taxes payable on sale of heirloom violin in USA

[James]

I live in Austria, am an American citizen, and wish to bring
2 violins to USA to sell. These are inherited instruments
that I have had for about 14 years, and are valued at about
85,000 total US$. Does anyone know what I may have to pay in
either sales tax or income/other taxes either at the sale or
later...also what are the possibilities of just "selling"
them and transferring the money from my US account to
overseas. I'm not sure of many tax laws as you can see, as I
have benn ouot of the country for a long time.

ANy help is appreciated,

Gruß from Österreich, James

 

[Paul A. Thomas]

I live in Austria, am an American citizen, and wish to bring
2 violins to USA to sell. These are inherited instruments
that I have had for about 14 years, and are valued at about
85,000 total US$. Does anyone know what I may have to pay in
either sales tax or income/other taxes either at the sale or
later...also what are the possibilities of just "selling"
them and transferring the money from my US account to
overseas. I'm not sure of many tax laws as you can see, as I
have benn ouot of the country for a long time.

Shouldn't be any sales tax as you aren't "in-the-business"
of selling violins (but check with state laws). Now that
may not exempt the buyer from "use tax" on the purchase.

The capital gain on the sale of a "collectible" was at 28%
(not sure if the new laws changed that rate), and I do
believe that is what you're looking at with a violin (most
likely considered a collectible) unless you personally used
the violins in business.

Is there any state that you currently claim as a "home
state"? and do you file returns there? If so, then the
appropriate state income tax applies to that state, and/or
the state in which the sale takes place.

 

[Drewremedy]

I live in Austria, am an American citizen, and wish to bring

2 violins to USA to sell. These are inherited instruments
that I have had for about 14 years, and are valued at about
85,000 total US$. Does anyone know what I may have to pay in
either sales tax or income/other taxes either at the sale or
later...also what are the possibilities of just "selling"
them and transferring the money from my US account to
overseas. I'm not sure of many tax laws as you can see, as I
have benn ouot of the country for a long time.

As far as I know there are NO taxes for you to bring
inherited personal property into the US.

However I do NOT know how US customs treats the importation
of such personal property for duty purposes I sure as heck
would find out before I carried them in and got picked up.
And while antiques are exempt--the definition needs to be
checked to be sure it applies.

However, your gain upon sale is taxable income. For example
the violins were worth $10,000 when you inherited them years
ago and you sell them now for $85,000 you have $75,000 of
long term gain (at old rates of 20% I think ) Depending upon
where you live, there may be a state tax as well.

In many places the sale of personal property is not taxed as
a sales tax but I think you want to check that out before
you transact a deal in a wrong city or state and get a
whopper--in general the tax is due by the buyer-- If you use
a broker--be careful!

As a practical matter the sale of personal property is
rarely a reported item, but I would not think a $85,000
transaction is to be ignored and US banks track financial
exchanges of over $10,000. And a transfer from ones US
account to ones foreign account is sure to leave trails.

There may be room to be creative but don't be stupid. I'd do
some more homework.

For that kind of money it may pay the buyer to fly over to
inspect. Hint!

Transit insurance at your end may be very costly. Why risk
transporting them?

 

[D. Stussy]

I live in Austria, am an American citizen, and wish to bring
2 violins to USA to sell. These are inherited instruments
that I have had for about 14 years, and are valued at about
85,000 total US$. Does anyone know what I may have to pay in
either sales tax or income/other taxes either at the sale or
later...also what are the possibilities of just "selling"
them and transferring the money from my US account to
overseas. I'm not sure of many tax laws as you can see, as I
have benn ouot of the country for a long time.

Sales tax: Probably zero. These are used items and as long
as you don't qualify as a dealer (defined by my state as
more than 3 "casual sales" in a single year), there won't be
any tax imposed. There may be an excise tax as you bring
them in to the U.S., but that's not a sales tax.

Income tax: You are taxed on your net gain on the sale
(assumed since these things don't reduce in value over
time). You need to know their value 14 years ago when you
came into them.

 

[Dave Woods, EA]

As far as I know there are NO taxes for you to bring
inherited personal property into the US.

However I do NOT know how US customs treats the importation
of such personal property for duty purposes I sure as heck
would find out before I carried them in and got picked up.
And while antiques are exempt--the definition needs to be
checked to be sure it applies.

However, your gain upon sale is taxable income. For example
the violins were worth $10,000 when you inherited them years
ago and you sell them now for $85,000 you have $75,000 of
long term gain (at old rates of 20% I think )
15%.

Depending upon
where you live, there may be a state tax as well.

In many places the sale of personal property is not taxed as
a sales tax but I think you want to check that out before
you transact a deal in a wrong city or state and get a
whopper--in general the tax is due by the buyer-- If you use
a broker--be careful!

As a practical matter the sale of personal property is
rarely a reported item, but I would not think a $85,000
transaction is to be ignored and US banks track financial
exchanges of over $10,000. And a transfer from ones US
account to ones foreign account is sure to leave trails.

They track CASH transfers. I doubt someone is going to
exchange a briefcase of cash for a violin.

--
David M. Woods, EA
Boston, MA 02109

Postings here are general information only and not to be
relied upon as advice.

 

[Arthur L. Rubin]

The capital gain on the sale of a "collectible" was at 28%
(not sure if the new laws changed that rate), and I do
believe that is what you're looking at with a violin (most
likely considered a collectible) unless you personally used
the violins in business.

The law didn't change, but I'm not sure a violin is a
"collectible".

 

[D. Stussy]

Paul A. Thomas wrote:

The law didn't change, but I'm not sure a violin is a
"collectible".

In this case, I would agree that it is NOT. Collectibles
generally only have the "use" of looking at and holding,
while this item has a greater use - as the musical
instrument it is (or they are, since there are two).

 

[Christopher Green]

Paul A. Thomas wrote:

The law didn't change, but I'm not sure a violin is a
"collectible".

In the cases I've seen that are to the point, it depends on
how the instrument is used. In Liddle v. Commissioner and
Simon v. Commissioner (both upheld on appeal), professional
musicians were allowed to depreciate antique instruments
that were appropriate to their standing and clearly used as
tools of their trade. In Browning v. Commissioner, though,
Browning failed to establish that his collection of Strads
was tools of the trade rather than collectibles.

So an antique violin would be a collectible, couldn't be
depreciated, and would be 28% property -- unless it were
clearly a tool of a violinist's trade, and even then the IRS
might challenge and take the matter as far as appeals court.
Liddle's case, which is widely available online, is
instructive.