Won a 2 carat Daniel K engagement ring, how much is it worth?

[gailrmv]

What a dilemma!
I personally would prefer the RB solitaire because that''s my favorite style. I would also like it that my boyfriend chose it on his own. A lot of people I bet would prefer the daniel K aascher. No way to know without asking your girl!

I like what the previous poster suggested about proposing with both!

And, for what its worth, for the other poster, although I''m not Mormon and I know the comment was made in total jest, I thought it was a tad tasteless.

 

[Waited2Long]

Yes, it was in total jest. Lighten up.
Assuming that taxes must be paid on the value between purchase price and retail price, donating the ring to charity could leave him worse off than if he had never bought it. He's already paid $2500 for the ring; by donating it he may only recover the taxed portion of that $2500, leaving him in the hole by the majority of the value. >$10k is a lot of cash to spend on a 2nd rock! Lucky gal indeed.

 

[ellewoods]

Hello!

First of all----what an AMAZING dilemma! I am absolutely in love with Daniel K rings and I would give most anything to get one as my engagement ring! Your soon to be fiance is a lucky woman!

Now to what I know....I have seen Daniel K rings and tried them on in various stores in California and New York. Daniel K carries a very high premium. I think the $35,000 you were quoted is about right. Of course, it would be more helpful if you could tell us the color of the center stone and the clarity.

For example, at Michael C Fina in New York City, I tried on a Daniel K engagement ring (the Rosebud) with a 2.03 carat center stone. It was priced at just under $26,000. But the quality of the center stone wasn''t the best -- it was a J color and a SI1 if I remember correctly.

In California a couple months ago I tried on several other Daniel K rings. Now this particular jeweler has a terribly high markup on everything. But I tried on a Daniel K ring that was about a 2.2 carat (maybe a little less) and it was IF (internally flawless) and a G color. Price? around $69,000. Yes, that is terribly expensive. I do not think that is fair market value. But with those kind of excellent characteristics, and the Daniel K premium price, someone will buy that ring at some point.

So to answer your question, yes, Daniel K carries as very high premium like Tiffany''s. I would venture to say it''s at par or even above Tiffany''s premium. Of course I think it''s totally worth it because in my opinion, Daniel K rings are much much much more wonderful than Tiffany ones!

Where are you located? I can give you names of jewelers in NY and CA to visit or call. Also, Pearlman''s Jewelers in Michigan carries them.
http://www.pearlmansjewelers.com/ And Solomon Brothers (I think in GA?) carries them: http://www.solomonbrothers.com Neither of those sites lists prices (you have to call them directly to inquire).

Good luck.....and please please please after you propose can you post hand pics? Or any pics? I''m dying to get a look at that ring!

 

[ellewoods]

One more thing I just thought of.

Daniel K does NOT sell his settings seperately anymore.

To buy one of his settings, you have to buy the center stone and completed ring from him too. So you can''t just value the setting and the center stone seperately. I have spoken to the people at Daniel K about this, as well as many jewelry stores in NY and CA and in other states. I have heard of a few people still being able to get the setting seperately....but in 1 case someone had an heirloom diamond and in the other case, I haven''t been able to get in touch with the jeweler.

Anyway, I don''t think having an appraisal done that just considers the setting''s value plus the center stone''s value is a true approximation of what retail cost is for tax purposes. Since you have to buy them together in a retail store, I think you''d have to use the price of a complete ring bought at a Daniel K retailer -- and also factor in the name brand premium. Daniel K may not be as famous or well known as Tiffany or Cartier, but that doesn''t make his rings any less expensive at retail stores. When you buy one, you pay extra for the brand, and the details that other designers (and non designer) rings do not have. It''s like appraising a purse without taking into account the brand name. I might have a non-brand purse that is just as good a quality and looks similar to a Louis Vuitton, but a fair appraisal of the non-brand purse would never be as much as the identical Louis Vuitton. And the Louis Vuitton would never be valued at the non-brand purse''s price, even if they were exactly the same in other respects.

I''m not saying it''s fair or it makes total sense, but that''s how it works.

