I've done some searching but have been unable to find info on what I'm specifically looking for. My guess is there's a specific term for this type of business that I don't know.

Suppose I want to start a separate business entity (an LLC?) that's sole purpose is to buy and hold certain non-traditional investment items. This would be things that one might think would go up in value such as sports cards, vintage books, art, or any other sort of physical asset that doesn't fall into a typical portfolio. These items would then be sold at a later date, presumably at least a few years, for profit.

Given the above, I have two questions.

Is there a special term for this type of business entity? Is the above even something that someone could set up?

If so, how would one report that type of business to the IRS? I'd imagine that if I went out and spent a bunch of money on sports cards and then told the IRS that these were a "business expense" that might raise some red flags. To them, it might look like me just buying stuff I wanted anyways and creating a business to help disguise my personal expenses as a business one. I'd imagine the above business would run at a loss for multiple years, until it sold off any of its assets, which certainly wouldn't help the case.

  • 1
    The purchase of assets is not a "business expense" and not deductible.
    – D Stanley
    Jul 1, 2021 at 18:47
  • @DStanley Thanks for clearing that up. So in the situation above I wouldn't report the actual purchase as an expense, but would use that to calculate my actual profit once an asset is sold?
    – newBieDev
    Jul 1, 2021 at 19:21
  • 3
    Exactly. In accounting terms it would be a "capital expense" not an "operational expense". You'd pay tax on the profit when you sell it.
    – D Stanley
    Jul 1, 2021 at 19:49
  • Sounds like an SPV (special purpose vehicle)
    – 0xFEE1DEAD
    Jul 1, 2021 at 19:53
  • 1
    What would the point of registering this business be? Why not just buy a Rolex as an investment or whatever other non-traditional asset you’d like. What do you think “being a business” will accomplish for you?
    – quid
    Jul 2, 2021 at 2:19


You must log in to answer this question.