# Capital gains and stamp collection



## mutzy (Jul 26, 2010)

I will inherit a valuable collection from my father who is in his 90's and has been collecting stamps since the
early 50's. I would guess book value around 60 to 65 thousand; auction value in the 30 to 40 range.
How am I going to come up with the ACB. (may be by the pound, the stamp albums have to weigh 300 lbs.)


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## leoc2 (Dec 28, 2010)

How about selling each stamp individually. As long as you sell a stamp for under $1000 you won't pay tax. 

From: 
http://www.taxtips.ca/filing/capitalgain.htm

A capital gain or loss is the gain or loss resulting from the sale of a capital asset, such as stocks, bonds, art, stamp collections, and real estate. Some assets are considered personal-use property, such as cottages, cars, boats, and furniture (unless these are business assets). Some personal-use property is considered listed personal property (LPP), such as works of art, and stamp collections. The gains and losses for personal-use property and LPP are calculated separately from gains and losses on other capital assets. See our articles on Listed Personal Property and Personal-use Property for more information.

From:
http://www.taxtips.ca/glossary.htm#ListedPersonalProperty

If you have LPP which you purchased for more than $1,000, and you sell the property for more than you paid, you will have a capital gain to report on your tax return. The deemed cost of LPP purchased for less than $1,000 is $1,000. If you have LPP which you purchased for $800, and you sell the property for $1,300, your capital gain will be $300.


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## humble_pie (Jun 7, 2009)

i believe that any gains to declare would be part of the father's estate, which has not yet come into existence since, happily, he is still alive.

in a simplistic mode, the collection would be appraised at the time of the father's passing. It is the estate that would then pay any capital gains owing.

however, as leo2 points out, there is still time for many options to be explored. One is to sell the stamps one or a few at a time, so that the proceeds will always be less than $1k, as leo suggests.

another option would be to donate some or all of the stamps, in return for a charitable gift receipt that could benefit your father's estate. An advantage of this is that a proper evaluation of the collection would have to be made.

with a partial donation, perhaps the valuable stamps could be donated, while the rest of the collection could be given to you as an affectionate memoir of your dad, while your dad is still alive. Of course, it might turn out that a few valuable stamps could happen to find themselves in the "no-value-affectionate-memoir" category that would be given to you in outright ownership ...

what with one possibility & another, there are plenty of creative opportunities here! plenty to keep your dad happily entertained throughout his nifty 90s!


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## MoneyGal (Apr 24, 2009)

Useful link on the taxation of listed personal property; addresses stamp collections specifically:

http://www.thebluntbeancounter.com/2011/03/personal-use-property-taxable-even-if.html

My only other contribution would be to note that a collection will typically sell at auction for 10-20% of the appraised price. The values assigned in stamp catalogues are usually extremely optimistic. You may not have as much of a gain as you expect, and be very careful about using stamp catalog values to assess the value of this collection for estate purposes. In your shoes, I'd discount the Scott value by 80% to arrive at a possible FMV.

Editing to say "Scott" = Scott Standard Postage Stamp Catalogue


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## MoneyGal (Apr 24, 2009)

humble_pie said:


> i believe that any gains to declare would be part of the father's estate, which has not yet come into existence since, happily, he is still alive.
> 
> in a simplistic mode, the collection would be appraised at the time of the father's passing. * It is the estate that would then pay any capital gains owing.*
> 
> ...


Yabbut what is the value at which the OP is acquiring the collection, and upon which he/she will pay gains, assuming no LPP treatment (i.e., selling stamps individually)?


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## humble_pie (Jun 7, 2009)

under any scenario, OP would have no capital gains to report until such time - far off in the future - when he might dispose of the stamp collection that he had inherited from his father.

if the stamp collection is still an asset in dad's hands at the time of his passing, then the executor is responsible for preparing a year-of-death tax return; this is where any capital gains for dad upon the stamp collection should be reported. In this scenario, the value of the collection in this income tax declaration becomes the cost base for the heir to whom the collection is bequeathed.

however, there is a creative scenario in which no capital gains tax would be reported by anybody, ever. Entirely legal. Elements of the creative scenario - small individual sales + donation - have already been spelled out upthread.

the real benefits of the creative scenario imho are the fun & frolics for dad in his lifetime, since disposition of the stamps would get underway during his lifetime. Would dad not enjoy seeing his beloved & passionate hobby find good homes? after all, he can't take the collection with him ...


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## MoneyGal (Apr 24, 2009)

I understand how estate taxation works; my point was (intended to be) that saying "the executor is responsible for determining FMV!" isn't that helpful. It's likely the OP is the executor in any case. 

Another option would be for dad to gift the collection to the OP while he is living, then the OP can do as he/she pleases - including selling stamps individually under the auspices of the LPP provisions, or donating to a philately society (there are lots of those around). In any case FMV needs to be determined to set the ACB for the OP. 

