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Old February 12, 2013, 12:44 AM   #18
Frank Ettin
Join Date: November 23, 2005
Location: California - San Francisco
Posts: 8,809
Originally Posted by 44 AMP
...Now, maybe a month or a year or ten, some of the guns I got at the shows will go away (sold/traded) and maybe they'll even be sold for more than I paid when I bought them. Again, all I'm doing is recycling part of my collection. Some guns are, or ought to be catch and release....

I don't see that as engaging in the business...

Now, the guy that buys and sells and uses his profits to make the payments on his Ramcharger, him I say is in the business, because he is not making deals to get guns to play with, he's making deals to make money for his living expenses...
How the money is used really won't be determinative.

Money is fungible. The money spent on guns and shooting is interchangeable with the money spent to pay bills and buy groceries. I can set up different operating accounts to track my money, but it's all my money. When my finances are considered in the aggregate, the sources of the money don't change the character of the money, nor does what I spend it on change the character of the money. It's just my money. (The times tracking is important are for keeping proper track of marital property, e. g., distinguishing between separate property and marital/community property; or when amounts of money from certain sources, or amounts paid, might be subject to different tax treatment, e. g., capital gains or municipal bond income or medical expenses.)

The only way to really keep finances truly separate is by creating different legal entities, like corporations, for different activities. Of course if you have a corporation for your gun buying and selling, that looks even more like a business.

So the bottom line is that if a federal prosecutor, looking at the totality of the circumstances and all the factors discussed in the various cases, decides that he can first convince a grand jury that there's probable cause to believe you're buying and selling guns as a trade or business, and then convince a trial jury beyond a reasonable doubt that you're buying and selling guns as a trade or business, he very well might prosecute you.

So how might that play out:
  1. If I shoot regularly, perhaps compete or attend classes as a matter of course, or if I hunt from time to time, but on occasion sell one of the guns I regularly use for such activity, I'm most likely in the clear even if I make a profit on the sales.

  2. I'm also probably okay if I like to hang around guns show or visit gun stores, buy a gun every so often for my recreational shooting, but sometimes find a gun at a good price that I think someone I know might be interested in, buy it and sell it. One factor that might matter is whether I buy more guns for my own shooting than I occasionally buy thinking I could sell it.

  3. Things start to get murkier when I'm spending a lot of time roaming gun shows and gun shops looking for interesting and under priced guns, buying them and selling them, more than I'm buying guns to keep or to shoot.
While there's no bright line test or safe harbor, I don't think it's really all that random.

I think most people will know what they're doing unless they are fooling themselves or are disingenuous. The danger signs probably revolve around when one is buying and selling more than he is shooting and keeping. Is he really just rationalizing at that point about being a "collector"? Is he being honest with himself when he avoids accepting that his real interest is the dealing -- buying and selling rather than owning and shooting? Because at that point he's really at risk.

As a hobby, there's nothing wrong with deriving one's satisfaction and fun from the "action" of dealing. With any sort of collectible there are folks whose real pleasure isn't owning that painting or watch or antique table or baseball card; it's the buying and selling of such things. The difference is that one doesn't need a license to deal in baseball cards. But he does need a license to deal in guns.

And one needs a license to deal in guns because, I think the ATF would contend, gun transfers by a dealer need to comport with certain formalities, e. g., background checks, forms that are retained, validation of a transferee's identity and place of residence, etc. So limiting transactions by unlicensed persons limits transfers "off the books." We might not like that, but that is government's rationale, and ATF is going to serve that interest until a court tells it that it can't or until Congress changes the law (both extreme long shots).
"It is long been a principle of ours that one is no more armed because he has possession of a firearm than he is a musician because he owns a piano. There is no point in having a gun if you are not capable of using it skillfully." -- Jeff Cooper
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