New IRS reporting for 2021? 8 8

[fantastic_four]

9 hours ago, grebal said:

On 3/9/2021 at 2:55 PM, grebal said:

For those who might be more current on the tax regs, what's the story - can we deduct $3,000 in losses from Comic Book Trading against Ordinary Income every year?

I ask . . .

19 hours ago, fantastic_four said:

...

I then deleted the $1500 gain sale, and VERY surprisingly the net loss for the year was actually deductible, or so HR Block's software thinks.  That floored me...I didn't think they'd let me deduct net losses on collectibles sales from the rest of my income, but apparently that does work.  It makes general sense, but I still didn't think the IRS would allow it--but luckily they do.

...

and f_f answers.

Thanks, bud, I thought that might still be the case.  If it's the same rule I was thinking about, the max loss amount that can be used to offset ord. inc. is $3k.

I just played around with different loss amounts and it appears that's right, the max you can deduct is $3000.  Tried a sale where I kept changing the loss from $7000 to $5000 to $3000 and finally to $2000, and the $7000/$5000/$3000 losses all deducted the same amount.  HR Block applied the loss to both my federal and state (Virginia) taxes.

Thanks for that, I hadn't noticed there was a max.  So if you're expecting losses try never to pool them in one year and either spread them over multiple years or be sure to offset the losses to keep them under $3000 for the year by selling some stuff at a gain.

Edited March 29, 2021 by fantastic_four

[garyt1957]

On 3/8/2021 at 1:56 PM, nochips said:

I use them all the time but $600.00 is a deal killer for me. I will buy and sell on these boards only, checks and money orders, old school is coming back! No more Venmo, paypal, etc.

I understand PayPal is now issuing 1099's for sales over $1000 a year? That really sucks.  I don't even mind paying the taxes but the paperwork will be horrible since everything you sell for less than you paid is non taxable.  Then you'll have to keep all your mailing receipts to prove shipping costs, etc

[snitzer]

57 minutes ago, garyt1957 said:

I understand PayPal is now issuing 1099's for sales over $1000 a year? That really sucks.  I don't even mind paying the taxes but the paperwork will be horrible since everything you sell for less than you paid is non taxable.  Then you'll have to keep all your mailing receipts to prove shipping costs, etc

It’s $600 and PayPal executes based on what the government voted into the tax code as part of the most recent stimulus package.

[mlansdown]

If PayPal sends you a 1099-K with your gross total sales, do you now have the opportunity to use losses from garage-sale-type items to OFFSET your profits from comic books and other profitable sales?

Example:
Sell a comic book for $1000 (cost basis = $500)
Sell an old iPad for $50 (cost basis = $550)
Total sales reported on 1099-K: $1050
Cost of Goods Sold: $1050
Total Profit: $0
Total Tax: $0

It seems reasonable to balance losses against profits, a process at the corporate level that allows companies to minimize their yearly tax bite.

Just a thought...

[manetteska]

8 hours ago, mlansdown said:

If PayPal sends you a 1099-K with your gross total sales, do you now have the opportunity to use losses from garage-sale-type items to OFFSET your profits from comic books and other profitable sales?

Example:
Sell a comic book for $1000 (cost basis = $500)
Sell an old iPad for $50 (cost basis = $550)
Total sales reported on 1099-K: $1050
Cost of Goods Sold: $1050
Total Profit: $0
Total Tax: $0

It seems reasonable to balance losses against profits, a process at the corporate level that allows companies to minimize their yearly tax bite.

Just a thought...

As long as both items' sales show up on the 1099, yes.

My question is -- and has yet to be answered though I have turned over my docs to the tax preparer -- can I deduct ALL of my 2020 Comic Purchases against my 2020 Comic Sales? Or can I only deduct the purchase cost of the 2020 sold items?

If this were a "regular" business, yes; however, this is a different and (to me) new situation.

[garyt1957]

9 hours ago, mlansdown said:

If PayPal sends you a 1099-K with your gross total sales, do you now have the opportunity to use losses from garage-sale-type items to OFFSET your profits from comic books and other profitable sales?

Example:
Sell a comic book for $1000 (cost basis = $500)
Sell an old iPad for $50 (cost basis = $550)
Total sales reported on 1099-K: $1050
Cost of Goods Sold: $1050
Total Profit: $0
Total Tax: $0

It seems reasonable to balance losses against profits, a process at the corporate level that allows companies to minimize their yearly tax bite.

Just a thought...

I wouldn't think it would work that way since the iPad you're selling is used so it wouldn't be worth $550 anymore. If you sold it for $50 that's likely it's worth now.  I'm probably way off base but that's how I see it.

[jimjum12]

8 minutes ago, manetteska said:

As long as both items' sales show up on the 1099, yes.

My question is -- and has yet to be answered though I have turned over my docs to the tax preparer -- can I deduct ALL of my 2020 Comic Purchases against my 2020 Comic Sales? Or can I only deduct the purchase cost of the 2020 sold items?

If this were a "regular" business, yes; however, this is a different and (to me) new situation.

There is a formula that is used .... you will need the total initial cost of inventory at the beginning of year and the total at the end of the year, you will need your purchases total and your Sales total for that year, and then you subtract your expenses from the profit that was arrived at  with the formula. Just remember, your State may require you to have a Business License in order to use these deductions on your State Taxes. The Business license will also allow you to buy supplies and inventory on line without paying Sales Tax. My first license( for sales of 50K or less )was 50 dollars per year. In many cases you will be expected to COLLECT sales tax for sales occurring in your State. It's not so bad, and if you have a loss in your business, it can trigger a refund from your "day job" tax bill. In our State, you can only maintain a business if it shows a profit 3 out of every 5 years. It requires responsibility, but is not as onerous as one usually fears at first. GOD BLESS....