There was a gorgeous Daniel K for sale on Ebay last week....it was around 2 carats, starting price at $35,000, and it didn''t sell. It was gorgeous.

I think if you''d like to sell it to get your girlfriend a round brilliant, your best bet would be to try to trade it in for credit or cash at a jeweler that you want to buy the round brilliant (and/or setting from).....or taking the Daniel K to a jeweler who sells estate pieces, etc. so you have the best shot at getting the true value in a sale.

 

[itsjustarock]

Date: 12/19/2005 10:33:25 PM
Author: WTNLVR
I saw the $2500.00 and couldn''t understand that either. What is that?

I would show her both rings, see which one she liked better. If it was the one you bought that she didn''t like, I''d return it if possible. Otherwise, use the center stone in a RHR or pendant. She is the luckiest girl around either way IMO!!Congrats!

The $2500 is the price the contest winner pays for the ring. It''s like I won the right to purchase a $38,000 ring for $2,500. However, the difference in price ($35,500) has to be reported as income on my income tax this year. Therefore, if I''m in the 28% income tax bracket, I''m responsible for $35,500 x 28 = $9940
Essentially, I will be paying $12,440 for the Daniel K ring. Still quite a discount.

I won''t be able to return the other ring. The most likely scenario is I will propose with the RB solataire because I picked it out. I know its not as extravagent or exciting as the Daniel K, but its not something I won. Does that make any sense at all?? I will likely give her the Daniel K for her birthday. I dont want to give the wrong idea, I wouldnt normally spend $12,000 on a birthday gift. It''s just an opportunity at a good deal. After all, if she had a chance to buy me a Porsche for $12,000, I''m sure she wouldnt hesitate to do so.

 

[Mara]

Hmm tough call. The taxes could be quite significant depending on your tax bracket and income to begin with and if this pushes you into another tax bracket...

I''d almost say to sell the Daniel K. Personally I like the ring and all but I''m not one for huge brand names necessarily. I mean if it was $35k ring for $2k and there were no taxes, sure I''d take it. But if you have to fork out another $10k in taxes...and you already have another ring that you wanted to give to her...well the Daniel K is kind of ''extra''.

IF you can afford to keep both rings, great!! But if not then I would almost rather sell the Daniel K for ~$15k on eBay or consignment or something and pay the $10k in taxes ,then you have $5k leftover and you still have the original ring that you bought and loved.

Just a thought!!! I mean sure it''s great to win a $35k ring and all but the tax thing is a total downer...esp if your gf doesn''t CARE about the Daniel K brand name and all that yanno?

 

[ellewoods]

Hi again!

I totally understand where you''re coming from when you say you''d rather propose with a ring that you chose and paid for. I would love to win a Daniel K ring, but even though I''m in love with some of Daniel K''s designs, it would still feel a bit strange that it wasn''t something my boyfriend chose. Neither of us would choose an Asscher as our top choice for a center stone....and if you know your girlfriend likes round brilliant solitaires....well then its far worth it to get her that (and give her the ring you''ve bought) instead of a ring that''s very pretty

but just not her (or your) particular style/preference of ideal engagement ring.

It would make an excellent birthday gift though!

I wonder if you could even perhaps exchange it directly with Daniel K for a different piece. Maybe even something less expensive to cut down on the tax problem. He has some gorgeous right hand rings (that don''t look like engagement rings) as well as beautiful diamond earrings, necklaces, bracelets, etc. If you haven''t found it yet....here''s the website: www.danielk.net Their NY phone number is on the website, I really don''t think it could hurt to call and explain you won the ring but already have one to propose with and you''re wondering if you might be able to exchange it for something else.

And I''m not against the idea of selling it either, I just would worry that if you tried to sell it on Ebay the price would turn people off and you''d get no bids or you''d have to sell it at a loss. But you can probably find several excellent jewelers who do consignment selling, estate jewelry selling, etc. And if you can do that.....well then you can spend the proceeds on an even more amazing honeymoon than you were thinking of!

