WorthPoint &#187; Jim Sturgill

More Mileage Cents = More Dollars for Antiques & Collectibles

Buy Antiques Now, Have No Regrets Later

Gift Annuity: You Give, Then Receive

Make Profit Your Holiday Mantra

WorthPoint—Get the Most from Your Antiques & Collectibles

Make Profit Your Holiday Mantra

jim sturgill — Tue, 02 Dec 2008 18:19:16 +0000

Editor’s Note: Economic pundits predict dire times ahead for this holiday season. But antiques and collectibles dealers may improve sales by following Jim Sturgill’s common-sense advice.

Today’s business reports are doom and gloom and then more gloom. News stories warn that Christmas buying will be bad and won’t pull us out of the economic morass. We are doomed.

This is despite the Wal-Mart lines (and that tragedy of the worker being trampled to death by overeager shoppers pushing to get in) and the crowds in Target. All of this is being reported. What is being overlooked by the media is the steady stream of folks in and out of antiques shops.

Here in my hometown, antique shops had a respectable Black Friday uptick in traffic. Today, I stopped at a family-owned shop to buy my wife an antique necklace. The owner and I discussed the economy and world affairs as his wife decided which necklace I would buy. During the discussion, I told him of the Pfaltzgraff store where my wife shopped on Saturday. Pfaltzgraff is closing all its retail outlets, and certain retailing tricks can be learned about reducing inventory and increasing cash flow by observing Pfaltzgraff’s methods.

Pfaltzgraff is in the liquidation mode, and our antiques shops are in the sell-and-cash-flow mode. Here are things that may help your sales:

1. Keep the items you want to really move at eye level.
2. Keep the store clean and all lights on.
3. Welcome all who come in.
4. A “thank you” to all who leave even those who don’t buy anything.
5. Don’t clutter aisles.
6. Don’t place similar items together—spread them through the store.
7. Discount those items that have taken up shelf space for years.
8. Buy this and get that for half-price (or whatever—just maintain your overall margin).
9. Don’t let consignment items overwhelm your own inventory.
10. Keep a watchful eye. Thieves are here and everywhere.

A little effort will increase Christmas sales. Profit should always be your mantra.

– Jim Sturgill is a director of WorthPoint and founding partner of Sturgill & Associates LLP, a DC and Baltimore area CPA firm.

WorthPoint—Get the Most from Your Antiques & Collectibles

Gift Annuity: You Give, Then Receive

jim sturgill — Tue, 11 Nov 2008 17:45:28 +0000

Editor’s Note: CPA Jim Sturgill always gives sound advice to antiques-and-collectibles dealers and collectors. Here he suggests a win-win way for anyone to make charitable contributions in this down economy.

There seems to be no end to the bad economic times we are in now. Many of us are tightening our belts and looking for ways to cut expenses. Maybe you used to leave 18 percent for your favorite attentive waitress. Now it’s 15. The hairdresser? You trim some of that tip, as well. And if you’re still taking cabs, you cut corners there.

Maybe entertainment has become renting a movie instead of going to one. And that 52-inch TV with a Blu-ray DVD player that costs $3,200 you’ve been eyeing? The 32-inch sitting in your family room will do just fine.

Charitable giving drops in hard times

Unfortunately, people are also reducing church and other charity donations at a time when these groups and organizations need more, not less, help.

It is a human instinct to keep wealth and not desire to give away cash in hard times. But, what if you could make a donation and receive a return over your lifetime? Actually, there’s no “what if” involved. You can do exactly that with something called a gift annuity. With a gift annuity, you give and you receive.

What is a gift annuity?

Here is how a gift annuity works. You contract with the charity to give it a one-time payment and receive periodic payments back for your lifetime. The charity uses the balance above the payments for its purposes. Many charities have fundraisers who will guide you through the process.

Most charities assume that 50 percent of the gift annuity will remain with them. In light of the hard times, this is a substantial amount. You receive an income-tax deduction for the estimated amount the charity receives. Plus you receive cash monthly or quarterly that will be substantially greater than CD rates. (For more details, you might take a look at what the American Council on Gift Annuities has to say.)

