Trading card collection

So my brother had a collection of “Magic the Gathering” playing/trading cards. (think baseball cards for nerds). So after he died my sister-in-law decides to sell them (my brother said they were part of his retirement plan, we all laughed). There was a total of ~4000 cards and she sold them in large lots to a dealer for a total of ~$100,000 (he’s laughing now). The bulk 95% plus sold for less than $100, most of the rest fetched in the several hundreds of dollars and 10-12 going into thousands of dollars, the top seller was ~$5,000. Top cost on the collection would be around $10K give or take. I will have a detailed list of the sales by individual card.

I am thinking most of the sales can fall under the $1,000 ACB rule for PUP and will only need to report a gain on the cards that sold for more than $1,000.

Wondering on other thoughts.

Jim Turner

Sorry for your loss. Your brother had an interesting angle on retirement planning.

I would think that if you have the individual ACB and proceeds clearly supported, your approach is quite defendable from a CRA stand point. Certainly look more advantageous to look at it on a card-by-card basis than in bulk.

I would suggest that the collection would be viewed as a “set” rather than on an individual card-by-card basis.

You might want to read the former IT 332R (IIRC) which dealt with PUP that is a colletion and defined it as a “set”…so a single ACB of $1K…not a bunch of individual $1K ACBs.

Jim, I would say your approach is reasonable. Whether or not the collection of trading cards constituted a set is not relevant unless, quoting the Income Tax Act, subsection 46(3), they “would, if {they} were disposed of, ordinarily be disposed of in one disposition as a set”. The nature of trading cards is such that a “complete set” may be exceedingly rare if one even exists, or can be verified to be complete. Almost inevitably, some cards will be more valuable individually than others due to various factors such as rarity, condition, the quality of the original printing (e.g. the image may or may not be printed squarely on the cardstock, or the margins may or may not be even in width), and who-knows-what collectors may consider more or less desirable. Thus I submit that it is arguable that it is not reasonable to value a group of trading cards as a set. The proof if needed is in the facts you described: your sister-in-law “sold them in large lots to a dealer” - not as one set.

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Like the analysis but for one potentially salient piece: the dealer in fact bought all of them for a single amount (or so it appears). The dealer may have priced them by segments for convenience of determining a total value, but still took the lot.

Would be an interesting case. Suspect a lot of “collections” are valued in the same way, be it stamps, coins, jewelry, art etc. Fascinating situation nonetheless.

The situation does not appear to me as it apparently does to you. To say the cards were sold to a dealer (singular) in large lots (plural) for a total of $100K is not the same as to say they were “sold to a dealer for $100K”. The former implies division into groups, whereas the latter implies a bulk sale. However, even a bulk sale does not imply that the items sold would ordinarily be disposed of as a set. Suppose your client was clearing a house and a dealer paid a lump sum - say $10K - for the contents. Would you then treat the contents as a “set” with an ACB of $1,000 and proceeds of $10,000?

Don’t think so - because they are dissimilar articles.

Trading cards are all…cards.

(I’m with you…I’d far rather see them as “individual” sales…I’m just not sure that CRA sees them the same way - if they look at it.)

When I said “lots” I meant that she didn’t take all the cards in at once. She took in a binder or two at a time, had them evaluated and paid then went on to the next bunch. Every single card was examined, graded and priced individually, then the total of the itemized price list was paid. So I believe I can establish the each card was essentially sold individually.

Could it be that if the set is sold as a complete set, it;s a capital gain, but if solid as individual cards it’s a business. I’m thinking it could be similar to selling standing wood in a forest…