Tax Rate on Capital Gains on Wine Sales?

If someone sells wines at auction, what is the tax rate on those gains? From what I see on the internet 28% seems to apply to collectables. CPAs out there, some reference articles, opinions? Thanks.

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Le6qeMe7-vM

My records always seem to show I only broke even, so the actual rate doesn’t matter.

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nice try, narc


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Yes, 28% for collectibles, unless you’re in a lower tax bracket for ordinary income, in which case I believe it’s that lower rate.

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The federal tax rate on capital gains is either 15% or 20%, depending on hour other income. Sone states also impose an additional tax. Not sure if wine is a capital asset.
Phil Jones

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The IRS says this about capital assets:

Capital Assets

_Almost everything you own and use for personal purposes, pleasure, or investment is a capital asset. For exceptions, see Noncapital Assets, later.
The following items are examples of capital assets.

  • Stocks and bonds.
  • A home owned and occupied by you and your family.
  • Household furnishings.
  • A car used for pleasure or commuting.
  • Coin or stamp collections.
  • Gems and jewelry.
  • Gold, silver, and other metals.
  • Timber grown on your home property or investment property, even if you make casual sales of the timber._
    So I guess after you pay your taxes, plus the premium, you may want to reconsider selling.
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Normally, for an individual, the maximum rate would be 28% (the rate would be lower if your taxable income is low enough to put you in the 15% tax bracket for ordinary income).

Wine will be a capital asset under IRC § 1221 unless it is inventory or supplies, i.e., unless you are in a trade or business of selling wine or you are using the wine in a trade or business (e.g., you purchased the wine for business entertainment).

However, alcoholic beverages are also defined as a “collectible” under IRC § 408(m), and gains from the sale of collectibles that are capital assets are taxed at a maximum rate of 28% (rather than the 15%/20% maximums that apply to sales of most other types of capital assets).

ETA: The maximum rate of 28% applies only to assets held for more than one year. Sales of capital assets held for a year or less generate short-term capital gain which is taxed at the same rates as ordinary income.

– Matt

I believe you’re correct.

For an individual, gain on sale of wine is a capital gain, but collectibles (art, wine, coins, etc) have their own rates within capital gains rates.

I once set up a poll, which showed that 28-30% of WBers were lawyers. Looks like the rate of accountants is much lower.

Thanks for pointing this out, Matt.

And, it’s also based on whether or not you bought it as an investment. If you can prove another reason (death, divorce, hard times, etc.), you won’t be subject either.

Thanks everyone for the great feed back. So wine is a collectible and for people in a high tax bracket, 28% is the rate gains are taxed at. Sale of a non collectible (a capital asset), if there was a capital gain it would be taxed like any other income. Correct?

Ignore the bad advice from the men behind the curtain. As every good lawyer knows, the answer is, “it depends.”

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Just sell some of your Napa 2011 cabs and use the loss to cover the gains from your other sale. how tough is that?

Now there’s room in the cellar for more wines you REALLY like! champagne.gif

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You make the faulty assumption that all accountants are tax accountants. Just because you passed the reg section of the cpa exam 20 years ago does not mean you retained he ability to actually do taxes or remember fairly specialized tax regs

Generally exempt from cgt in the UK as chattels. Generally.

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Accountant humor is too dry for me.
Do we have any jokes about how capital gains are not indexed for inflation?

P Hickner

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I usually just offset any “capital gains” by my “capital losses” on consumed bottles. Lol. champagne.gif

If I ever did actually sell a bottle, I’d be hard pressed to disclose it… I have to assume most people are in the same boat.