Sell Now or Leave the Ferrari to the Kids?

The IRS can’t tax you after you’re gone, so they tax you on the way out

by John Draneas

Last month, Publisher Martin made some insightful observations about the current state of the collector car market and how collectors should act in (September, “Time to Buy, Sell or Hold?” p. 10). I won’t question Keith’s views of the market, as I’ve developed great respect for them since he and I actually made money on Lucky, our 2-stroke Saab. But I will add that the many layers of taxation that affect this decision play a pretty big role in your final decision.

Take John’s Ferrari

Let’s take my friend John as an example. He acquired a wonderful 1966 Ferrari 365 California Spyder back in the ’70s at the then market-correct price of $25,000. Today, let’s call its market value $1 million, although he could probably get more for it given how values are skyrocketing. John has enjoyed the car for many years, but he doesn’t drive it as often as...