After reading a article about wine auctions, I found a nugget buried at its conclusion. The article is by Beppi Crosariol who is a food and wine writer for the Globe and Mail. Want to know how the rich get richer? They use wine as a method to reduce their personal income tax! Genius.
“But for sellers, unloading at auction can be absurdly lucrative, even when the wine is donated to charity. That's because donors receive a generous receipt against income tax, the amount usually based on the wine's replacement rather than retail value. And that's the key.
In Canada, a collector-worthy bottle of 1990 Château de Beaucastel Châteauneuf-du-Pape would have cost about $50 upon release in the early 1990s. To replace it now from the international market, including shipping to Canada, would easily take several hundred dollars. In fact, the tax receipts can be so attractively high that some people have been known to donate a $50-retail-price wine to a charity in return for a $400 receipt, then turn around and win back the same bottle for a bid of $200.
I don't know about you, but at my tortuously high income-tax rate, a $400 tax receipt would be worth more than a $200 refund, so I'd be making a net profit from the government. It's the hidden reason that fine wine has become such a popular collector's item.”
Link to the article here