When selling to a Gray / tax situation ?

[Frank McKay]

Apologies in advance if this is a dumb question as I’ve never sold to a Gray before. I have a TT DJ41 that is not getting much wrist time and I’d like to sell it. Hypothetically if I’m offered 7.5k, am I obligated to pay tax on that amount or keep the whole dollar amount. Thx

[Mifune]

there are always capital gains on assets with realized gains... whether or not the IRS fins out is up to the buyer...

[Frank McKay]

Originally Posted by Mifune

there are always capital gains on assets with realized gains... whether or not the IRS fins out is up to the buyer...

Capital gains? I wouldn’t be gaining anything Lol. I assume the buyer would have to pay tax on his purchase as well if it’s decided that they will report purchase to the IRS.

[Mifune]

you're selling at a loss... then no gains.
a watch is like a piece of art or real estate or crypto

[airchitect]

You are not a store. You do not collect tax. However, in theory, if you sold a Daytona for 40k you’re “supposed” to pay tax on the 26.5k profit.


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[garyk]

Interesting question. If you make a profit on something in the US, you pay capital gains, right? No idea…

[calebb90]

Originally Posted by garyk

Interesting question. If you make a profit on something in the US, you pay capital gains, right? No idea…

If you owned less than a year and make a profit, you pay regular income tax rate. Post 1 year of ownership, profits taxed as capital gains. The dealer won’t take the taxes, you’d have to declare on tax forms at the end of the year.

If you trade towards something else, the price of your trade is deducted and you only pay sales tax on the remaining balance. I.e. you’re offered 7.5k trade value for your watch and purchasing another 10k watch, you’d only pay sales tax on 2.5k.


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[garyk]

Originally Posted by calebb90

If you owned less than a year and make a profit, you pay regular income tax rate. Post 1 year of ownership, profits taxed as capital gains. The dealer won’t take the taxes, you’d have to declare on tax forms at the end of the year.

If you trade towards something else, the price of your trade is deducted and you only pay sales tax on the remaining balance. I.e. you’re offered 7.5k trade value for your watch and purchasing another 10k watch, you’d only pay sales tax on 2.5k.


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Sounds right. I’ve never contemplated such a buy sell situation for watches so I had no idea. Thanks for the info!

[dannyp]

Originally Posted by calebb90

If you owned less than a year and make a profit, you pay regular income tax rate. Post 1 year of ownership, profits taxed as capital gains. The dealer won’t take the taxes, you’d have to declare on tax forms at the end of the year.

If you trade towards something else, the price of your trade is deducted and you only pay sales tax on the remaining balance. I.e. you’re offered 7.5k trade value for your watch and purchasing another 10k watch, you’d only pay sales tax on 2.5k.


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Just to clarify, you're talking about two different taxes here: income/capital gains tax and sales tax.

Income or capital gains tax would be paid on the proceeds (profits) of any sale. Buy a watch for $9,000, sell it six months later for $15,000, pay income tax on $6,000.

Sales tax is paid on the purchase of a new watch. Buy a $9,000 watch, pay sales tax on a $9,000 purchase.

In either situation, a trade-in offsets the tax liability:

Income/cap gains tax: Dealer offers $15,000 for a watch you paid $9,000 for, decide to instead take a $12,000 watch and $3,000 cash, pay income tax on $3,000 instead of $6,000.

Sales tax: Dealer offers $15,000 for the watch you paid $9,000 for, you put it towards a $20,000 watch, sales tax is paid on the $5,000 difference you pay in cash.

[calebb90]

Originally Posted by garyk

Sounds right. I’ve never contemplated such a buy sell situation for watches so I had no idea. Thanks for the info!

Crappy “asset” because technically you’re taxed on profit but cannot write off losses. Which is why I never view watches as investments.

My guess is 90%+ of flippers don’t report.


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[garyk]

Originally Posted by calebb90

Crappy “asset” because technically you’re taxed on profit but cannot write off losses. Which is why I never view watches as investments.

My guess is 90%+ of flippers don’t report.


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Correct, lots cash changing hands…

[fskywalker]

Originally Posted by calebb90

Crappy “asset” because technically you’re taxed on profit but cannot write off losses. Which is why I never view watches as investments.

