Could you pay the taxes on a Strad?

October 11, 2007 at 06:15 PM · When buying a very-very expensive bow or violin I'm wondering how you can avoid paying enormous taxes. Let's go cheap and buy a $500,000 instrument, we didn't like their Strads or delGesus, but found a really great sounding non Strad. Figuring a sales tax of 7%, that's $35,000 in taxes alone. If you buy a $7,000,000 Guarneri that's $490,000 in taxes alone, enough for a nice house in a nice neighborhood.

Kind of makes me glad I'm not rich as I couldn't afford the taxes on the el-cheapo $500,000.

Replies (20)

October 11, 2007 at 06:15 PM · Who's paying $7,000,000 for a del Gesu? That seems quite inflated.

October 11, 2007 at 06:35 PM · "buy" it over the internet...they don't tax that yet.

October 11, 2007 at 06:40 PM · If you have to ask . . .

October 11, 2007 at 07:17 PM · I've seen several delGesu's at more than that. Oh well, dream on.

October 11, 2007 at 07:22 PM · Preston... I'm guessing you didn't see how much the Firebird Strad sold for?

Ray... pay cash. Also, depending on what dealer you buy from, I have no doubt that there are a few among them who would definately find a way to save you 7%.

October 11, 2007 at 07:26 PM · Any transaction greater than $10,000 must be reported to the IRS. If you pay cash and you don't report it, you are a federal felon, which can be as bad thing.

If you can afford the purchase price, you can afford the tax.

Or rather, if you have to ask, you can't afford it :-)

October 11, 2007 at 07:44 PM · Nope I've been kinda outta the loop in that sense for the last little while.

What's going on?! How much was the Firebird?

October 11, 2007 at 07:50 PM · 7.2

October 11, 2007 at 09:37 PM · "Any transaction greater than $10,000 must be reported to the IRS"

actually, if you ask irs, they will probably say,,,as little as one cent:)

if you take out 10,000 cash from your bank in one shot, you need to sign a form to be filed with the feds. it is one way to moniter violinists who dab into pharmaceutical deals:)

October 11, 2007 at 09:49 PM · If you live in a state different than that of the shop, the shop will usually ship it. Sales tax can usually (but not always) be avoided).

October 12, 2007 at 02:20 AM · How can we be sure that when they quote 7.2 million in the newspapers, it's not including the sales taxes?

In Australia, we have something known as the GST - Goods and Services Tax, which is currently at 10%. If I buy a bottle of Coke, it might be $2.80. There's about 25c there that's GST, but I don't worry about that, because I know it's $2.80. When I buy a bow from a dealer here, and he quotes me $1500, I know that it's going to be $1500. Now because I have a business, I can later go back and claim about $136 as GST and get that as a credit against the GST I have to charge (all very complicated), but I've still got to have the $1500 in the first place.

I'm guessing that's probably the case here, When we hear that it sold for $7.2 million, there's not $504,000 extra in sales tax, the price of the violin would've been about $6, 728, 971 - giving a sales tax of around 471,000. But they incorporate that into the price, so that it's easier to know how much you'll be paying.

October 12, 2007 at 02:28 AM · Technically, you are suppsoed to pay tax on EVERYTHING you buy. It is simply an un-enforceable rule.

A friend of mine got nailed recently by the IRS, because after an audit they found that he had not paid sales tax on any musical items he purchased out of state. Note: the stores did not add the tax, since they were shipping, yet he was supposed to voluntarily add this tax to his return each year! -That includes a $10 cable.

He had to pay tax on everything for the last 7 years, plus a large fine and insane interest. It makes no sense to me, but there it is.

No kidding.

--------

BTW- forget the tax on a Strad, could you afford the insurance?

October 12, 2007 at 02:35 AM · Ben... would you be happier if I said 6.7 million?

What a dramatic, earth shattering difference.

If someone can find that much money, 450k isn't much at all. I really, really don't think it factors in.

October 12, 2007 at 06:37 AM · 7.2!!?? Geeze!

October 12, 2007 at 07:06 PM · Here's my idea. Yo could buy the instrument, pay the tax, and immediately donate the instrument to an orchestra or conservatory. Have the deductions spread out over as many years as the feds/your state allow. Or find one of those non-profits that does lifetime annuities to you for your sizeable contribution now and make a deal. The proviso to any group is you have life-use of the instrument, and they must pay the insurance and upkeep for you. ;)) Sue

October 12, 2007 at 07:46 PM · Allan, I'm assuming your friend was nailed by the New York State division of revenue (or whatever that agency is called in New York), since there is no federal sales tax.

On the broader topic, I'd also assume that any such taxes wouldn't apply to purchases made outside the United States. That would be your only option, I suppose.

October 12, 2007 at 08:35 PM · If I were to buy a $7,000,000 violin and couldn't afford the tax, I would lower my standards and try to find one for a mere 5 or 6 million to allow necessary headroom.

Are you a Republican?

October 12, 2007 at 09:59 PM · Michael,

Yes, NY State.

October 12, 2007 at 10:06 PM · Live in one state and buy the violin from a dealer in another state. Then, have the violin "shipped" to you in your home state. The reason you don't pay taxes for things bought over internert is because normally, the person doesn't live in the same state as the internet company selling the item. If you do happen to live in the same state as the company, you do pay sales taxes.

October 12, 2007 at 10:11 PM · My understanding is that by law, sales taxes are the obligation of the consumer. So, a merchant of one state may not have to be responsible for the collection of taxes for another. It doesn't remove the burden though from the buyer. I can't however, think of a publically traded retail company where this is the case. JP Morgan once said when he was selling his yacht, "if you have to ask the price you can't afford it." I would imagine that if you can afford to buy a Gesu for $7M, the tax on it would not be such a stretch. Since I would tend to doubt that a rare violin dealer is getting overwhelmed by calls from serious buyers, my advice would be to offer $6.5M.

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