Donations

Stamp collections can in many instances be a terrific tax shelter. IRS provides on their own form, (8283) a specific category for stamp donations.

Unlike other collectibles such as fine art or rare coins, stamp collections differ in one major way from those. A rare coin whose retail price is $1000 can be easily sold for $900 or even more! Only very rare stamps can be sold to a dealer or be auctioned at a high percentage of retail at this level.

Most stamp collections take a hefty beating when sold to a dealer or auctioned. The "quick cash" offers can be as little as ten percent of their fair market value! Here at the Foundation our appraisals are done at fair market value based on the current prices listed in the catalog.

DONATION VS AUCTION

THE AUCTION HOUSE STING

You have collected stamps all your life (or inherited a valuable collection) and have decided at some point to sell it. Whomever formed the collection might have said to you if you sell call this or that auction house. Bad decision; fine to have the auction representative meet with you and view the collection but be aware no matter what is said regarding price realization it’s just the auction house trying to get your collection without a guarantee. They will tell you what you want to hear; if Grandpa formed the collection and said to you in his lifetime it’s worth $100,000 and you give this information to the auction house they will look you straight in the face and say “of course it will bring that or more.” They will tell you anything to pry away the collection leaving you with a five/ten page contract disclaimer stating they are not responsible for the price realization. How do I know this, because after fifty years of working with every major auction house worldwide they tell me what they practice.

Every major dealer knows this but never the actual collector and certainly not my reader if you inherited the collection.

I have tried unsuccessfully to both educate the dealers to be fair with the public and have in the past recommended certain dealers over the years (geographically of course) and all to no avail. I find for the most part the public is just “ripped off.”  After forty years our Board has decided we will do these appraisals at our cost (time wise) and help sell the collection if feasible and with your approval.

HOW THE AUCTION HOUSE/DEALER PERFORMS THE STING

The Dealer

You contact them or strangely they contact you first because the Tammany Hall group keeps track of the obituaries! Examine the albums of your loved one and see if the books have death stickers, these labels tell you to contact this or that organization if the collector is deceased! Some heirs are bombarded by calls or letters stating they will pay more (lie), their auction firm will get the best result (lie) or can we meet? Beware of Greeks bringing you a gift (Troy of course) and the gift will turn out to be your loss. OK, you feel you have nothing to lose so you set the appointment, one with a famous buyer recommended by Tammany Hall and the other with a famous auction house or two that the collector had been doing business with. The stamp dealer shows up usually dressed in a worn out of date suit that has seen better days. At first he and sometimes she will be very courteous to you quickly looking at the stamp collection and making remarks such as “Oh too bad, this excellent stamp is damaged, Oh what a shame most of the stamps are used not mint. By the time the dealer has viewed all the books (usually one hour) Grandpas collection lovingly put together over a lifetime for possibly tens of thousands of dollars is reduced to rubble. The professional dealer (thief) will basically try and convince you he/she is doing you a favor offering you whatever figure is offered. And now comes the really bad part, try and tell the dealer you want to think about the offer or get another opinion; all hell breaks lose, the very nice person who showed up becomes irate telling you that you have wasted his/her time, that Grandpa wasted his money on bad stamps and on and on and from fifty years of experience about half those I have talked to after this experience sell part or all just to get rid of the pest. What they did not know was if they sold part, the part sold was purchased for nearly nothing and if the entire collection was sold it was a pittance.

The auction house

Now comes the good part (also described under SHOULD I DONATE); you have survived the Tammany Hall boys and decided not to sell. Grandpa purchased many of his stamps from this or that auction house so you call them if they have not already contacted you. A very well dressed representative shows up usually in a dark gray suit white shirt and tie. You are impressed remembering how the dealer was a bit dingy. He proceeds to show you the companies famous catalogs even inferring how Grandpas collection might be featured with his name on the front or inside the catalog (impressive), Unlike the dealer he admires the collection rarely making negative comments and when you might happen to remark “Grandpa thought his collection was worth $100,000 the auction house pro will let you know it’s possible. Wow is you impressed and possibly can’t wait for them to consign the collection for auction. They give you a five/10 page contract which of course you don’t read the fine print or if you do and you see the paragraph stating “the auction house can’t warrantee the financial result” (bold Efi), they convince you it’s just to protect the auction house but not to worry if Grandpa thought it was worth $100,000 then it will surely bring that figure and here lies the crux: When the final check comes to you for the sale written out for about $10,000 and you call the nice gentlemen whom you met he tells you how sorry he is and it’s not his fault Grandpa thought it was worth $100,000. This is usually when here at APF we get the call and I have to tell them the above. The horse is out of the barn and as Looney Tunes Porky Pig says in the end “THAT’S ALL FOLKS.”  What you should have known and I’m telling you now is you MUST force the auction house to set a minimum guarantee if they want the collection. When you do this suddenly the $100,000 the auction rep. tells you is possible becomes a. fraction of that figure usually 10/15%! Now is the time to call me at APF so I can set you straight. When APF has a collection for sale we always tell you what the real figure is and if consigned to us we never come under that figure.

A Los Angeles attorney whose client wanted to sue California’s largest stamp & coin auction house called me some years ago. I reviewed the facts carefully and told them they were wasting their time the auction house did nothing wrong! I have known that auction firm for fifty years, admire the original owners and in fact all they did was business as usual. Please call me or email me (even better, especially from 7/1 to 9/1 as I spend many summers in Europe doing stamp seminars. Also Google Michael DuBasso on the Internet for interviews regarding famous stamp stories.

HOW TO AVOID THIS STING

Avoiding this rip off is simple; after hearing their pitch and looking at their contract just state boldly: What is the minimum guarantee? The auction representative will look startled; this is the worst possible situation for them, the time of truth. They will then proceed to bull shit you on why that’s not possible using any scenario that comes in their head.

When you finally push them on the issue by firmly stating without a minimum guarantee you will not consign the collection they will state, (keeping in mind Grandpa says it was worth $100,000) “well of course I can only guarantee a small amount to protect my company”.  They then will quote you anywhere from ten to twenty percent of what they had originally agreed it would bring, $100,000 or more!  Also keep in mind by the time the auction house deducts their various fees and commissions you are likely to end up with much/much less.

TIME TO CONSIDER DONATION

Using the above referenced example (Grandpas $100,000 collection), the collector probably spent his life forming this collection one item or set at a time and did spend $100,000. The $100,000 was and is fair market value; the $10,000 to $15,000 the auction house now guarantees is the “quick cash value it is likely to bring at auction as one lot! By donating this collection you net $50,000 as in the case of most not for profit Foundations like ours we are a 50% charity. If donated you can deduct about 30% of your net adjusted income and stretch this donation over five years.

YOU NET FIFTY THOUSAND DOLLARS VERSUS MAYBE $15,000 AFTER DEDUCTIONS.

Collections that are donated to the Foundation are first reviewed by us and then sent out for independent appraisal as required by law. Our paperwork is done correctly and in many cases we work directly between your own accountant or CPA and the Foundations CPA. If you have a valuable collection that you are considering donating please contact Michael DuBasso our Director at (310) 275-3256 or write to us in detail.