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Thread: Taxable Postage Stamps?

  1. #1
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    Default Taxable Postage Stamps?

    The U.S. Postal Service has proposed yet another rate increase,
    this one would raise first class postage to 42 cents in May, 2007.

    At the same time they also propose issuing a "forever stamp", which
    would also cost 42 cents. This stamp would be valid despite any further
    rate increases. (See article)

    Query: When the rate increases above 42 cents to, say 45 cents, does
    the use of a forever stamp constitute a capital gain?

    Please note that this inquiry is made in complete jest -- unless, of
    course, the answer is in the affirmative. <g>

    http://www.washingtonpost.com/wp-dyn...050301039.html


  2. #2
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    Default Taxable Postage Stamps?

    In article <nbim521gl3rhcndllv7uv1h3brq1mqkd9g@4ax.com>,
    William Brenner <wbrenner@nospamplease.net> wrote:
    The U.S. Postal Service has proposed yet another rate increase,this one would raise first class postage to 42 cents in May, 2007.At the same time they also propose issuing a "forever stamp", whichwould also cost 42 cents. This stamp would be valid despite any furtherrate increases. (See article)Query: When the rate increases above 42 cents to, say 45 cents, doesthe use of a forever stamp constitute a capital gain?Please note that this inquiry is made in complete jest -- unless, ofcourse, the answer is in the affirmative. <g>http://www.washingtonpost.com/wp-dyn...050301039.html

    Cute.

    I don't see any difference between this proposal and a local
    movie theater saying ticket prices will go up but anyone who buys
    a ticket this week can use it any time in the future. Just a cost
    of doing business thing.

    However, many people are not aware that the Post Office caught up
    with some European nations who issue charity surchage stamps, for
    charities like breast cancer and firefighters. These stamps carry
    a surcharge that doesn't go towards the required postage but is
    funneled to designated charities. Deduct the surcharge.

    And deduct the surcharge paid for state license plates that
    funnel additional collected fees to state conservation agencies,
    state colleges, and other charities/gov't agencies for charitible
    donations.



    --

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    Art Kamlet ArtKamlet @ AOL.com Columbus OH K2PZH


  3. #3
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    Default Taxable Postage Stamps?

    >The U.S. Postal Service has proposed yet another rate increase,
    this one would raise first class postage to 42 cents in May, 2007.At the same time they also propose issuing a "forever stamp", whichwould also cost 42 cents. This stamp would be valid despite any furtherrate increases. (See article)
    Why would one buy anything *BUT* the "forever stamp"? It costs the
    same, but if you hold one across a rate increase, you don't have
    to pay the increase.
    Query: When the rate increases above 42 cents to, say 45 cents, doesthe use of a forever stamp constitute a capital gain?
    I believe that if you *SELL* the stamp for 45 cents, it would be
    a capital gain.

    If using the stamp were a capital gain, I'd hate to think of the
    tax situation and lots of paperwork with the price of gasoline (what
    is "THE price of gasoline"?) changing multiple times while you use
    up the tank.

    There are plenty of situations where you can lock in a fixed price
    on a long-term contract, then get the advantage of a lower price
    than what anyone else could get later (e.g. apartment leases).
    These are not taxed as capital gains as far as I know.
    Please note that this inquiry is made in complete jest -- unless, ofcourse, the answer is in the affirmative. <g>http://www.washingtonpost.com/wp-dyn...050301039.html
    Gordon L. Burditt


  4. #4
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    Default Taxable Postage Stamps?

    William Brenner wrote:

    < The U.S. Postal Service has proposed a "forever stamp" that would
    always be good for first class postage regardless of future rate
    increases>
    Query: When the rate increases above 42 cents to, say 45 cents, does the use of a forever stamp constitute a capital gain? Please note that this inquiry is made in complete jest -- unless, of course, the answer is in the affirmative. <g>
    Um, the answer IS yes. <g>

    If you bought a million of 'em at $0.42 and the value went up to $0.45,
    you would have an (unrealized) gain of thirty thousand dollars.

    Of course, you would only have to declare that gain and pay taxes on it
    if you SOLD the stamps, and then your gain would be measured by what
    you actually sold them for.

