When I was a kid, my grandfather gave me some collectible items, which at the time were worthless.

Many years later, this stuff is actually worth a few thousand dollars. If I sell this stuff on eBay, what would my tax liability be?

I know beyond a certain amount, eBay reports you to the IRS so I would assume I'd have to pay tax. The question is, how do I calculate the cost basis?

These items were worth close to nothing when given to me, but they were more of a gift at the time and not so much an inheritance. So if I were to sell them for, say, $5000 I would have to declare the entire amount as income?


Short answer: Yes.

First of all, it doesn't sound like you owe any inheritance or gift tax. From your description, the items were clearly below the $13,000 limit (2009 and after) that can be gifted. (The exact amount of the limit will be different for you since it sounds like the gifting took place before 2009.)

As far as tax liability, it would be just the gains: The sale value minus the "basis" (similar to purchase price). This is described in the page I previously linked to in the "What if I sell property given to me?" section.

  • 1
    By the way, those links are to the Business/Small Business section of the IRS website. However it reads as if it is written for individuals. Furthermore I could not find anything about gift tax on the individuals section of the website. So that all led me to believe that everything stated there is applicable to individuals giving gifts. If you know otherwise please advise. – Stainsor Apr 27 '11 at 14:19
  • What are the rules in cases where one receives a gift without any indication of the cost basis, but where the basis would likely be a substantial fraction of the selling price [e.g. the common retail price for a used item of that type never fell below $1000 prior to one's acquisition of it, and one sells it for $1200]? Would one have to prove that the giver hadn't somehow bought it at a flea market for $200, or could one use the lowest common retail price as a cost basis? What if it was one item in a storage locker for which the giver had paid $2000? – supercat Jan 9 '17 at 18:23

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