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I am starting a new business (Selling Antiques).

I have antiques that I have purchased over the years for personal use that I will be selling from my antique store. How do I handle this for income tax purposes. Do I include them in my business inventory? If so, do I show them as purchases for this year, and do I put them in at cost. If I sold them at a gain outside my business, I understand it would be a capital gain, but ordinary income if sold through my business. Is this correct and what is the best way to handle this.
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Tax Professional Answers

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John Stancil
It is a judgement call. If you are selling the antiques through your business, they would be reported as business income. You would move them (figuratively) to the business books at your cost or fair market value as of the date transferred to the business, whichever is lower. Record them as Inventory (Assets) and reflect a similar amount as your equity (investment) in the business.

If you are not selling them through the business, they would be treated as capital gains at the 28% collectibles rate. Your gain is the excess of your proceeds over your original cost.
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