    If all you do is USE the stamps for postage, you got what you paid for
    and there is no taxable gain IMO. It's as if you bought tickets to a
    Rolling Stones concert for face value and then had the choice to either
    (a) attend the concert or (b) scalp the tickets to an eager fan for the
    going rate on Ebay, far above the face value. There is no reportable
    income if you just go to the concert. If you sell the tickets and
    make money on the sale, though, there is. If you use the stamps for
    business purposes, you would be entitled to deduct the actual purchase
    cost basis of the stamps you bought at the time you bought them (if on
    a cash accounting basis) but not their appreciated value at the time of
    actual use. Unless you really enjoy paying your accountant and tax
    attorney to jump thru these hoops, I'm assuming this is all in fun
    anyway.

    I am NOT a tax attorney and the above is NOT legal advice but just
    speculation from a fellow taxpayer.

    --
    This posting is for discussion purposes, not professional advice.
    Anything you post on this Newsgroup is public information.
    I am not your lawyer, and you are not my client in any specific legal
    matter.
    For confidential professional advice, consult your own lawyer in a
    private communication.
    Mike Jacobs
    LAW OFFICE OF W. MICHAEL JACOBS
    10440 Little Patuxent Pkwy #300
    Columbia, MD 21044
    (tel) 410-740-5685 (fax) 410-740-4300


  5. #5
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    Default Taxable Postage Stamps?

    In article <nbim521gl3rhcndllv7uv1h3brq1mqkd9g@4ax.com>,
    William Brenner <wbrenner@nospamplease.net> wrote:
    Query: When the rate increases above 42 cents to, say 45 cents, doesthe use of a forever stamp constitute a capital gain?
    I would say no; I bought a service, delivery of a first-class letter
    (at a time of my choosing), and received that service.

    Seth


  6. #6
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    Default Taxable Postage Stamps?


    William Brenner wrote:
    The U.S. Postal Service has proposed yet another rate increase, this one would raise first class postage to 42 cents in May, 2007. At the same time they also propose issuing a "forever stamp", which would also cost 42 cents. This stamp would be valid despite any further rate increases. (See article) Query: When the rate increases above 42 cents to, say 45 cents, does the use of a forever stamp constitute a capital gain? Please note that this inquiry is made in complete jest -- unless, of course, the answer is in the affirmative. <g>


    Well, if it does, then all my supermarket coupons are taxable income.
    What a thought!

    Katie in San Diego


  7. #7
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    Default Taxable Postage Stamps?

    William Brenner wrote:
    At the same time they also propose issuing a "forever stamp", which would also cost 42 cents. This stamp would be valid despite any further rate increases. (See article) Query: When the rate increases above 42 cents to, say 45 cents, does the use of a forever stamp constitute a capital gain?
    Not until you use it. Until then it'll be an unrealized gain. Also you
    should schedule this on your Return as a passive investment where you
    have all your investment at risk.

    Do not schedule as an active investment unless you become Postmaster
    General.

    -paul
    I had fun too


  8. #8
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    Default Taxable Postage Stamps?

    "William Brenner" <wbrenner@nospamplease.net> wrote in message
    news:nbim521gl3rhcndllv7uv1h3brq1mqkd9g@4ax.com...
    The U.S. Postal Service has proposed yet another rate increase, this one would raise first class postage to 42 cents in May, 2007. At the same time they also propose issuing a "forever stamp", which would also cost 42 cents. This stamp would be valid despite any further rate increases. (See article) Query: When the rate increases above 42 cents to, say 45 cents, does the use of a forever stamp constitute a capital gain? Please note that this inquiry is made in complete jest -- unless, of course, the answer is in the affirmative. <g> http://www.washingtonpost.com/wp-dyn...050301039.html
    If you sell the stamps for more than you paid, then it would be a capital
    gain. If you use the stamps for your own personal or business purposes, then
    it is not a capital gain.



  9. #9
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    Default Taxable Postage Stamps?

    William Brenner wrote:
    The U.S. Postal Service has proposed yet another rate increase, this one would raise first class postage to 42 cents in May, 2007. At the same time they also propose issuing a "forever stamp", which would also cost 42 cents. This stamp would be valid despite any further rate increases. (See article) Query: When the rate increases above 42 cents to, say 45 cents, does the use of a forever stamp constitute a capital gain? Please note that this inquiry is made in complete jest -- unless, of course, the answer is in the affirmative. <g> http://www.washingtonpost.com/wp-dyn...050301039.html
    does this also imply a possible futures market ??