Or a surprise birthday vacation for your girlfriend. Or an excellent portion paid on a new car! Or 3 Vera Wang wedding dresses for your girlfriend....plus lots of other goodies! (I''m dreaming of what I''d do in your situation.

)

 

[Waited2Long]

Author: MSN Money
Can you beat the IRS?
There aren’t many ways to keep your good fortune from the taxman. Probably the best way is to have the prize or award given directly to the charity of your choice. But you don’t get the charitable-donation deduction. You simply exclude it from income. It’s as if you never got the award.
There is another, more-subtle way to limit your tax exposure. You include prizes and award winnings as income on your return at their fair market value to you. This is very important. It’s not the general fair market value, but rather the fair market value to you.
Let’s say you already have two new attaché cases and, on a quiz show, win a third that normally retails at $200. The value of that third attaché case to you may be negligible. It clearly wouldn’t be its full retail-selling price.
So you could try to run a new, lower price by the IRS. The burden, however, is on you to prove the reduced value.
If you sell the item, the amount received is normally deemed to be its fair market value. If, for example, you’re awarded a car that retails for $20,000 and you immediately sell that car to someone else in town for $15,000, the amount you would include in your income should only be the lower amount, or $15,000.
Be careful here, though. If you sell the car to a relative, the IRS will argue that you received $20,000 in income and made a nondeductible gift of $5,000 to your relative. Sorry.
Some taxpayers have tried to get around this problem by selling to someone to whom they’re not related. That person turns around and sells to your relative. I don’t advise this idea. If there’s any prearranged agreement, the IRS will collapse the two transactions, deem the first sale to be a sham and successfully establish the true nature of the gift to your relative.

An appropriate IRS document is Pub 525. I don't see any rules in there on determing value for items, but the author above suggests there is room for interpretation, especially since you already bought another ring!
Hope you don't live in taxifornia like some of us.

 

[mrssalvo]

IF you decide to sell it, definitely talk to Bil Pearlman. He consigns previously owned jewelry and offers a very fair price. I love Daniel k but want a round for my upgrade. IF hubby won a DK ring i''d sell it b/c I wouldn''t wear it and I rather have the cash for my house or use the money towards a bigger round

. I guess you should let her decide what she would like to do..please keep us posted.

 

[valeria101]

Quick 2c...

#1. Isn''t the fair reported value of jewelry ''replacement value'' for insurance purposes and ''current market value'' for everything else? Once the DK ring is in your hands, the market value is... what you might get if you want to sell it. And that will not be 35k, but probably a bit less than someone may have to pay to have a similar piece made sans the brand premium. Or the same evaluation as it would be if you wanted to sell, of course.

#2. Can you return the other (round) ring?

 

[HOUMedGal]

What a delicious dilemma!!

I LOVE the idea of you proposing with the RB that YOU picked out and that YOU paid for, and then giving her the prize ring for her birthday (if you can afford to do that, of course!) It will shock the pants off of her and I''m sure she''ll love it!

And at that point, if she doesn''t want a right hand ring, you could take the center stone, put it in a pendant or something, and then try to sell the Daniel K setting by itself. If the settings alone are so scarce as previously mentioned, you might get some good $$$ for it!

Congratulations!! (on the prize AND on your upcoming engagement!!!)

 

[itsjustarock]

Date: 12/20/2005 9:39:39 AM
Author: valeria101
Quick 2c...

#1. Isn''t the fair reported value of jewelry ''replacement value'' for insurance purposes and ''current market value'' for everything else? Once the DK ring is in your hands, the market value is... what you might get if you want to sell it. And that will not be 35k, but probably a bit less than someone may have to pay to have a similar piece made sans the brand premium. Or the same evaluation as it would be if you wanted to sell, of course.

#2. Can you return the other (round) ring?

#1 I will let every know once I consult with an tax attorney. I am gonna leave the interpretation of tax laws to the professionals.

#2 I cant return the other round ring as it was bought overseas.

 

[Mara]

I know Val, the tax laws are confusing.

