Questions around starting an LLC 0

[Weidel Legacy Collection]

Here's a question for those of you who have turned your collecting habits into a business.

As I near retirement, and after reading so many posts about it, I've decided that it's time for me to start clearing the decks a bit to avoid burdening my family with having to deal with my collections.  My first focus will be to start divesting the flotsam and jetsam (duplicate slabs, raw coins, US mint products, and miscellaneous) I've acquired over the years before starting to sell my core collection and then including other collections I have.  I think it makes sense to start an LLC to track and manage expenses, income, tax liability, etc.

My question: since what I'm selling has been acquired over 30+ years, is it 'OK' to start a business to sell these assets?  While I have some documentation/records on acquisition costs, it's mostly contained in several spreadsheets with little paper to back-up the purchases.

Recommendations?

Thanks!

[JKK]

I think my CPA would tell you that if you don't have cost records, then an auditor would look at what seems reasonable. They would probably examine some of your cost estimates and see whether they made sense.

When I started selling sports cards, some of them went back to my childhood and I had zero way to assign a cost to each card even if I had wanted to create this massive inventory system. So I did some guessing and decided on an average cost percentage, one that probably costs me a little more tax than if I had detailed records, but that's okay. It's when one miraculously comes up with some system that means paying zero tax that the government naturally wonders what might be up. If an auditor asks how I came up with this, I'll explain the divergent acquisition history and say that I thought it reflected a reasonable average of reality. Considering that I'm reporting and paying tax on the supposition that my cost was 35% of retail, and I do have the records to back up the sale prices, I believe they'd look at me and decide that I'm honest because if this is a plan to evade tax, it's a brain-dead one, like a plan to save fuel by idling your engine all day.

As far as an LLC, I don't think it's necessary, but it's a valid choice if you think there is noteworthy liability from which you want to shield yourself.

[Coinbuf]

I personally wouldn't spend the time and money to set up an LLC, I have done it for a group I was involved with at one time so I am familiar with the process.  LLC's are great at protecting your assets in the case of some damage that is done to person or property thru the course of business.  As an example if you own and run a vending machine business and one of the machines starts a fire you could be held responsible and your assets (house, car, etc.) could be seized to cover damages.  An LLC would protect your assets (to a point) in such a case but I do not see any scenario where you would cause harm to anyone by selling some coins and mint products; unless you plan to misrepresent what your selling and an LLC would not protect you from that.  The only other reason would be if there is a taxation benefit and that would need to be assessed on an individual and state by state basis.  However do not expect an LLC to stop the IRS, if the tax man wants to get at you they will blow right through any shielding an LLC might provide, and as you would be the only officer of the LLC it would all flow to you eventually anyway.

It is certainly ok to start a business to sell your collections but it's not required, if you plan to sell everything yourself then setting up an Ebay store may be a good option to reduce the costs as much as possible.  Or there is the auction route for the more expensive items which may or may not get you better returns.  Also if you do have any expensive coins (1,000.00 or more) having any certified/slabbed coins reviewed by CAC will help the liquidity and salability of those that do sticker.  If you cannot submit yourself or thru a local dealer an auction house can help with that also.

Another option might be to setup a trust and run everything thru that, again it would depend on your individual and state taxation rules.  Best of luck with whatever course you decide to go. 

[Weidel Legacy Collection]

JKK and Coinbuf - much thanks for your input!