  10. #10
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    Default Taxable Postage Stamps?

    In article <nbim521gl3rhcndllv7uv1h3brq1mqkd9g@4ax.com>,
    William Brenner <wbrenner@nospamplease.net> wrote:
    The U.S. Postal Service has proposed yet another rate increase,this one would raise first class postage to 42 cents in May, 2007.At the same time they also propose issuing a "forever stamp", whichwould also cost 42 cents. This stamp would be valid despite any furtherrate increases. (See article)Query: When the rate increases above 42 cents to, say 45 cents, doesthe use of a forever stamp constitute a capital gain?Please note that this inquiry is made in complete jest -- unless, ofcourse, the answer is in the affirmative. <g>
    A) this is an accounting question, not a legal one. try asking in one of
    the 'investment' newsgroups.

    B) What if you *sell* the forever stamps to somebody else, at a price above
    what you paid for them, but somewhat below the Post Office's current
    'retail' price for postage? does _that_ incur capital gains liability?

    C) In either scenario, which depreciation schedule do you use for the stamps?

    D) If a letter with one of those stamps on it comes back as 'undeliverable',
    can you claim a capital loss? If so, how much -- purchase price,
    'depreciated' value, or replacement cost?


  11. #11
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    Default Taxable Postage Stamps?

    In article <gfbt52997gcr67qvc49s15qj31jvn8h93j@4ax.com>,
    gordonb.0ybsb@burditt.org (Gordon Burditt) wrote:
    The U.S. Postal Service has proposed yet another rate increase,this one would raise first class postage to 42 cents in May, 2007.At the same time they also propose issuing a "forever stamp", whichwould also cost 42 cents. This stamp would be valid despite any furtherrate increases. (See article) Why would one buy anything *BUT* the "forever stamp"? It costs the same, but if you hold one across a rate increase, you don't have to pay the increase.
    The Post Office is betting that some people will lose them or never
    getting around to using them. That's revenue they'll receive now (and
    can invest immediately) for services they'll never have to render.

    --
    Barry Margolin, barmar@alum.mit.edu
    Arlington, MA
    *** PLEASE don't copy me on replies, I'll read them in the group ***


  12. #12
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    Default Taxable Postage Stamps?

    "Robert Bonomi" <bonomi@host122.r-bonomi.com> wrote in message
    news:tfbt525lm0vthljpikod77tfbhgd9kj63p@4ax.com...
    A) this is an accounting question, not a legal one. try asking in one of the 'investment' newsgroups.
    No need. Some on this newsgroup are CPA's.

    B) What if you *sell* the forever stamps to somebody else, at a price above what you paid for them, but somewhat below the Post Office's current 'retail' price for postage? does _that_ incur capital gains liability?
    There would be a capital gain if they were sold above what was originally
    paid (basis). Fair market value or what the Post Office currently charges is
    irrelevant once they are sold. What matters is the sales price. If they are
    not sold, there is no capital gain or loss.
    C) In either scenario, which depreciation schedule do you use for the stamps?
    Stamps that are purchased and not allocated or used for a specific purpose
    are not depreciable assets.

    Unless you buy an awful lot of them at one time, stamps are usually
    expensed, not capitalized. The exception would be if the stamps are used
    specifically to support the creation of a capital asset, such as a
    construction project, and everything relating to the project is capitalized.
    D) If a letter with one of those stamps on it comes back as 'undeliverable', can you claim a capital loss? If so, how much -- purchase price, 'depreciated' value, or replacement cost?
    No. The cost of the postage could be expensed (to a business), but it is not
    a capital gain or loss unless you specifically bought the stamps for
    investment purposes and they were sold.

    In certain cases, it could be a casualty loss (not a capital loss) to an
    individual or business, but I don't believe that this situation
    (undeliverable) would qualify.

    You cannot expense an item (either currently or over time via depreciation
    of a capital asset) AND claim a capital or casualty loss.



  13. #13
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    Default Taxable Postage Stamps?


