08-22-2007, 08:20 PM
1) I'm not saying the IRS should or should not do anything, just what they do. It's just the facts, which is what you asked for. Don't shoot the messenger, ya know.
Fair enough.
2) You are confusing the issue. If you BUY something it's not a gift. What we are talking about here is a guy catches a historically important baseball that is worth $$$$ to collectors. It cost him $0. As the IRS views it, it was a gift, value received for no investment. It doesn't matter what the item is, a car, an iPod, movie tickets for life, if it has tangible value, and you receive it for free or below market value, that is income to you. Cha Ching. The IRS wants it's cut too.
The ball he caught has a retail value of $12.99.
If the IRS wants to collect $3.00 of that, I'm Ok with it.
The value to him to keep the ball on his mantle is sentimental.
ONLY if he sells the ball does he realize the theoretical $500,000+. At that point, IMO, he should pay capital gains tax on the difference between $12.99 and what he sold it for.
Now lets get back to the family heirlooms. The IRS does get their share of those goodies as well. It's call the Death Tax. When someone dies the estate's executor has to inventory every spoon and dust mite in the home(s) and pay tax on the value of those items if the estate is worth more than a set amount, currently $2M, but that will go back down to $675K in 2011.
When the IRS starts collecting the Death Tax while I'm still alive, then I'll worry.