Determining cost basis of stamps & coins inherited years ago

[docjth]

In 2023 we sold large stamp and coin collections inherited more than 30 years ago from our fathers through a recommended auction house (they do not provide a 1099). We received a check for the sale, less their fees, which we deposited. We know this is taxable, but we have no way determining a cost basis for comparison to the sale income to obtain the resulting gain/loss. Any suggestions of how to report this on our taxes or do we just have to take it as a capital gain?

[TomK2023]

When you inherit property, the IRS applies what is known as a stepped-up cost basis. When you sell, you owe capital gains taxes only on any gains that the asset made since you inherited it. 

Since you do not know the cost basis at the time you inherited it (and no real way of finding it out), you will have to pay capital gains on the entire proceeds as a long-tern investment - minus any sales fees of course.

Capital gains, losses, and 1099-B forms are all entered in the same place:

1. Open or continue your return in TurboTax.
2. Search for investment sales and then select the Jump to link in the search results.
3. Answer Yes to the question Did you have investment income in 2023?
   • If you land on the Your investments and savings screen, select Add investments.
4. Follow the instructions and we'll calculate the gain or loss from the sale.

@docjth 

[Edited 1/31/24 | 1:02PM CST]

[Opus 17]

If audited, the IRS does not have to award any cost basis you can't prove.

If you have an inventory of the items (type, date, condition), you might be able to find some 30 year old coin and stamp valuation guides and check the values.  A dealer might save old guides, or maybe a library would have them.  That would be better than nothing and would give you something to stand on in case of audit.

But if you don't have a detailed enough inventory, you are probably stuck reporting the entire proceeds as a gain.

[dmertz]

This sounds like an item that would have to have been appraised for estate purposes, so you might find the value in the estate or probate documents.

[docjth]

Thanks - this confirms what I thought would be the case - much appreciated. 

[docjth]

I didn't mention that these compiled collections resulted in 8 huge storage boxes of binders full of national and international stamps, plus envelopes and bags of loose stamps - literally thousands of stamps! Thanks for taking the time to give me input.

[docjth]

No, never was done, we just ended up with 8 huge boxes of binders and bags. Thanks for taking the time to provide input. 

[ThomasM125]

At a minimum, you could assume the stamps and coins were worth their stated value so that would be a starting point. You could then do some research to determine what the average appreciation of similar collectibles was and work backwards from the price at the sale date to estimate a cost basis. If your calculations made good sense it may suffice.