    Gordon Burditt wrote:
    The U.S. Postal Service has proposed yet another rate increase,this one would raise first class postage to 42 cents in May, 2007.At the same time they also propose issuing a "forever stamp", whichwould also cost 42 cents. This stamp would be valid despite any furtherrate increases. (See article) Why would one buy anything *BUT* the "forever stamp"? It costs the same, but if you hold one across a rate increase, you don't have to pay the increase.
    I'd assume it only works for first class letter mail ...
    I'm still using up our own as well as other people's leftover stamps
    from several rate increases ago to put together other postages
    (priority, first class package, international) - that only works
    when the value of the stamp is on the stamp as a number.
    If you mostly mail standard letters the forever stamp may work for
    you. If you run a small mail-order business where the smallest
    is a non-machinable letter (OK, I know it would work for that but you
    still ahve to have the extra stamp for the non-machinable surcharge)
    it probably won't ...

    Aloha,

    Maren
    Palms, Etc.: Tropical Plant Seeds - Hand-made Jewelry - Plants &
    Lilikoi
    http://www.jach.hawaii.edu/~maren/palms_etc/


  14. #14
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    Default Taxable Postage Stamps?

    In misc.legal.moderated Gordon Burditt <gordonb.0ybsb@burditt.org> wrote:
    The U.S. Postal Service has proposed yet another rate increase,this one would raise first class postage to 42 cents in May, 2007.At the same time they also propose issuing a "forever stamp", whichwould also cost 42 cents. This stamp would be valid despite any furtherrate increases. (See article)
    Why would one buy anything *BUT* the "forever stamp"? It costs the same, but if you hold one across a rate increase, you don't have to pay the increase.
    If postage goes to $0.42 and you buy a "forever stamp" then it's good to use
    at any time. But if postage then rises to $0.46 and you have used up your
    "forever stamp(s)" you have to buy more at the then-current $0.46, etc. I.e.
    you can't buy them 10 years from now at the $0.42 rate. So yes, basically
    they'll wind up selling nothing but "for-ever stamps" and not selling
    "regular stamps" but they won't keep selling "for-ever stamps" at a rate of
    $0.42 'for-ever.'



    --
    Mike

    -------------------------------
    "Our enemies are innovative and resourceful, and so are we. They never stop
    thinking about new ways to harm our country and our people, and neither do
    we," George W. "Shrub" Bush Aug 5, 2004


  15. #15
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    Default Taxable Postage Stamps?

    Stan Brown <the_stan_brown@fastmail.fm> wrote:
    AIUI, these days the Postal Service is supposed to break even, and in particular the cost of a stamp is supposed to cover the cost of a letter. While the increases may look large because they're so visible, in fact in recent years they have been more modest than some other increases. Health care and health insurance come to mind.
    If they're not doing as well as they should, as far as I'm concerned
    it's their own fault. Their customer service is absolutely horrible
    (not to mention their reliability leaves much to be desired). No
    wonder people use other delivery services when possible.

    Stu


  16. #16
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    Default Taxable Postage Stamps?

    >> >The U.S. Postal Service has proposed yet another rate increase,
    this one would raise first class postage to 42 cents in May, 2007.At the same time they also propose issuing a "forever stamp", whichwould also cost 42 cents. This stamp would be valid despite any furtherrate increases. (See article) Why would one buy anything *BUT* the "forever stamp"? It costs the same, but if you hold one across a rate increase, you don't have to pay the increase.The Post Office is betting that some people will lose them or nevergetting around to using them. That's revenue they'll receive now (andcan invest immediately) for services they'll never have to render.
    This is true of stamps in general, not just the "forever" stamp.

    Assuming that the "forever" stamp and ordinary stamps cost the same
    for first class postage, why buy an ordinary stamp? If I buy a
    roll of 100 stamps with intent to use them within the next month,
    why not get free insurance that postal rates won't go up during
    that time? There's no down side.

    The "forever" stamp delays how quickly the Post Office can make a
    rate increase "take". Rumors of a pending rate increase will set
    off speculative buying of cheaper "forever" stamps while they're
    still available. Even if the rate increase is a complete surprise
    to the public, how long will the public's inventory of stamps last?
    For a month or so most of the stamps used will be those bought at
    the lower rate.

