Comic Art Loans 1 1

[Peter L]

I saw this on X and I would love to hear your thoughts on this strategy.  Would it work for some of us?  What would be the advantage of those doing this?

[Kevin76]

The rich also use art to lower the amount of taxes they have to pay 

[Ecclectica]

I don't care if they don't sell their pieces and create instead a museum to store and display their art, so everybody can see it for the price of a ticket.

(at the contrary to see the art pieces "buried" in huge wharehouses in Switzerland, pieces that will not even move a bit when a transaction between 2 billionnaires will occur).

 

Edited Monday at 09:58 AM by Ecclectica

[MAY1979]

How much does JPMC value an average Trimpe Hulk cover?

[Readcomix]

On 9/16/2024 at 8:12 AM, MAY1979 said:

How much does JPMC value an average Trimpe Hulk cover?

Kidding aside, I wonder how they look at the guys who cross the lines from comics: Frazetta, James Jean etc.?

Or pure Americana such as Schulz?

Edited Tuesday at 01:58 AM by Readcomix
Added thought

[tth2]

On 9/17/2024 at 9:56 AM, Readcomix said:

Kidding aside, I wonder how they look at the guys who cross the lines from comics: Frazetta, James Jean etc.?

Or pure Americana such as Schulz?

They don't.  The loans we're talking about are sizeable, and the collateral even more sizeable as the banks are going to require any loans secured by art be heavily overcollateralized.  The art you're talking about is peanuts (pun intended), so way too small for them to consider.   

[Readcomix]

On 9/16/2024 at 11:54 PM, tth2 said:

They don't.  The loans we're talking about are sizeable, and the collateral even more sizeable as the banks are going to require any loans secured by art be heavily overcollateralized.  The art you're talking about is peanuts (pun intended), so way too small for them to consider.   

I realize the scale of value is waaaaay different. Just playing with notions about the future. Greed and banks and scope creep are old friends. IF that day ever comes, I’d assume those are the sorts of artists who might among all the current longshots to “graduate” to that game. 

[grapeape]

On 9/16/2024 at 8:54 PM, tth2 said:

They don't.  The loans we're talking about are sizeable, and the collateral even more sizeable as the banks are going to require any loans secured by art be heavily overcollateralized.  The art you're talking about is peanuts (pun intended), so way too small for them to consider.   

Peanuts?

[MAY1979]

On 9/17/2024 at 6:05 AM, Readcomix said:

I realize the scale of value is waaaaay different. Just playing with notions about the future. Greed and banks and scope creep are old friends. IF that day ever comes, I’d assume those are the sorts of artists who might among all the current longshots to “graduate” to that game. 

Reasonable to think - but if Comic and Strip art increases then I'd expect a proportionate increase in fine art. Thus rendering the Comic stuff still Peanuts. Now some of the Frazzeta paintings IMHO those are most likley to one day hold a finance co's interest.

 

Still I look forward to the day when I can pick-up a F-150 for some Sal B Hulk Pages or secure a Mortgage by flashing a Byrne FF splash.

Edited Tuesday at 02:16 PM by MAY1979

[tth2]

On 9/17/2024 at 10:14 PM, MAY1979 said:

Still I look forward to the day when I can pick-up a F-150 for some Sal B Hulk Pages or secure a Mortgage by flashing a Byrne FF splash.

I don't know about Hulk pages, but there were some Sal B pages in the most recent auction that would easily have financed the purchase of a F-150 or provided a nice downpayment on a house in a nice zip code.

[Will_K]

Vince Collateral

[delekkerste]

One thing to keep in mind is that these lenders typically lend up to 50% max of the appraised value (and quite often less). 

Another thing to keep in mind is that the Zeck Secret Wars #8 page won't appraise for the $3.3 million it sold for.  

[MAY1979]

On 9/17/2024 at 11:40 AM, delekkerste said:

One thing to keep in mind is that these lenders typically lend up to 50% max of the appraised value (and quite often less). 

Another thing to keep in mind is that the Zeck Secret Wars #8 page won't appraise for the $3.3 million it sold for.  

I can hear the JPMC Loan officer saying "It's like the 26th appearance of the black costume" , "and you thought it was the first - seriously", "loan denied"

Then when it hits the media, Jamie Dimon backing up his firms position via "I'd personally fire anyone employed at Chase who thinks SW8 is first Spidey in Black"

Edited Tuesday at 06:01 PM by MAY1979

[Dr. Balls]

On 9/15/2024 at 7:46 PM, Peter L said:

What would be the advantage of those doing this?

There is no advantage when borrowing money from the bank.

[tth2]

On 9/16/2024 at 9:46 AM, Peter L said:

I saw this on X and I would love to hear your thoughts on this strategy.  Would it work for some of us?  What would be the advantage of those doing this?

It's a popular new tax avoidance strategy for the wealthy.  Rather than sell stock or other assets to buy a new home or yacht or whatever, as that would trigger capital gains taxes, you buy it with borrowed money that's secured by the stock/assets, which then allows you to pass on the stock/assets to your heirs, who will take it valued at their current basis rather than your original basis, which will save them a lot of capital gains when they sell the inherited stock/assets later on. 

[Readcomix]

I KNEW we could have fun with this!  My work here is done ; you’re welcome! 

[pemart1966]

Every lending institution will have its own definition of what constitutes "art" and indeed what constitutes "collateral".

[Bronty]

On 9/18/2024 at 9:34 AM, tth2 said:

It's a popular new tax avoidance strategy for the wealthy.  Rather than sell stock or other assets to buy a new home or yacht or whatever, as that would trigger capital gains taxes, you buy it with borrowed money that's secured by the stock/assets, which then allows you to pass on the stock/assets to your heirs, who will take it valued at their current basis rather than your original basis, which will save them a lot of capital gains when they sell the inherited stock/assets later on. 

I don't know the US system but I wonder if you don't have a disposition here.    Presumably the reason they'd save capital gains later is because they'd pay them upfront.

I can see why people do it - why trigger the tax.    At the same time, you're also paying interest now that you weren't paying before, so you'd hope it was all short term borrowing or at some point you're better off just paying the tax.

 

Edited yesterday at 07:58 PM by Bronty

[Xatari]

On 9/17/2024 at 3:15 PM, Dr. Balls said:

There is no advantage when borrowing money from the bank.

Nope.  They are a for-profit business, and there is a reason the majors have been around since the 1800s.

[tth2]

On 9/19/2024 at 3:55 AM, Bronty said:

I don't know the US system but I wonder if you don't have a disposition here.    Presumably the reason they'd save capital gains later is because they'd pay them upfront.

I wasn't a tax or trusts & estates lawyer, but I do know that at a minimum, the amount of tax payable on inherited assets is immediately reduced by an exemption on federal estate tax (currently $13.61m), and I'm sure the ultra-wealthy have many additional vehicles and methods to further shield inheritances from tax.  In contrast, the taxes from selling assets now would not be similarly shielded or reduced.

On 9/19/2024 at 3:55 AM, Bronty said:

At the same time, you're also paying interest now that you weren't paying before, so you'd hope it was all short term borrowing or at some point you're better off just paying the tax.

The rich guys have the best financial, tax and trusts & estates advisors and lawyers working for them, so if these secured loans in lieu of liquidating assets have become a favored way of raising funds, there must be a clear financial benefit from doing so.