Record Keeping

"The longest journey begins with a single step — and a record."

Nobody knows your collection as well as you do. The hours you have spent or will spend enjoying it give you a familiarity that another person could never match. As such, no one is more qualified to record your collecting activities than you are. Creating a permanent record for your collection can be either an easy task or a daunting one. While we are sure that the quote below the title of this chapter was created for some other circumstance (likely double-entry book-keeping), there are definite parallels. If you begin an inventory with the first purchase and continue to build it on a "log as you go" basis, the task will not be onerous, and either you or your heirs (or both) will be rewarded when the journey is done. This is the best solution because the time spent logging each transaction is minimal, the information is fresh, and a pattern of activity is started that will become habit as your collection develops.

Coin Inventory

For coin collectors, HA.com has a free and particularly useful feature called "My Collection" which allows the coin collector to keep a private record of items owned, bought, or sold.

Handwritten or Computer Generated — The Choice Is Yours

The important thing is that you create an inventory of your collection. The method you use to accomplish this is a matter of personal preference. Some collectors love numbers and statistics, and may take some additional pleasure in having a well-organized record. This may well take the form of a hand-written ledger, with each item and its history meticulously entered across the columns. Please be honest with yourself, however. If your handwriting is sometimes indecipherable even to you, please consider how difficult (if not impossible) it would be for your heirs to try to understand those illegible entries and guess at your intent. In this rapidly advancing age of computers and software programs, help is available. Many computer software programs have been written to assist in record-keeping of inventories.

If you are somewhat computer literate and either dislike packaged programs or don't want all the "bells and whistles," you can create your own record-keeping file on any spreadsheet program such as Microsoft® EXCEL or WORKS.

If you use either a manual record or create your own computer file, you need to include at a minimum, the following information:

Necessary Items — If creating your own computer file, each of these items should be posted in a separate column to allow easy categorical sorting:

• Purchase Date

• Date (or approximate date) item was made

• Mintmark (if a coin) or other markings (i.e., Publisher — for books)

• Denomination (if a coin)

• Variety (where applicable)

• Grade or Condition
  If you are recording uncertified coins, or un-authenticated collectibles, please consider that your heirs will be inclined to accept your opinion as gospel. If you "stretch," you will both overvalue your collection for estate tax purposes and make it virtually impossible for your heirs to be comfortable with any disposition option.

• Grading Service or Appraiser (where applicable)

• Certificate ID Number — for coins, comics and cards (where applicable)
  This is the inventory number assigned by the grading service and found on the grading label of the holder. It provides item-specific identification where the collection has multiple identical items and is valuable as a recovery tool in the unfortunate event that the collection was stolen. If you have a software package that does not include this option, you should list this number in the notes field.

• Purchase Price
  This information is especially useful for tax purposes, when selling items, and recording capital gains.

Optional Items might include:

• Where You Purchased the Item
  This is a helpful reference for pedigree, recovery issues; particularly valuable if from a recognized auction house and sale. Often, your heirs will not know your major (trusted) sources of collectibles.

• Related Expenses That Would Impact the Acquisition Cost
  Acquisition expenses are part of the basis of your collection for estate purposes. If you traveled to an auction or convention to make purchases, reasonable travel expenses relative to the amount purchased may be assigned (more on this later).

• An Issue Numbering System (for coins)
  In the case of rare coins, one easy method for sorting and organizing collection records by computer is the use of an issue numbering system that sequences each coin by denomination, date and mint mark. The Professional Coin Grading Service (PCGS) employs such a numbering system. Their numbers are widely recognized in the industry and can be found by acquiring theirPopulation Report. An additional benefit in recording purchases using this system is that each PCGS coin has its issue identification number on the grading label.

• An Inventory Numbering System
  You might also benefit from having your own inventory numbering system to link the items to the record. Numbers could be sequential (e.g. 00001), reflect the purchase date (e.g. 9912001), or any other system that makes it easy to pick up a piece of your collection and quickly identify it in the record.

• Location
  This is particularly important if your collection is extensive and spread out around your house, in safe-deposit boxes, in different banks, or other storage sites. Also, if you have annotated a group of objects as a single line item on your inventory, try to keep them together in one location.

Determining Values

Red Book, Trends, and Coin Dealer Newsletter are popular guides for determining value for coins and currency collectors. The Overstreet Price Guide is used for comics(a digital copy can be obtained from the HeritageComics.com website). Other publications are relevant to each collectible.

CONTINUING ITEMS — Once your files are created, two functions are quite important to the process. One is annotating any items that you have sold or traded. (Can you imagine the amount of time your heirs would spend looking for listed objects if you neglected to note that you had sold them ten years prior?) The second is to create a periodic value update. Packaged software may provide this option, but if you're creating your own file, you'll need to consider:

• Value
  Value Source. We would recommend that you use a wholesale pricing guide, as something approximating liquidation value is usually more beneficial for estate purposes. You should note the source, so your heirs can use the same one.

• Last Evaluation Date
  We recommend that you update your records at least semi-annually and more frequently if you acquire and/or dispose of significant items. Always date the evaluation on the inventory

• Sales Date (if applicable)
  If you sell or trade something, please annotate it in your record. One way of addressing this is to conduct an annual inventory and note either that you found the article or explain its absence.