    Gordon L. Burditt


  17. #17
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    Default Taxable Postage Stamps?

    "Barry Margolin" <barmar@alum.mit.edu> wrote in message
    news:9j0462dj4222u784ivnaphohru7r2jmr8p@4ax.com...
    The Post Office is betting that some people will lose them or never getting around to using them. That's revenue they'll receive now (and can invest immediately) for services they'll never have to render. -- Barry Margolin, barmar@alum.mit.edu
    I suspect that the reason for the "forever stamps" is that the Post Office
    does not make much (if any) money by servicing people who stand in line to
    buy $.03 stamps when rates increase. At the rate they pay the counter help,
    and the cost of printing and distributing the $.03 stamps, they probably
    only break even.

    The Post Office is loosing business every day to electronic mail, electronic
    payments, and even electronic billing. Providing better customer
    satisfaction about using the US Mail is in their own best interests.



  18. #18
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    Default Taxable Postage Stamps?

    In article <7ii6625jjh8epjgch0l3ec4mdkluqfjmlq@4ax.com>,
    Barry Gold <bgold@nyx.net> wrote:
    The Federal Government can make anything illegal it feels like, but inthe past they have treated postage stamps as fully transferable,assignable, and refundable promises of future service. That is, youcan sell or give stamps to somebody else to use for postal "services",or you can take them to the post office and turn them in for theirface value.
    I don't believe the last item is correct. If you take a roll of
    37c stamps back to the Post office, they will not accept them
    back, either for other denomination postage or for cash. (An
    exception exists for damaged stamps.)
    --

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    Art Kamlet ArtKamlet @ AOL.com Columbus OH K2PZH


  19. #19
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    Default Taxable Postage Stamps?

    Stan Brown wrote:
    AIUI, these days the Postal Service is supposed to break even, and in particular the cost of a stamp is supposed to cover the cost of a letter.
    They aren't merely supposed to break even, they're *guaranteed* to break
    even. My business doesn't get such a guarantee, nor does it get to write
    self-interested regulation calculated to hamper its competitors.
    Moreover, given how much they've spent on automation, their costs should
    have risen significantly slower than inflation, but that's not reflected
    in their stamp pricing. The USPS is like any other federal bureaucracy:
    a fat, bloated money sink with no discipline or incentive to manage
    costs or improve service.

    Some states have started allowing private companies to compete with the
    state's employee's unions for providing it services. The unions have to
    bid and compete like everybody else. Some of the union bids have won!
    It's really clamped down on cost increases in the state's budgets, since
    the unions don't get to treat the state's taxpayers like their own
    private bank (something most visible in CA, for example).
    ..


  20. #20
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    Default Taxable Postage Stamps?

    Sat, 13 May 2006 13:35:19 -0400 from Bob <bob@nospam.com>:
    Stan Brown wrote:
    AIUI, these days the Postal Service is supposed to break even, and in particular the cost of a stamp is supposed to cover the cost of a letter.
    They aren't merely supposed to break even, they're *guaranteed* to break even. My business doesn't get such a guarantee, nor does it get to write self-interested regulation calculated to hamper its competitors.
    Your business is also not required to perform equal services for
    people in remote locations, without exception.

    The Postal Service is a utility, not a business, regardless of what
    the legislation says. It used to be an arm of the government, openly
    supported by taxation; it ought to be again.

    --
    If you e-mail me from a fake address, your fingers will drop off.

    I am not a lawyer; this is not legal advice. When you read anything
    legal on the net, always verify it on your own, in light of your
    particular circumstances. You may also need to consult a lawyer.

    Stan Brown, Oak Road Systems, Tompkins County, New York, USA
    http://OakRoadSystems.com


  21. #21
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    Default Taxable Postage Stamps?

    kamlet@panix.com (Arthur Kamlet) wrote:
    I don't believe the last item is correct. If you take a roll of 37c stamps back to the Post office, they will not accept them back, either for other denomination postage or for cash. (An exception exists for damaged stamps.)
    I've had them take a full roll of stamps back, as long as I was
    exchanging it for a roll of higher value.

    Apparently if you have unused lose stamps they will give you 80% of
    the face value back.

    Stu


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