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Old 03-17-2014, 08:04 PM
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captial gain/loss on a wedding ring

Hello - I plan to sell my wedding ring, but do not know how much my exhusband paid for it. He has since passed away and I have no way to find out the purchase price. It had been appraised for $40k around the time he got it for me. Now, about 7 years later, I would like to sell it. How do I record the sale - profit or loss on my taxes, if I don't know the cost basis for it? It will sell around $25k.

Anything you can offer, will be appreciated. I am eager to find out the answer, because based on the tax ramifications, I would invest in an IRA or keep the money in savings to pay any additional taxes.

Thank you.



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Old 03-17-2014, 09:05 PM
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Location: Huntington Beach, CA
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Your post provides the most important part to the answer you seek.

Your "basis" is the value of the gift at the time the gift was made. I am assuming that you accepted the gift the instant it was given to you and the appraisal, for insurance purposes or whatever, happened within a proximately close time frame, and that precious metals and precious gems, diamonds, or the like, was reasonably stable within that time frame.

By way of example; Your deceased husband gave you the gift on Dec 31 and you accepted it that same day. Then a few months later you had it appraised for $40,000. That becomes your basis.

Please understand that the above is general information and you should seek a qualified tax professional who can research the tax law at the time that the gift was made. This is especially true depending on State law.

Good luck and best wishes,

Ron Fenney
Tax Accountant
Huntington Beach, CA 92649



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Old 03-18-2014, 06:26 PM
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Thank you Ron for responding so quickly. I live in California and although it appears this would be a capital loss which is good news on the one hand, it still feels lousy that something can lose so much value (or I guess, it could have been overpriced...)

Either way, it is very helpful to have your advice.



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Old 03-19-2014, 10:15 AM
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Quote:
Originally Posted by ireperi View Post
Hello - I plan to sell my wedding ring, but do not know how much my exhusband paid for it. He has since passed away and I have no way to find out the purchase price. It had been appraised for $40k around the time he got it for me. Now, about 7 years later, I would like to sell it. How do I record the sale - profit or loss on my taxes, if I don't know the cost basis for it? It will sell around $25k.

Anything you can offer, will be appreciated. I am eager to find out the answer, because based on the tax ramifications, I would invest in an IRA or keep the money in savings to pay any additional taxes.

Thank you.
The tax basis for wedding ring is calculated using the same methodology for both capital and noncapital assets. its basis represents all of the allowable acquisition costs and is used to determine your profit or gain on a subsequent sale. In addition to its actual purchase price, allowable costs include such items as state or local sales taxes and shipping fees or etc. The gain or loss is calculated by subtracting the ring’s tax basis from the gross proceeds of its sale. So, asyou sell property that was used for personal purposes, you have to pay tax on the gain. But if there is a loss, it is considered personal and not deductible.You have to compare the amount you received for the sale of the ring(gold/diamond) to its original cost to determine your taxable gain, if any. For example, if you sold it for $25K and its basis is say $15K your gain is $10K. The sale should be reported on Sch D of Form 1040/the new form 8949.

Gain from the sale of gold/diamond ring is considered collectibles gain and is taxed at a higher rate than conventional long-term capital gains. Collectibles gain is gain or loss from the sale or trade of a work of art, rug, antique, metal (such as gold, silver and platinum bullion), gem, stamp, coin or alcoholic beverage held more than one year. . The maximum tax rate on collectibles gain is 28 percentaslongas your marginal ax rate is 28% or higher than 28%.I guess you need to contact the National Association of Jewelry Appraisers for a qualified appraiser in your cityfor the original cost basis of the ring..



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Old 03-19-2014, 10:21 AM
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as a gift the basis of th ering is its orignal basis aslongas the FMV of the ring , when it was bought and given to you) was HGHER than the cost of the ring; however, if the fmv of the ring was lower than its cost basis when it was purchased , then, its basis is :#1:when you dispose of the ring, if the FMV of the ring is lower than its cost , then, your basis is FMV if you take a loss on sale of the ring; however, if you sell it in gain ,I mean FMV> original basis, then its basis'd be its orgnal basis, NOT FMV.



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