You can sell at a loss to reduce your tax exposure if you’re what the IRS deems a dealer. That means simply actively buying and selling. You’re then taxed at ordinary income rates that can be deducted with losses and expenses like a business.
A one time sale falls under the capital gains threshold, a 28% tax on collectibles. This cannot be diversified out of or reduced with expenses.
I go more in depth on this topic in my previous post!
That's very interesting. Are there any hard and fast rules that qualify a dealer from a normy? Maybe this deserves a full Q&A collaboration? Up for it Drew?
So helpful to understand this! How about selling for a loss, would that lead to a capital loss and are there any important factors to keep in mind?
Great question!
You can sell at a loss to reduce your tax exposure if you’re what the IRS deems a dealer. That means simply actively buying and selling. You’re then taxed at ordinary income rates that can be deducted with losses and expenses like a business.
A one time sale falls under the capital gains threshold, a 28% tax on collectibles. This cannot be diversified out of or reduced with expenses.
I go more in depth on this topic in my previous post!
https://drewscottrevwealth.substack.com/p/capital-gains-vs-collectibles-tax?r=7w0r47&utm_medium=ios
That's very interesting. Are there any hard and fast rules that qualify a dealer from a normy? Maybe this deserves a full Q&A collaboration? Up for it Drew?
Sounds like a great idea!