Inherited collection of knives - laws/taxes on sale?

DO NOT take tax advice here!!! Plenty of smart people here, but they aren't tax experts in your local. And neither am I!
Check with tax professionals in your own city, state, and or country.

Just from what you have said, any number of things could be in play, depending on the laws where you live.
For instance, since you inherited these knives. You may or may not have to pay an inheritance tax. Could be you do, but only if the inheritance is over a certain amount. Or maybe you already did because enough cash was available and was withheld from you to cover all your inheritance taxes. Or maybe you have to pay it at the end of the tax year. Or maybe your inheritance was small enough that the gov't. says no taxes are due.

Having to collect and pay sales tax, normally in the US, if you are not a business, you don't collect and pay sales tax on used items you sell. If for no other reason than you are not set up as a retail business and don't have the reseller's numbers required. If you are in Europe and dealing with VAT, I haven't a clue but would have to believe a similar requirement is in place. But governments are going to do what ever they want, so you may be required to collect and then report and pay VAT for everything you sell even as used. Though I fail to see where the "value added" comes into play by selling old used property.

Guys have recommended selling here, and that is certainly a great way to liquidate your stock and get decent prices. But that may or may not solve your tax issues. Could be you have to collect VAT! But maybe not for any items sold to foreign buyers. Or maybe charge tax only to foreign buyers.

Get the correct answers from experts in your own jurisdiction.

Or just say to H*** with them, and ignore it figuring you'll deal with it if and when they come knocking on your door. :cool: It's all good.
 
I am an attorney with experience in estate administration.

There are tax consequences to being in a business, as has been referenced earlier in this thread. There are also potential capital gains tax considerations to keep in mind. If property is inherited upon a death, the person who inherits gets a stepped up basis in the things inherited. What this means is if the decedent bought something for $10.00, and it had a fair market value as of the date of death of $100.00, then the person who inherits has a basis of $100.00. $90.00 of appreciation escapes capital gains tax. If the person who inherits later sell the property for $150.00, he or she has a capital gain of $50.00, the difference between basis and sale price.

Capital gains applies in transactions by living person. Buy a knife for $10.00 and sell it for $100.00, have an obligation to report $90.00 of capital gain. The capital gains tax rate, for federal tax purposes, depends on the tax rate for ordinary income. Some persons end up paying no capital gains. States have different rules.

The IRS website has publications on capital gains and basis, as well as information in question and answer format.
 
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