Note of caution: Carefully research the chosen charity. Charitable gift annuities are not insured. If the charity becomes insolvent, you will no longer receive your payments.

Don’t let hard times keep you from doing good. Gift annuities are a way to help a fine cause while helping yourself.

– Jim Sturgill is a director of WorthPoint and founding partner of Sturgill & Associates LLP, a DC and Baltimore area CPA firm.

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WorthPoint—Get the Most from Your Antiques & Collectibles

Simple Ways to Save Money

jim sturgill — Tue, 04 Nov 2008 17:17:36 +0000

I visited a family of antiques dealers this morning at their store in a nearby strip mall. I commented that the store was cold, which resulted in the owner telling me how bad the gas furnace was. Noting that all the ductwork was in the ceiling, I suggested that the ducts may be leaking and heating the area above the ceiling tiles.

While I was explaining payroll-tax withholding to the owners’ wife, the owner got a ladder and discovered that the main seam in the metal ductwork was not sealed and that the area above the ceiling tiles was stifling hot. Some heating and air-conditioning experts estimate that repairing leaking ducts will save 10% to 20%. The owner will be able to repair the ducts himself with some putty and tape.

Raise deductible, lower premium

I reviewed some of the antiques shop’s expense invoices and found that the automobile insurance was high. What was the deductible on their van? I asked. The answer was $200. The wife called their insurance agent and found they could save $400 by increasing the deductible to $500. Increasing the deductible to $1,000 would result in a savings of 40% of the premium!

Next, I checked the shop’s bank statement to make sure the balance was correct. While doing so, I saw several ATM charges. The wife explained that she stopped at the ATM Monday, Wednesday and Friday each week to get cash for family needs. Their bank was across the county, so she used the local bank, which charged an ATM fee. I told her to either change banks or stop at the ATM only once a week because fees were running $468 per year. The ATM fee is $3 if you get $20 or $200.

Paying son to work saves taxes

As I was leaving, their son came to the shop and asked for his allowance. The son is old enough to have a part-time job. It made more financial sense for the antiques shop owner to not pay his son an allowance but instead hire him and pay him a reasonable wage. The payment of the salary would not result in losing the son as a dependent, and his salary would reduce the antiques shop’s income taxes.

Many a father arriving from work to find a house with every light blazing has asked, “What? Do I own stock in the electric company?” Unless antiques dealers own stock in the utility company, bank and insurance firm, why should they pay more of their hard-earned money than necessary? Why pay the IRS more than needed?

And are we to argue with Benjamin Franklin’s sage observation that “a penny saved is a penny earned”? It was true in the 18th century and even truer today in this time of economic turmoil.

My advice? Don’t overlook even the smallest ways to save money. They will add up in the long run.

– Jim Sturgill is a director of WorthPoint and founding partner of Sturgill & Associates LLP, a DC and Baltimore area CPA firm.

More Jim Sturgill Dollar & Sense columns

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Estate Advisor Service – An Interview with Jim Sturgill

WorthPoint Staff — Mon, 03 Nov 2008 14:54:42 +0000

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Why is it important to have your estate evaluated? What should you do with your collection to ensure its value? Jim Sturgill, CPA, of Sturgill and Associates answers these questions and explains how the Estate Advisor Service from WorthPoint can help you value your estate.
WorthPoint – Get the Most from your Antiques and Collectibles.

Financial Turmoil: Antiques Hold Value

jim sturgill — Thu, 18 Sep 2008 04:44:14 +0000

The stock market is in turmoil. Investment banks must be bailed out by the U.S. government. Hedge funds are experiencing investor demands. The largest insurance company must be propped up by the government. Where does it all end? Should I convert all my investments to cash? How about U.S. Treasuries or gold? Or antiques?

We are all anxious not to lose any more in the investment arena. The “talking heads” in the media caution and encourage investments in the same vehicles. U.S. Treasuries are at the lowest rate in years. Gold is touted as a solid investment that will keep up and exceed inflation, but I have seen it go south.

