Hugo Borchardt]

http://money.cnn.com/2011/05/23/pf/e...tm?iid=Popular

I guess I shouldn't cash in my 401k for more Lugers. :-)

C

[Edward Tinker]

Its the same as all investments, diversify. Lugers AND Colts

Maybe I am just poor, but whenever they talk about having a minimum of 5 million dollars to live off of by the time I retire. That is not very reachable by most of the folks I know....


Ed

[mrerick]

Walter's column parrots Financial Planning 101... the basics of taking diversification and tax impact into consideration when investing. Interesting that he doesn't go into:

- Estate planning implications (what does the wife do with the hated collection if he should pass away first?)
- The cost of insuring the collection
- The cost of storing and protecting the collection

Since he's a fan of IRAs it's also interesting that he doesn't go into:

- The potential for tax rates on IRA withdrawals to be higher than they were when the money was earned.

I think that his $5 Million comment came from working back to what a "safe" $250,000 asset allocation percentage would be from an entire estate.

Marc

[Conny]

An IRA or 401k is taxed. If he sells his collection after retiring, lets say 20 a year, it is tax free income that wouldn't need to be reported. Excluding gun businesses, does anyone here report the money made when a gun is sold?
I can see advantages and disadvantages in his thinking. It is not something I would do. Diversification is the safest way.

[DavidJayUden]

Another consideration is the dreaded "cost basis". Survivors may be asked to document the price paid for each item in order to calculate capital gains/ inheritance taxes upon sale. Or not, as I'm no estate attorney. Might be an interesting lesson if one commented on this thread. After all, no one gets out of here alive.

dju

[Edward Tinker]

I would think everything depends on the value of your estate.

Many people would never get the IRS attention, but those who have been watched for whatever reason or you have a huge collection, then yes, you might be audited or whatever they call it when you're dead.

It also depends on if your family worries and sells, then claims it on their tax forms???

Far better to let me buy your $75k collection before you die for $45k and spend the money or bank the money. Cuz if you wait till you're dead, well, you won't care if your daughter or son sells it for $25k. Not an uncommon occurrence, my favorite story is the family that had a huge collection, they tossed out all the leather and many of the stocks, 'because they were moldy' and the guns were worth hundreds of thousands of dollars and they almost sold all of them for that 25k number above (if memory serves me right)


Ed