Building a Rolex collection under a legal entity

[Zoolantz]

I am a serial entrepreneur in my mid-40s. As I start to take a serious look at building a luxury watch collection, I wonder how many of you are doing it within a corporation or family trust instead of holding it personally.

I already have a family trust set up. Is it a good idea to use that to buy watches?

[superpop]

Rolex watches are fashion baubles not financial instruments. If you are in the business of buying and selling watches then yes, they should be under the custody of a corporation, short of that, no.

[Phwtch1]

Originally Posted by superpop

Rolex watches are fashion baubles not financial instruments. If you are in the business of buying and selling watches then yes, they should be under the custody of a corporation, short of that, no.

No better response than this...

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[Zoolantz]

Originally Posted by superpop

Rolex watches are fashion baubles not financial instruments. If you are in the business of buying and selling watches then yes, they should be under the custody of a corporation, short of that, no.

Well, eventually we all have to either sell or pass them on to our kids someday.

[996marty]

Originally Posted by Zoolantz

Well, eventually we all have to either sell or pass them on to our kids someday.

But would they be for wearing or just purely investment?

[dlddrrr]

Lol I’ve heard of people buying yachts under corporations for tax reasons but never heard of people buying watches under corporations for measly tax savings (if there even are any)

[omar-rye]

What is your area of entrepreneurship?

[Wrathchild]

Odd question? Just buy your first watch and enjoy it….see from there

[MrMercedes]

My AD wouldn't be able to stop laughing if you made this suggestion. And you certainly wouldn't get a watch.

[Slimpee]

Can you help provide us with why you think it might be a good idea?

[baythan]

Originally Posted by superpop

Rolex watches are fashion baubles not financial instruments. If you are in the business of buying and selling watches then yes, they should be under the custody of a corporation, short of that, no.

This, I think is the best way to explain.

[Njkdog]

I kind of hate everything about this post. You joined today? Either this is a troll post or this is a bad sign of Collectors to come.

[dnd2984]

Originally Posted by omar-rye

What is your area of entrepreneurship?

Same question I have. What was your CPAs thought on this..

[Fleetlord]

Would you be personally buying these or would a member of your staff handle the minutiae?

[APhound]

Just don’t let your wife do the accounting


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[Gaussian]

Originally Posted by dnd2984

Same question I have. What was your CPAs thought on this..

That would be my first inquiry, not here on a group of—no offense to any of us—un-vetted online individuals.

But I do appreciate your entrepreneurial spirit!

After all, who wants to pay income taxes ?


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[KatGirl]

Say what, now?

Kat


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[Joearch]

OP……odd question

[ArtNouveau]

I am still scratching my head on this one.

[dseig001]

Some random instagrammer I’m sure. Baller Busters would love to have a word with you.

[wesdaniel]

What, exactly, do you mean by, "holding it personally?"

When you buy a car, a house, or an investment such as a stock or a mutual fund, you "hold" it a specific way as it is reportable, depreciable, etc.

When you buy a Rolex (or any watch), there's no "holding" it per se - the closest that I guess you come is whose name is on the papers, but, that's essentially meaningless.

As others have suggested, if you're a watch dealer, the funds to purchase the watch will come out of your corporation, you will have a bill of sale from the seller and you will generate an invoice to the customer. This will establish your cost basis (plus any money you put into repairs/refurb) and profit (or, in today's market, more likely, loss) on the transaction.

But, unless you're going into the watch business, it really doesn't matter. There's no title or deed that's issued, so it's moot.

[Njkdog]

Originally Posted by arbees319

Just don’t let your wife do the accounting


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Why not?

[nocaps]

assuming the op is asking a legitimate question, here are some negatives that i see in setting up a corporation to hold title to wristwatches. i'm sure there's more;

1. cost to set up and maintain a corporation. (in california it's $800/yr.)
2. possible denial of insurance claim by your insurer if title is not held personally.

[Willyjo]

This really is a first….

[MILGAUSS88]

Originally Posted by wesdaniel

What, exactly, do you mean by, "holding it personally?"

When you buy a car, a house, or an investment such as a stock or a mutual fund, you "hold" it a specific way as it is reportable, depreciable, etc.

When you buy a Rolex (or any watch), there's no "holding" it per se - the closest that I guess you come is whose name is on the papers, but, that's essentially meaningless.

As others have suggested, if you're a watch dealer, the funds to purchase the watch will come out of your corporation, you will have a bill of sale from the seller and you will generate an invoice to the customer. This will establish your cost basis (plus any money you put into repairs/refurb) and profit (or, in today's market, more likely, loss) on the transaction.

But, unless you're going into the watch business, it really doesn't matter. There's no title or deed that's issued, so it's moot.

If you are selling more than $10,000 of personal goods in one year, you are required to report it on your income tax statement. It really doesn't matter if you are incorporated or not.
Unless you trade it or sell it for cash, there is going to be a recorded transaction that I am sure the IRS will be interested in. And if you don't declare it, good chance you are going to find yourself in trouble.

[harvey]

…well done in getting a ridiculous thread in so early in the new year!

[russ86]

Just when I though I seen it all on this forum

[Zoolantz]

Originally Posted by 996marty

But would they be for wearing or just purely investment?

I just bought my first Rolex yesterday. I told my 12-year-old son that I'd give it to him on his college graduation date. But it will have to be a 'good' school. I will be the one deciding what 'good' means :)

[cblock406]

Originally Posted by Zoolantz

I just bought my first Rolex yesterday. I told my 12-year-old son that I'd give it to him on his college graduation date. But it will have to be a 'good' school. I will be the one deciding what 'good' means :)

Congrats, what did you get?

If you aren't in the business of buying and selling watches, the primary reason I can think of putting your assets (in this case Rolex watches) into a trust would be to avoid probate or to try and reduce estate tax liability. Buying and holding Rolex watches indefinitely does not rise to the level of a trade or business.

[Zoolantz]

Originally Posted by wesdaniel

What, exactly, do you mean by, "holding it personally?"

When you buy a car, a house, or an investment such as a stock or a mutual fund, you "hold" it a specific way as it is reportable, depreciable, etc.

When you buy a Rolex (or any watch), there's no "holding" it per se - the closest that I guess you come is whose name is on the papers, but, that's essentially meaningless.

As others have suggested, if you're a watch dealer, the funds to purchase the watch will come out of your corporation, you will have a bill of sale from the seller and you will generate an invoice to the customer. This will establish your cost basis (plus any money you put into repairs/refurb) and profit (or, in today's market, more likely, loss) on the transaction.

But, unless you're going into the watch business, it really doesn't matter. There's no title or deed that's issued, so it's moot.

By "personally", I meant, you
1) buy the watch with your after-tax income (not great)
2) pay the sales tax that you cannot get back (bad)
3) sell it later for profit and pay personal income tax on the gain (terrible, but you know you are supposed to report it)
4) you hold onto your watch collection until you die, only to trigger an estate tax for your beneficiary. Alternatively, your beneficiary decides to not report this 'gift' or inheritance and faces the potential tax evasion risks.

All those four disadvantages can be addressed by purchasing and holding the watch collection using a legal entity.

Yes, there are other benefits of holding the watch collection using a corporation/partnership/trust like you mentioned - service and repair costs and so on.

So why can't my legal entity be a watch dealer? I don't think the IRS/CRA has rules that specifically require a watch dealer to conduct X number of transactions each year to qualify.

Am I really off the course on this one? Isn't it how the ultra-rich build their art collections?