My antiques-dealer client base comes to my mind and to my rescue. I had breakfast with a solid antiques dealer this morning. We were discussing his retirement plans and the huge decrease in the value of his 401(k) retirement-plan assets. I explained to him that the stock-market downturn could last another 18 months, and nobody knows where the “bottom” is. He studied my comment for some time. He then frankly said, “There is no choice. My antiques investments either in inventory or self-owned have not let me down in over 50 years. I will buy more antique inventory and more antiques for my own personal collection.”

Antiques hold value

That was a powerful statement by a knowledgeable market participant. In his more than 50 years of store ownership, his inventory of antiques has held its value. His personal antiques collection did the same.

I thought of the many antiques collectors I know. The oyster-plate collection of my friend in Hanover, Md., has had significant increases in value each time we review her estate plan. The Winchester-rifle collection of an old friend who died recently had increased in value over the years. The basic inventories of our antiques dealers have kept ahead of inflation every since I have helped the antiques dealers take inventory. That is over 50 years!

Now is the best time to invest in antiques for fun and/or profit. Any questions?

– Jim Sturgill is a director of WorthPoint and founding partner of Sturgill & Associates LLP, a DC and Baltimore area CPA firm.

More Jim Sturgill Dollar & Sense columns

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WorthPoint—the premier Web site for art, antiques and collectibles

When Art & Antiques Cause a Bloody Nose

jim sturgill — Sat, 16 Aug 2008 14:39:40 +0000

You never know what’s going to set off a family fight in the world of art, antiques and collectibles. In the case of the Krebs clan, it began with a three-scoop, chocolate ice-cream cone.

The Krebs family settled in our area of Maryland in the 1700s. It has many members with quite a few successful farmers. Back in the 1970s, one of them operated an antiques shop and homemade ice-cream store. Such stores were few and far apart, and people drove as many as 50 miles for their banana splits, shakes and cones.

The wife of the antiques shop/ice-cream store owner was an amateur artist who painted landscapes that she would sell in the shop. Her paintings were good, and some of them were given an “old” look. They were displayed on a table with a sign identifying the wife as the artist.

One summer afternoon, one of the owner’s brothers stopped by and ordered a chocolate cone—three scoops, the ice cream was that good. While enjoying his treat, the brother wandered into the antiques shop to browse. He looked at the horse harnesses, bridles and halters that were used by farmers some 50 years back. He examined the old hand tools. All of a sudden, two very old paintings caught his attention. They were very well priced, and he knew he must have them in his parlor. Unbeknown to all concerned, the antiques shop clerk had removed the sign identifying the artist in order to dust the table and forgot to replace it.

The brother purchased the two paintings and proudly displayed them where he had envisioned them in his parlor. He showed all his visitors the paintings and gleefully told them how his brother had underpriced such quality art.

There came a time when the antiques owner and his wife visited the brother. The brother couldn’t help smirking about his good-quality old paintings and how cheaply he had gotten them. The dealer’s wife couldn’t help thanking her brother-in-law for buying and displaying her art in such a grand manner. After a bloody nose, peace was declared, and the paintings were returned to the dealer.

Nowadays, a Worthologist from WorthPoint can identify the value of paintings thereby eliminating the need to punch a relative.

– Jim Sturgill is a director of WorthPoint and founding partner of Sturgill & Associates LLP, a DC and Baltimore area CPA firm.

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Estate Planning—Stop the Squabbling, Save the Family

acenh — Fri, 08 Aug 2008 21:10:07 +0000

When it comes to dividing an estate, ordinarily level-headed, rational people often act like 3-year-olds arguing over who gets the Slinky and who gets the yo-yo. The funeral is barely concluded when the squabbling begins over the disposition of art, antiques and collectibles.

“Why do you get the antique Lalique wineglasses? You don’t know a Burgundy from a Bordeaux.”

“I’m taking the Napoleon III bookcase.”

“Oh no, you’re not. Aunty always said it would look perfect in my living room.”

And on and on.

I am often asked how to protect antiques. That question was posed to me by the nephew in a wealthy family. The nephew had just been appointed executor of his aunt’s estate. He is an attorney, and I saw immediately that he took the appointment very seriously.

