Judith (Now 37 Years Old) Owns a Collection of Porcelain

Essay

Judith (now 37 years old) owns a collection of porcelain dolls that she acquired when she was a grade-schooler.She had forgotten about them until her mother sent them to her.Her mother had discovered them in a box in her attic while she was cleaning out her house before selling it.Judith had originally acquired all the dolls as gifts from her parents, so she has no way to establish a basis for them.Using information from the Internet, she prepares a careful inventory of the dolls that includes their name, when they were first available for sale, their current value, and other pertinent information.She then lists them for sale on the Internet.To her surprise, she quickly gets an offer of $5,000 for all of them, which she accepts.Judith has no other gain or loss transactions for the year and is in the 24% marginal tax bracket.What issues do these facts create?