When most people think of investing they think of stocks and other more traditional investments Wayne Gretzky however decided to do some alternative investing. According to a video on AOL today he bought a Honus Wagner T206 card from 1909 for $451,000 from a Sotheby's auction that he called an investment. His father called him an idiot. The investment turned out like Gretzky's career to be a great one. The card thought to be the holy grail of baseball cards as there are just about 60 in existence then sold in 2007 for $2.8 Million dollars. He made a 520% gain on the investment.
The card although one in bad shape was recently in the news as well recently when a card that a nun had inherited from her brother and she sold it along with other Catholic nuns Sisters of Notre dame to pay for charitable operations.
$220,000 was received for the card after the payment to the auction house despite it being in terrible shape and with virtually any other card could not have been sold but it sort of proved that as with any investment it is a matter of supply and demand.
The nun who inherited the Honus Wagner card from her brother would have received a steped up basis in it so for income tax or capital gains purposes its value would be that of date of death and not what it cost her brother. Since she gave it to a charitable organization who sold the card and used for charitable purpose she likely would receive a charitable tax deduction for income tax purposes and also not have to any income tax if the value had gone up from his date of death value.
The tax treatment of collectibles is that short-term gains are taxed at the same rate as your regular income. Long-term capital gains have two rates: If you're in the 15 percent tax bracket you pay 15 percent; if you're in a higher bracket, you pay 28 percent.
The value of the card is judged just as any other item of property would be what a willing buyer would pay a willing seller but having knowledge of all relevent facts and neither being under compulsion to buy or to sell.
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