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Question about Taxes when selling
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87 posts in this topic

I'm not trying to get too deep in the weeds, but have a few quick questions ... 

According to eBay’s tax policy, sellers are responsible for any taxes from the sales they make on eBay. If you’re a high volume seller who uses PayPal, you will receive a 1099-K form from PayPal provided that you: Made over $20,000 in unadjusted gross sales income in a year and had over 200 transactions. [Even if you don’t receive a 1099-K from PayPal, you should still report any income you earn on eBay to the IRS.]

(#1.) At what minimum threshold does everyone suggest reporting? Even if you just sell $2000 worth in a year?

(#2.) No sale is pure income because you had to initially buy the book. Do I need to be keeping track of every purchase for offsetting future sales?

(#3.) I recently saw a kid pull a $65,000 basketball card from a pack and sell it on eBay. Is the IRS coming after a kid? Should I put all my comics in my child's name? (LOL, I'm just messing).  

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ANY money coming into your possession or into your bank account could possibly be considered "income".  It is up to you to report correctly that which IS income, and explain away that which isn't.  Presuming US residence, not sure about other countries.

If you have comic sales, you want to offset the sales by whatever is legally deductible - the original cost (called the basis), selling expenses such as shipping, supplies, advertising, auction fees, etc.  What you have left is income.

If you sell a few thousand dollars worth of anything, you pretty much have a small business.  There is a small business supplement that you file with your taxes, Schedule C.  There are also published instructions for Schedule C that you might want to review.

 

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7 minutes ago, Lightning55 said:

ANY money coming into your possession or into your bank account could possibly be considered "income".  It is up to you to report correctly that which IS income, and explain away that which isn't.  Presuming US residence, not sure about other countries.

If you have comic sales, you want to offset the sales by whatever is legally deductible - the original cost (called the basis), selling expenses such as shipping, supplies, advertising, auction fees, etc.  What you have left is income.

If you sell a few thousand dollars worth of anything, you pretty much have a small business.  There is a small business supplement that you file with your taxes, Schedule C.  There are also published instructions for Schedule C that you might want to review.

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5 hours ago, cmixer said:

I'm not trying to get too deep in the weeds, but have a few quick questions ... 

According to eBay’s tax policy, sellers are responsible for any taxes from the sales they make on eBay. If you’re a high volume seller who uses PayPal, you will receive a 1099-K form from PayPal provided that you: Made over $20,000 in unadjusted gross sales income in a year and had over 200 transactions. [Even if you don’t receive a 1099-K from PayPal, you should still report any income you earn on eBay to the IRS.]

(#1.) At what minimum threshold does everyone suggest reporting? Even if you just sell $2000 worth in a year?

(#2.) No sale is pure income because you had to initially buy the book. Do I need to be keeping track of every purchase for offsetting future sales?

(#3.) I recently saw a kid pull a $65,000 basketball card from a pack and sell it on eBay. Is the IRS coming after a kid? Should I put all my comics in my child's name? (LOL, I'm just messing).  

It's not an easy answer since it really depends on if this is a business for you or are you just selling off some collectibles that you may have had for awhile.  You need to only report profits from the sales so you can subtract off the initial price of the books (don't forget slabbing costs) and any fees it cost to sell the books.  Now if it's a business then you get into a whole another ball game where it gets even more complex.  I'd estimate that very few people who sell off a couple grand in books report the profits (even though they should) but if you are coming close to the 1099-k threshold then you will increase your risks of getting in trouble if you do not report the income. 

That kid got lucky and should report the profits especially since I'm assuming the sale was on somewhere like E-Bay or Facebook where there is a paper trail.  How is the kid going to just pocket $65K and not have the government not wonder where all this money came from (drugs?).  The more money you are talking about the more the risks go up to play around with the tax man.

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If you have a job and that job isn't selling comics, if comics are your hobby, then I don't think it makes any sense to report the comics.  You have a real job and that income dwarfs your ebay account, you are doing your part by paying income taxes on your job. 

Your comic habit is not a profit center if you are most people.  You sell a few you buy a few more.

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The sale of collectibles is always considered income. Legally, income must be reported. The transaction might result in a profit, loss, or break even. But the end result doesnt determine whether reporting is required.

Actually, the sale of anything is income. There are some minimum thresholds for garage sales though. And there is the letter of the law, and what people do of course.

Keep records. Comics are the easiest things in the world to establish a cost basis in lieu of other documentation. Cover price, ouch.

 

NOTE: I may be incorrect on some of my statements.  Looking into it.  Love taxes!

Edited by Dr. Love
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1 minute ago, Dr. Love said:

The sale of collectibles is always considered income. Legally, income must be reported. The transaction might result in a profit, loss, or break even. But the end result doesnt determine whether reporting is required.

Actually, the sale of anything is income. There are some minimum thresholds for garage sales though. And there is the letter of the law, and what people do of course.

Keep records. Comics are the easiest things in the world to establish a cost basis in lieu of other documentation. Cover price, ouch.

There is also the poverty line that doesn't require filing taxes, so this is not always true, just want to throw that out there lol 

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21 minutes ago, Dr. Love said:

The sale of collectibles is always considered income. Legally, income must be reported. The transaction might result in a profit, loss, or break even. But the end result doesnt determine whether reporting is required.

Actually, the sale of anything is income. There are some minimum thresholds for garage sales though. And there is the letter of the law, and what people do of course.

Keep records. Comics are the easiest things in the world to establish a cost basis in lieu of other documentation. Cover price, ouch.

Absolutely.  And if you're reporting it as income, then you can write off the costs associated with the acquisition of any books -- shipping, travel, etc.  Keep receipts.  

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fight club it, or consult your cpa.

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Tax avoidance is ok.

Tax evasion is a crime.  I suspect we have our share of criminals on these boards.

You cross the line to committing a crime when you don't report taxable income. 

You can likely avoid a lot of the taxable income for selling a comic by taking into account the cost you paid for the book and certain other off-setting costs.  

But, you don't get to offset the $5K you made by selling a comic with the $4K you spent buying another book.  Not unless you are organized as something other than a normal collector.

Good news for collectors is that if you held the comic for more than one year, it's likely taxed at the favorable 28% long term capital gain rate, not the higher rates paid by folks who actually work for their money.

In America, we give tax breaks to folks who make money on a passive investment, and tax folks more who earn their money by working hard.  Go figure.  But, keeping that in mind should take the sting off of paying your fair share from selling a passive investment.  After all, paying taxes is how the vast vast vast majority of us actually patriotically support our country.

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Edited by sfcityduck
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In Canada at least, sale of an antique collectible is considered a capitals gain and is taxed as such.  For that reason. I now leave the purchase price on every comic I buy so when I retire and sell them off, I will only pay tax on the net profit I made while owning them.  

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