Note that selling individual stamps under the LPP provisions of the ITA is considered by CRA to be allowable if the stamps are not related. If the stamps are related, they are deemed to be part of a "set" and the set is treated as one item for LPP purposes.


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## humble_pie (Jun 7, 2009)

MoneyGal said:


> y point was (intended to be) that saying "the executor is responsible for determining FMV!" isn't that helpful. It's likely the OP is the executor in any case


sure it's helpful. The minute a donation to a proper museum is involved, a reliable appraiser has to be involved. 

of course i saw that the OP is likely to be the executor. Do u think that exempts him from having to make an inventory of the estate's contents including their value? or exempts him from having to file a year-of-death income tax declaration? if any of the valuable stamps are still in dad's possession at that time = appraiser.


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## MoneyGal (Apr 24, 2009)

Humble, I think we are talking at cross-purposes. 

I have a reasonable amount of experience with this exact scenario. 

The OP will be very hard-pressed to find a museum willing to accept the donation and issue a receipt. (Of course I have no idea what the collection actually consists of.) 

Additionally, typically most amateur stamp collections are essentially worthless, as difficult as this may be to imagine. Stamps mounted in albums are worth only a very tiny fraction of the catalog price given for a stamp; the process of mounting with a hinge destroys a significant amount of value. Even a mint stamp mounted in an album will be worth perhaps 50% of the unmounted price.


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## alingva (Aug 17, 2013)

Do not sell the collection. Pass it to your kids.


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## mutzy (Jul 26, 2010)

Pretty hard to find unhinged stamps from the 18 and early 1900's, but he has some. My kids have informed me that the only
interest they have in the stamps is the cash. In fact being thoughtful and generous kids they passed me their boxes and boxes
of baseball and hockey cards.
I forgot to say thanks for all the informative posts.


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## uptoolate (Oct 9, 2011)

Today their interest may be just the cash. But time has a way of changing priorities. In thirty years, something that touched their grandfather's hands and was a passion quite possibly could be, how do they put it? Priceless. Personally, I'd put the stamps away somewhere nice and safe and dry along with the baseball and hockey cards. My 2 cent stamp's worth...


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## mutzy (Jul 26, 2010)

From one long suffering Leaf fan to another that is most likely what will happen.


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## fatcat (Nov 11, 2009)

MoneyGal said:


> Useful link on the taxation of listed personal property; addresses stamp collections specifically:
> 
> http://www.thebluntbeancounter.com/2011/03/personal-use-property-taxable-even-if.html
> 
> ...


gal is correct here ... i am a collector presently selling my collection ... people who find or are left a stamp collection and who know nothing about stamps, will, 95% of the time, overestimate the value ... stamp collections are hard to value unless you are talking about about rare and highly collectable stamps and sets ...

most people have large collections consisting of albums and envelopes and stock books and so on, and most of the time unless they are very wealthy, it will consist of common material which is hard to value

all kinds of people travel around the country and buy and appraise collections, they will take a collections and essentially page through it and are very good at spotting value pretty quickly

for common material you are going to be offered 5-10% of catalogue price

pie is right, the value gets fixed in dad's probate and that becomes the cost basis and the basis for estate tax and capital gains (which is often zero because, aside from the fact that in the case of common material, people don't usually keep records of their purchases, like most collectibles, _people spend far more money to assemble the collection_ than it is worth being sold as a single lot (they buy at retail and then sell the collection at wholesale) ...

exceptions being well known, rare, and highly collectible stamps and some collections, like bill gross's for example ...

dad should either just give the stamps to the kids now and avoid probate or just let normal probate take place, the executor can get 2 or 3 potential buyers to come and look at the collection and make an offer

as i say, it is almost a universal law that collections are worth far less than the inheritors think they are worth and even the owners think they are worth ...

potential buyers never share the great passion and fun that went in to the creation of the collection in the first place and they are not willing to pay for it


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## humble_pie (Jun 7, 2009)

fatcat said:


> dad should either just give the stamps to the kids now and avoid probate or just let normal probate take place, the executor can get 2 or 3 potential buyers to come and look at the collection and make an offer
> 
> as i say, it is almost a universal law that collections are worth far less than the inheritors think they are worth and even the owners think they are worth ...
> 
> potential buyers never share the great passion and fun that went in to the creation of the collection in the first place and they are not willing to pay for it



thankx fatcat for a nice way of explaining to dear old dad that his pride & joy may not inspire others

the appealing part of the story was how much fun grampaw must have had over most of his life. As uptoolate says, perhaps the OP's children (the grandchildren) will, in time, come to cherish their grandfather's passionate hobby. 

re "collectibles" in general, many types surely must turn out to have little value.

a fairly decent one: sterling silver. Old objects don't break. Scars & usage add valuable patina. Looks great on tables (serving dishes, platters, ice buckets, candlesticks). More or less retains its value (never buy silver items new, though). Individual items can still be found for modest prices. Plus offers possibility of higher future value, especially if one can manage to find 18th century pieces. Be sure to identify sterling, not plate, which might look nice but has no value.


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