Are animal heads deemed to be collectible items for income tax purposes?

Question

For example...one own's a collection of deer, buffalo and other heads...some shot some purchased. They are going to be sold to Cabella's Sporting. As a capital asset, would they be deemed to be a collectible like coins, rugs, stamps, etc.

Answer 1

I would imagine so. Have a friend who has a buffalo head he had mounted when he shot it in Alaska back in 85. He has turned down a 10k offer for it. That makes it apparent that if you buy, hold and sell mounted heads they would be collectibles. You could also call 1-800-829-1040 and ask the IRS. Go to IRS.GOV and see if any light is shed on the subject there.

Answer 2

I would try to not list them as collectibles on Schedule D. If the IRS disagrees, at least you have a reasonable argument that they are not collectible and therefore not subject to the 28% capital gains treatment.

According to the IRS:

"Collectibles include works of art, rugs, antiques, metals, gems, stamps, coins, alcoholic beverages, and certain other tangible property."

You could argue that these are personal items that were not collectible since you did not hold them for appreciation in value (they were your personal hunting trophies). You could list them on Schedule D and take noncollectible capital gains on them.

As second approach is to treat the sale of hunting trophies as hobby income (Line 21 of Form 1040) and deduct expenses related to obtaining the hunting trophies (whether your own hunting expenses, or your purchase price of bought trophies) as hobby expenses on Schedule A. This results in the cash obtained from the sale being taxed as ordinary income, which may be more beneficial to you than treating the items as collectible. It also has the advantage of not assigning a basis to the items, and of taking hobby expenses.

Answer 3

Your question is not very clear. Are you referring to being able to deduct expenses and declaring income (if you sell the heads); whether or not it is a hobby or a business?

Consider this - hobby expenses are deductible only to the extent of hobby income, it is important to distinguish hobby expenses from expenses incurred in an activity engaged in for profit. In making this distinction, all facts and circumstances with respect to the activity are taken into account and no one factor alone is decisive. Among the factors which should normally be taken into account are the following:

Whether you carry on the activity in a businesslike manner
Whether the time and effort you put into the activity indicate you intend to make it profitable
Whether you depend on income from the activity for your livelihood
Whether your losses are due to circumstances beyond your control (or are normal in the start up phase of your type of business)
Whether you change your methods of operation in an attempt to improve profitability
Whether you, or your adviser's, have the knowledge needed to carry on the activity as a successful business
Whether you were successful in making a profit in similar activities in the past
Whether the activity makes a profit in some years, and how much profit it makes
Whether you can expect to make a future profit from the appreciation of the assets used in the activity