The nephew’s aunt is elderly and in good health. She lives in a large stone home stuffed with three generations of antiques and collectibles, which, the nephew said, she did little to protect. Her many items included oyster plates, flow blue china, handguns and long guns from the Revolutionary and Civil Wars. The nephew referred to his aunt’s home as a museum.

Stop the arguing before it begins

I asked about the will and the disposition of the antiques. The aunt had had an unpleasant experience some years past when she gave her siblings and nieces and nephews some of her collection. There were quarrels over who got which antique and dissatisfaction with individual items received. This was too much for the spinster aunt, who hated confrontation. Because of this, she had decided that all her belongings should be converted to cash and the cash given to her family and charities. She wants all her antiques and collectibles auctioned and each of her relatives given the opportunity to buy what they want.

We hired professionals to inventory and value the aunt’s extensive collection. The inventory consisted of digital images, serial numbers, detailed written description. We also had her home wired for security, and a security service hired. All the antiques and collectibles are insured now. The inventory will be checked at least annually by a qualified professional.

This list will help in identifying items stolen or lost. The insurance is expensive but deemed necessary to preserve the estate. I have found that in the case of most families, it is best to convert all estate items to cash to prevent sibling disagreements that last a lifetime.

The action taken in this case happened before WorthPoint. I will encourage the nephew to use WorthPoint’s Estate Services Division when that time comes. Please check out this division services.

– Jim Sturgill is a director of WorthPoint and founding partner of Sturgill & Associates LLP, a DC and Baltimore area CPA firm.

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Estate Planning—Antiques, Collectibles & GREED

acenh — Fri, 01 Aug 2008 04:30:13 +0000

Inheriting fine collectibles, antiques and art sometimes brings out unattractive qualities in people, one being greed. Let me assure you that despite what the Michael Douglas character proclaimed in “Wall Street,” greed is not good.

Take the case of one of my older friends who had a very valuable Winchester lever-action rifle collection. My friend died 10 years ago at the tender age of 90. He had been acquiring Winchesters since he was in his teens. His collection consisted of all calibers; he even had two “Henrys.”

My friend owned a thriving nursery that sold plants wholesale to the many garden outlets you see along the highway, as well as to box stores, such as Lowe’s and Wal-Mart. I visited him regularly to attend to the nursery’s tax-reporting requirements. Because of my interest in firearm antiques, we discussed his collection and mine very often. I told him his collection was so valuable that he should have it insured. But, he assured me the fireproof, concrete vault where he stored the rifles was sufficient. Then I suggested that he have the collection photographed and categorized by year manufactured, serial number and caliber. He did and gave me a copy.

My friend did not have children, and one of his several nephews was the executor of his estate. My responsibilities were written in my friend’s will and that was to assist the executor file the federal estate-tax return. The nephew pulled together the estate’s assets and had them appraised. He gave me the appraisals so I could file the return. While filling out the various forms, I noticed something was missing—the Winchester collection! I asked the nephew about it, and he told me, “Uncle sold that last year. It’s gone.” I said that was strange as his uncle had promised to offer the Henrys to me first. Looking anxious, the nephew dismissed me. Well, the legal system dismissed the nephew and appointed me executor. Upon prodding from uncles and 28 first cousins, the nephew came up with the Winchester collection minus the Henrys. The court considered the inventory of Winchesters critical.

The inventory of Winchesters is a lesson learned. I am recommending that all my clients who have antiques and collectibles contact WorthPoint to have their valuables identified, categorized and valued.

– Jim Sturgill is a director of WorthPoint and founding partner of Sturgill & Associates LLP, a DC and Baltimore area CPA firm.

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Estate Planning—Where Are the Coin Collectibles?

jim sturgill — Fri, 25 Jul 2008 15:08:35 +0000

During the early 1980s, one of my favorite clients was the owner of an antiques shop who also owned a restaurant and bar with several pool tables. The client was rather elderly but quite alert and worked long hours seven days a week. During the 1930s, ’40s and ’50s, his restaurant supplied area service clubs with fried chicken and fried fish (known as a chicken fry or fish fry). He was a prime contractor for the service clubs in their fund-raising activities such as carnivals, fairs, Fourth of July fireworks etc. His wife and children managed the antiques shop.