My guess is 90%+ of flippers don’t report.


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[franklee168]

Let me get this straight. I pay state tax, federal tax, sales tax, property tax, wife tax, child tax, tax on tax. Now if I sell my watches I have to pay more taxes? GTFO. I'll keep them. Thank you very much.

[doboy007]

Originally Posted by franklee168

Let me get this straight. I pay state tax, federal tax, sales tax, property tax, wife tax, child tax, tax on tax. Now if I sell my watches I have to pay more taxes? GTFO. I'll keep them. Thank you very much.

They just tax you up the

[Frank McKay]

Originally Posted by franklee168

Let me get this straight. I pay state tax, federal tax, sales tax, property tax, wife tax, child tax, tax on tax. Now if I sell my watches I have to pay more taxes? GTFO. I'll keep them. Thank you very much.

Exactly it’s insane.

[rvanno]

Simple, don't worry about it. No one will ever know unless you start blabbing about it on the internet. The government takes enough already.

[donas]

Just guessing here, taxes on sold watches don't get paid often

[Eyenigma]

Call me crazy, but I would try to sell it for green cash. Most grey market dealers are swimming in it to buy and sell inventory. No smart dealer is going to charge tax. No smart seller is going to pay it. There's always grey areas to obfuscate it. *no pun intended.

[MILGAUSS88]

Originally Posted by Frank McKay

Capital gains? I wouldn’t be gaining anything Lol. I assume the buyer would have to pay tax on his purchase as well if it’s decided that they will report purchase to the IRS.

That would be sales tax, that is collected on a state level, not federal.
And any serious dealer would have a retail tax number that exempts them from paying sales taxes on items purchased for resale.

[ArtNouveau]

I have never paid income tax on an object I have sold in my life. I can’t imagine that many people do.
(Obviously this does not apply to property sales, or investments that result in capital gains)

[crew]

Originally Posted by MILGAUSS88

That would be sales tax, that is collected on a state level, not federal.
And any serious dealer would have a retail tax number that exempts them from paying sales taxes on items purchased for resale.

Thank you.

[beshannon]

https://www.rolexforums.com/showthread.php?t=817101

[crew]

Originally Posted by beshannon

https://www.rolexforums.com/showthread.php?t=817101

Interesting. Perhaps OP is hoping for a different answer over here?

[brandrea]

The real question is can you claim that loss?

[Boirefish]

Originally Posted by Frank McKay

Apologies in advance if this is a dumb question as I’ve never sold to a Gray before. I have a TT DJ41 that is not getting much wrist time and I’d like to sell it. Hypothetically if I’m offered 7.5k, am I obligated to pay tax on that amount or keep the whole dollar amount. Thx

Depends on whether it was a profit or a loss. If profit then yes, if loss and you were treating it as an investment technically you could claim capital loss, but if you get audited, be prepared to show all the evidence like receipts and personal/company bank account under which it was bought

[Andad]

Think about your question Frank.

[minute_man]

I am not familiar with the tax system in the US but in the EU, proceeds from the sale by an individual of her / his private property are not considered income and therefore exempted from taxation. Which makes perfect sense.
You can sell your house, your car, your watch and never have to pay tax even if you sold at a profit.

[Blansky]

Since I'm not a billionaire, I'm always afraid of the IRS.

That's I guess why everything I sell seems to be at a loss.

Crazy like a fox, eh..............eh????????

[Devildog]

Originally Posted by Frank McKay

When selling a Rolex to a Gray. Is your return on the watch taxed?
Apologies in advance if this is a dumb question as I’ve never sold to a Gray before. I have a TT DJ41 that is not getting much wrist time and I’d like to sell it. Hypothetically if I’m offered 7.5k, am I obligated to pay tax on that amount or are the funds retained in their entirety. Thx

What did you pay for it?

In the UK you'd be taxed on the gain only, not the whole amount and I'd imagine its the same in the USA.

[rick lee]

I would think a grey flipper, unless he has a business license, business insurance and/or brick and mortar location, wouldn't declare anything. If you buy through eBay or Chrono24, they will tack on sales tax, but they don't know your basis in anything you sell.