  Creating and maintaining the inventory record is paramount, but there are several related tasks that are also important.

• Retain All Purchase Invoices
  The IRS loves receipts. Having the majority of your cost basis documented lends credibility to those entries for which no invoice was provided. We recommend that you file your invoices sequentially by purchase date and if you have created your own inventory-numbering system, mark the matching numbers on the invoice.

• Retain Receipts For Related Expenses
  Certain expenses surrounding the acquisition, development and disposition of your collection may raise your cost basis, while others may be deductible in the current tax year. Grading service fees, shipping expenses, travel expenses and sales commissions or fees are examples. Rules vary too widely for any simple guideline beyond: keep every receipt and discuss your personal situation with your tax advisor.

• Maintain Duplicate Records
  Or back up your computer files. We recommend you keep one inventory at your primary place of residence and one off-site, perhaps in your safe deposit box with your other important papers. This is a safeguard against everything from a computer crash to theft or natural disaster, and is valuable from both an estate planning and insurance claim standpoint.

• Record Your Wishes in Writing
  If you wish to leave your collection to a specific heir, or if you wish specific objects to go to different heirs, thismustbe in your will to be effective. New, separate lists should be provided to identify the division of your collection. A very good means of handling it is for you to physically segregate the coins, invoices and other records in accordance with your bequest. Alternatively, the general inventory can be annotated to identify the heir for each line item.

• Playing "Catch Up"
  "What if I don't have the records and I've been collecting for many years? How can I recreate them and what is this 'basis' you're talking about?"

  Records are extremely important because in their absence, your basis for taxes (which basically means your cost) is the face value in the case of the coins. The task of catching up is ponderous, but necessary, to avoid an unnecessary tax bill. The IRS will generally accept recreated records that attest to the approximate time of purchase with contemporaneous values. The downside is that you will have to acquire the pricing guides for those periods and then maintain copies with your inventory.

In summary, the small steps you take each day in building a record along with your collection will create a valuable legacy. Good records will allow either an orderly disposition in your lifetime or will lessen the burden on your heirs at a time when they would much rather concentrate on honoring your memory. The alternative is discussed below and throughout the book, but it will involve an expensive and time-consuming effort at a most difficult time.

TIPS FOR HEIRS: If you have inherited a collection (or are attempting to evaluate one for probate) and the deceased maintained inadequate records or no records at all, what do you do to protect the interest of everyone concerned?

The first thing any professional will ask is whether you have an inventory list of the collection. It's imperative that you make one.

If the deceased was a coin collector, even if there were no records, the coins are probably either in individual holders that identify the issue and (possibly) grade, or in albums that identify the issue. If not and the coins are all loose, you will need to identify the issue. We recommend that you acquire "A Guidebook of United States Coins," which should be available at your public library or may be purchased from a local bookstore for around $10.00. Better known as the "Redbook" for its cover color, this guide will identify each issue of U.S. coinage, show where the mint marks are located and list significant varieties. The "Redbook" also provides retail values, but as it is published annually, the prices given are often loose estimates.

Arrange your list starting from the smallest denomination and in order of dates within the denomination; then work forward. If the holder shows a grade, include it. If any coins are certified, include the name of the certification service. If you are dealing with sets and partial sets, use your judgment in deciding what to list individually. If the "Redbook" indicates little value, you need not write down 75 different dates and mintmarks. For example, the "pennyboard" set of Lincoln Cents beginning in 1940 is worth only a few dollars complete and should be listed as one item. On the other hand, you do need to identify the more valuable coins in a set or partial set. If you have the 1909 — 1939 Lincoln Cents book and it contains only some of the coins, list it as a partial set and mention any issues that the guidebook shows as having a premium (e.g. "A partial Lincoln Cent set 1909 —1939, includes 1909-S, 1914-D, 1924-D and 1931-S").

In the case of comics, take note of the following: If the comic is stored individually in a hard, sealed acrylic package (known as a slab) it will have a grade from one of the comic grading services (generally Comics Guaranty, LLC (CGC) is the most well-known) at the top of the packaging—note whether the grading notes reference any particular pedigree (i.e., Stan Lee Collection, or Gaines File). Also, be sure to record the publication date of each book, and the publication company that printed the book. An Overstreet Price Guide (available online at HeritageComics.com) will help you estimate the value of your collection.

Comic art is a bit more difficult to value appropriately, as with much art, its value is debatable and subject to personal taste. If you can locate the origin of the pieces, you might be able to get a suggested value from the original seller. Note that estimated values for art may differ substantially from dealer to dealer, so auction houses may be the best venue to liquidate a collection. HeritageComics.com is the largest comics and comic art auctioneer in the world. Many questions concerning consignments can be answered on the website.

In the case of other collectibles (Tiffany lamps, antique cuff links, old watches, Colonial American spoons, sports cards and memorabilia) you should also make a list of the items, including as much data as you have available. A knowledgeable dealer may be able to suggest reference books to help you.

When you have completed the list, you are ready for the next step. Appraisals are discussed in depth in their own chapter, but the key point here is that the list you create will assist the professionals you contact in determining the scope of your collection and the type of appraisal that will be most beneficial.