I had been in the client’s small office several times and noted that a countertop was supported by three 55-gallon barrels. On one occasion, the client was chatty, and I asked him about the barrels. He explained that they had been there since the late ’50s when he “gave up my one-armed bandits.” I stared at him.

He explained that at a fish fry or chicken fry from the 1920s through the 1950s, the service clubs and churches let him bring a horse-drawn flatbed wagon with slot machines attached so gamblers could stand shoulder to shoulder dropping in coins. He told me he had slot machines that played 1 cent or 5 cent or 10 cent or 25 cent and “hog dollars.” He shared the winnings with the sponsor. Again, I asked why the barrels. He stated, “Jim, they are full of coins—been there since the ’50s!”

Hidden treasure

The client and I took the countertop off the barrels, and I thought I was looking at Long John Silver’s treasure. I remember seeing very old 50-cent pieces, Buffalo 5-cent pieces, old dimes, silver dollars with 1800 dates. I was shocked, and he belly-laughed at me for five minutes. Each barrel was so heavy that I could not even budge it. I told him he should put the old coins in the bank or do something to protect them. He was not worried and would get around to it soon. We never talked about the coins again because that was his choice.

My client died three years later. I assumed he had taken care of the coins properly. The only professional responsibility I had with his estate was to prepare its income-tax return. In doing so, I noted that the coins were not on the probate-court documents. When I inquired about the coins, I was informed “Dad had a gambling problem and had converted the coins to paper money and lost it at the track.” At that point, I was dismissed as the accountant. I do know that my old client did not gamble unless he held “house odds,” and he told me the “ponies don’t pay.”

Should a similar situation occur today, I have WorthPoint and the Worthologists to consult. Proper identification of antiques of all sorts and reporting their value on estate-tax returns is required by the IRS. Tax evasion is a felony.

—Jim Sturgill is a director of WorthPoint and founding partner of Sturgill & Associates LLP, a DC and Baltimore area CPA firm.

Jim Sturgill’s Dollar & Sense Column

Maintain the Value of Your Art, Antiques, or Collectibles Business

More Mileage Cents = More Dollars for Antiques & Collectibles

18 Things Worth Knowing about the Business of Antiques and Collectibles”

18 Things Worth Knowing about the Business of Antiques and Collectibles

jim sturgill — Tue, 22 Jul 2008 02:42:11 +0000

In case you didn’t know:

* There are more than 41,500 antiques shops/dealers in the U.S.A.. according to the “2008 Business Reference Guide.”

* Many antique shops have sold for 20% of annual sales plus inventory at cost. This is a rule of thumb and not applicable to all antiques shops.

* Most antiques shops are started by collectors.

* U.S. Custom laws define an antique as 100 years old at the date of purchase.

* Many antiques shops really do not sell antiques. Does that make them used-furniture stores?

* An insurance premium paid by an antiques shop is a deductible expense.

* Insurance premiums paid by a collector may be deductible as an investment expense subject to the 2%-reduction rule.

* Insurance premiums paid by a collector may not be added to basis in order to reduce gain on sale or offset insurance proceeds (Midwest floods).

* A buyer’s fee for purchase of an antique is added to the cost of the antique.

* The IRS taxes the gain on the sale of antiques held for one year or more at 28%.

* The IRS taxes the gain on the sale of stocks held for one year or more at 15%.

* Many occasional antiques sellers’ tax bracket is less than 28%.

* Shop layout and good inventory display will help with antiques sales.

* Tasteful signage will bring customers to your antiques shop.

* A “welcome” to each customer who enters your antiques shop will be remembered.

* A “thank you” to each customer who leaves your antiques shop will be remembered.

* Too much attention given a customer may sour a possible sale.

* Too little attention will drive a customer to another antiques shop.

—Jim Sturgill is a director of WorthPoint and founding partner of Sturgill & Associates LLP, a DC and Baltimore area CPA firm.

Jim Sturgill’s Dollar & Sense Column

Maintain the Value of Your Art, Antiques, or Collectibles Business

More Mileage Cents = More Dollars for Antiques & Collectibles