I was telling Greg this story last nite and said well if he paid $2500 for it, isn't it no longer a 'gift' and isn't $2500 the value if that is what he paid for it? So why does the retail value of the ring come into play if he PURCHASED it for $2500. I thought that the taxation on retail values was only if it was a gift, but not if money changed hands? Isn't that why people sell expensive things they really want to 'gift' for a dollar??

But then again, I don't know the laws very well, our accountant does all that stuff for us....anyway Greg's response was 'well, would you want to argue that with the IRS'...

Please keep us posted on what you do, itsjustarock, curious situation!!

 

[decodelighted]

Date: 12/20/2005 12:54:09 AM
Author: itsjustarock
The most likely scenario is I will propose with the RB solataire because I picked it out. I will likely give her the Daniel K for her birthday. I dont want to give the wrong idea, I wouldnt normally spend $12,000 on a birthday gift. It''s just an opportunity at a good deal. After all, if she had a chance to buy me a Porsche for $12,000, I''m sure she wouldnt hesitate to do so.

I think you just might be the best guy in the whole world (besides my Fiance of course

)

A) you''re probably right on about proposing with the 1.53 round you purchased/chose yourself. it''s the romantic thing to do. you picked it out FOR HER YOURSELF and that''s the most important thing. About it not being "as glamorous or valuable" as the Daniel K. I dunno. It''s pretty AWESOME and most any lady would be THRILLED!

B) the Porsche analogy is EXACTLY spot on. That IS what a 2 ct. fancy cut stone in a designer setting would be to most gals. Extravagent. Unattainable. Dream come true. If you can afford (in an engagement year with all the other expenses involved) to give her that as an "extra" ..WOW! You GO!

Personally I hope there''s some tax loophole that makes this whole thing less tricky and expensive for ya! Greg''s (Mara''s honey) got a good point about purchase price & value being arguable. Please keep up posted on your situation. Facinating!

 

[denverappraiser]

US federal income taxation for gambling winnings (which is what they call this) is based on the Fair Market Value of the item as of the date of the winnings. FMV is a well defined legal term that is not the same as MSRP and it’s not the same as what you can get for it at resale a few weeks later. At the risk of repeating myself, get it appraised by someone that meets the IRS definition of a ‘qualified appraiser’.

Neil Beaty
GG(GIA) ISA NAJA
Professional Appraisals in Denver

 

[Waited2Long]

FMV is the amount you would have to pay a third party to buy or lease the benefit. Does the "third party" have to be a retailer? I''ve read the stories here on PS. Private-party sales of jewelry typically don''t fetch anywhere near the appraised amounts. I would hope that a professional appraiser would not lower the value of an appraisal simply because the customer wanted a lower tax base. Would I want to argue such things with the IRS? Yes, I would. If there''s room for interpretation, why pay more taxes than you have to?

 

[LadyluvsLuxury]

Ohhhh to have such problems!!! Congratulations on your incredible winnings! sorry....no tax advice here!

 

[denverappraiser]

Date: 12/20/2005 4:13:39 PM
Author: Waited2Long
FMV is the amount you would have to pay a third party to buy or lease the benefit. Does the ''third party'' have to be a retailer? I''ve read the stories here on PS. Private-party sales of jewelry typically don''t fetch anywhere near the appraised amounts. I would hope that a professional appraiser would not lower the value of an appraisal simply because the customer wanted a lower tax base. Would I want to argue such things with the IRS? Yes, I would. If there''s room for interpretation, why pay more taxes than you have to?

IRS defiines fair market value as the price at which property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the relevant facts. They further clarify in their revenue rulings that the comparable sales must be arms length transactions and in the usual marketplace.

The usual marketplace for a new Daniel K brand ring with full warranty is at a Daniel K retailer although they don’t necessarily trade at the MSRP. Other than for people who happen to own an appropriate jewelry store, this is not the usual market where they will be selling a one month old ring. You’re quite correct, this difference is extremely important. For income tax purposes, the questions are going to be: ”What is the FMV as of the date of your winnings?” and “What are the relevant facts involving the description of your winnings one on that date?”

