Let's see.Sold for $4.2million.Less 8% seller commission of $336,000.Now you have to figure tax on the capital gain from the profit of $4,199,999.One of my model buddies makes most of his income now from selling things and he says the tax rate on the gains is 40 percent.So old Georgie's gonna net something less than $2 million.
Capital gains is actually 28% for collectible items, but you bring up an interesting point. Here's how taxes differ for collectors. investors and dealers of collectible cars:
"In terms of tax treatments, the distinction between collectors, investors and dealers is of great importance. Between collectors and investors, the tax rule is generally more favorable to the investors. Whereas, being a vehicle dealer may create unique tax advantages...The tax rate on long-term (collection held for more than one year) collectible capital gain is 28%, whether you are a collector or investor."
Moral: If you want to collect and sell valuable cars, be a dealer for bigger tax breaks. A lot of cars pass through the Barris shop, and I would guess he's smart enough to have dealer status, as well as having accountants to work all the tax advantages. If not, he's probably crying all the way to the bank.
Edited by sjordan2, 21 January 2013 - 07:27 AM.