My understanding is that they look at sales prices for similar pieces and then make an arbitrary decision. Which is really tough when you're talking about really subjectively-valued things like comic art.
Thank you for explaining how estimated current market prices are determined. I am curious about how the historical cost basis price at the time of acquisition is established.
As I understand it, Japan generally carries over the donor's acquisition cost and date when calculating taxable gains on gifted property.
While I am not a tax expert, I suspect that Japan's 5% deemed acquisition cost would apply in this case because the historical acquisition costs cannot be determined. Thus, the cost basis would not be zero. However, capital gains taxes would be owed on the difference between the current market price and the 5% deemed acquisition cost. Of course, the actual tax liability depends on your other income.
In short, this sort of artwork would most likely result in substantial capital gains taxes, as you suggest. Consultation with a tax expert would be required to determine the consequences of each specific case.
As I understand it, the 日本漫画家協会 (Japan Manga Artists' Association) has a tax attorney that they make available to members for situations including this one. There's even a manga about manga artists who struggle to figure out their taxes.
How is the cost basis usually determined in this situation? Do you have any case study data?
My understanding is that they look at sales prices for similar pieces and then make an arbitrary decision. Which is really tough when you're talking about really subjectively-valued things like comic art.
Thank you for explaining how estimated current market prices are determined. I am curious about how the historical cost basis price at the time of acquisition is established.
As I understand it, Japan generally carries over the donor's acquisition cost and date when calculating taxable gains on gifted property.
While I am not a tax expert, I suspect that Japan's 5% deemed acquisition cost would apply in this case because the historical acquisition costs cannot be determined. Thus, the cost basis would not be zero. However, capital gains taxes would be owed on the difference between the current market price and the 5% deemed acquisition cost. Of course, the actual tax liability depends on your other income.
In short, this sort of artwork would most likely result in substantial capital gains taxes, as you suggest. Consultation with a tax expert would be required to determine the consequences of each specific case.
As I understand it, the 日本漫画家協会 (Japan Manga Artists' Association) has a tax attorney that they make available to members for situations including this one. There's even a manga about manga artists who struggle to figure out their taxes.
Sounds like a great resource!