Most appraised amounts involve a completely different definition of value and are simply not applicable.

Can you beat the IRS? Sure. Have at it. Just don’t go into it thinking that FMV means that it’s fair or that they just make this stuff up. Talk to a tax professional.

Neil Beaty
GG(GIA) ISA NAJA
Professional Appraisals in Denver

 

[Gonzodogg]

Yeah i''m with all the other "I wish I had that problem" people

 

[Waited2Long]

Date: 12/20/2005 8:58:53 PM
Author: denverappraiser

Can you beat the IRS? Sure. Have at it. Just don’t go into it thinking that FMV means that it’s fair or that they just make this stuff up. Talk to a tax professional.

It''s not about "beating" the IRS, because you can''t--at least not at an audit. It''s about getting all of the gray areas written into the tax codes on your side of the fence. All I''m saying is I would get an aggressive tax professional who could find reasonable justification for claiming a value that is well under the appraised value.

 

[denverappraiser]

Date: 12/21/2005 1:24:05 AM
Author: Waited2Long

All I''m saying is I would get an aggressive tax professional who could find reasonable justification for claiming a value that is well under the appraised value.

You don''t have the apprasal, you have a 1099 presented by AmEx, which has a value that they presumably got from Daniel K. A copy of this will be submitted by AmEx to IRS and this is what will be used to determine your tax liability unless you present a defensable altertanitive about why it''s inaccurate. You can expect to have difficulty defending a claim of Fair Market Value without submitting a report that was prepared and signed by a qualified appraiser. If you don''t like what your appraiser had to say, you are certainly welcome to ignore their report and find another but, in the end, an ''appraised value'' is exactly what you will need to use and, if they contest you, this is what they will use against you. As mentioned above, this is not the same as the insurance replacement value that is frequently discussed here.

By all means, follow the advice of your tax professional.

Neil Beaty
GG(GIA) ISA NAJA
Professional Appraisals in Denver

 

[Waited2Long]

I agree. And I would hope that the tax professional would be familiar with applicable IRS documents, which specify that the appraisal is only one of several factors that should be considered.

IRS Pub 561

 

[itsjustarock]

To my friends here who still have an interest in this thread. Here is an update.

Just got the prize packet from American Express which included some waiver forms and a letter explaining that they will cover my tax obligations. Whoohooo. That is really great gesture. I just mailed the release papers back and the ring will be sent directly from Daniel K after they receive the paperwork. So in 2-3 weeks, I will post the picture of the ring once I receive it. Thank you all for the wonderful advice and kind words. I will keep updating the situation unless there is no interest. Perhaps you guys can help me conjure up a proposal plan.

 

[Patty]

Holy Moly, really?!

That''s GREAT news!

Whoo Hoo!

Congratulations!

 

[Kaleigh]

Well that IS good news, yay for you!!!!

 

[widget]

Author: itsjustarock
I will keep updating the situation unless there is no interest.

Are you kidding??? This is the most interesting thread!!!

Can''t wait to see pictures when you get it!

widget

 

[LollyBear]

I can''t wait to see pictures of both those beauties. Your FI is one lucky lady.

ETA: Guess who''s getting an AMEX card?

 

[Rhapsody]

Date: 12/29/2005 7:26:26 PM
Author: StephensBride

ETA: Guess who''s getting an AMEX card?

I used to be a visa girl all the way but I''m thinking i need and AmEx too!

Congrats on the fabulous prize and your impending engagement. Your soon-to-be is one lucky lady!

Cant wait to see pictures of BOTH the rings!

 

[Waited2Long]

Congrats! That is great news!

Definitely check the proposal ideas forum. A lot of GREAT stuff in there. I''ll be posting there too once I find the time. As of yesterday, I AM ENGAGED. WOOT!

 

[valeria101]

Date: 12/29/2005 6:30:50 PM
Author: itsjustarock

I will keep updating the situation unless there is no interest.

Joke ?

That ''1888 views'' number for this thread does men something - you''ve got a neighbourhood worth of fans waiting for news. There should be quite a few crazy proposal ideas in the making too