-jimbo(a friend of jesus)

 

[manetteska]

15 minutes ago, jimjum12 said:

44 minutes ago, manetteska said:

As long as both items' sales show up on the 1099, yes.

My question is -- and has yet to be answered though I have turned over my docs to the tax preparer -- can I deduct ALL of my 2020 Comic Purchases against my 2020 Comic Sales? Or can I only deduct the purchase cost of the 2020 sold items?

If this were a "regular" business, yes; however, this is a different and (to me) new situation.

There is a formula that is used .... you will need the total initial cost of inventory at the beginning of year and the total at the end of the year, you will need your purchases total and your Sales total for that year, and then you subtract your expenses from the profit that was arrived at  with the formula. Just remember, your State may require you to have a Business License in order to use these deductions on your State Taxes. The Business license will also allow you to buy supplies and inventory on line without paying Sales Tax. My first license( for sales of 50K or less )was 50 dollars per year. In many cases you will be expected to COLLECT sales tax for sales occurring in your State. It's not so bad, and if you have a loss in your business, it can trigger a refund from your "day job" tax bill. In our State, you can only maintain a business if it shows a profit 3 out of every 5 years. It requires responsibility, but is not as onerous as one usually fears at first. GOD BLESS....

-jimbo(a friend of jesus)

Thanks; I have seen this formula before but in 2020 I did not have a Business License, and -- as you said -- every state is different so I'm back where I started. I will see what the tax-prep says, and I'll pay what I owe, but if this becomes too much of a hassle, or I end up paying more in taxes than a corporation just to have a nice comic collection, I'm out.

[jimjum12]

3 minutes ago, manetteska said:

Thanks; I have seen this formula before but in 2020 I did not have a Business License, and -- as you said -- every state is different so I'm back where I started. I will see what the tax-prep says, and I'll pay what I owe, but if this becomes too much of a hassle, or I end up paying more in taxes than a corporation just to have a nice comic collection, I'm out.

It all depends on how much profit you make, not how much you sell. It can hurt if bought at cover and sold years later at an inflated price, but if you're buying for short term resale at 50 cents on the dollar, it isn't bad. I've also been told that they will be more lenient if you just began your journey in the realms of Business.... should a discrepancy arise. GOD BLESS...

-jimbo(a friend of jesus)

[manetteska]

4 minutes ago, jimjum12 said:

18 minutes ago, manetteska said:

Thanks; I have seen this formula before but in 2020 I did not have a Business License, and -- as you said -- every state is different so I'm back where I started. I will see what the tax-prep says, and I'll pay what I owe, but if this becomes too much of a hassle, or I end up paying more in taxes than a corporation just to have a nice comic collection, I'm out.

It all depends on how much profit you make, not how much you sell. It can hurt if bought at cover and sold years later at an inflated price, but if you're buying for short term resale at 50 cents on the dollar, it isn't bad. I've also been told that they will be more lenient if you just began your journey in the realms of Business.... should a discrepancy arise. GOD BLESS...

-jimbo(a friend of jesus)

Not to put everything out there, but my Profit -- on SOLD goods only  -- was good. However, I took all of that Profit to buy more comics, essentially "Netting" me $0, or, honestly, in the negative. (Which isn't to say my overall "inventory" price is stagnant, just SOLD - Purchases. And again gets into the formula, etc. And then more questions, like: Am I then being taxed on Inventory which sat for a year and tripled in price, and then taxed again when I sell it?)

This is where I am at with all of this, which is a very individual- and state-specific scenario: (Using fake amounts) There is a big difference in paying taxes on $10k in SOLD Profit, versus $0 in SOLD Comics - Purchases.

[jimjum12]

7 minutes ago, manetteska said:

Am I then being taxed on Inventory which sat for a year and tripled in price,

The Inventory stays at what they call "cost of goods", so it only increases when sold .... estimated value, by you or them, has nothing to do with it. I found my tax bill is lower as more of my profit is reinvested into inventory. GOD BLESS...

-jimbo(a friend of jesus)

Edited April 6, 2021 by jimjum12

[mlansdown]

5 hours ago, garyt1957 said:

I wouldn't think it would work that way since the iPad you're selling is used so it wouldn't be worth $550 anymore. If you sold it for $50 that's likely it's worth now.  I'm probably way off base but that's how I see it.

I agree that the iPad is no longer worth $550, but Schedule C (where I report 1099-K income) simply asks for cost of goods sold - not the depreciated cost.  I'm not offering or looking for tax advice here - just thought I would introduce a potential silver lining when PayPal lumps all of your sales into a single sales total.  Check with your CPA to determine if this strategy is appropriate for your tax situation!

[garyt1957]

27 minutes ago, mlansdown said:

I agree that the iPad is no longer worth $550, but Schedule C (where I report 1099-K income) simply asks for cost of goods sold - not the depreciated cost.  I'm not offering or looking for tax advice here - just thought I would introduce a potential silver lining when PayPal lumps all of your sales into a single sales total.  Check with your CPA to determine if this strategy is appropriate for your tax situation!

 

27 minutes ago, mlansdown said:

I agree that the iPad is no longer worth $550, but Schedule C (where I report 1099-K income) simply asks for cost of goods sold - not the depreciated cost.  I'm not offering or looking for tax advice here - just thought I would introduce a potential silver lining when PayPal lumps all of your sales into a single sales total.  Check with your CPA to determine if this strategy is appropriate for your tax situation!

 

27 minutes ago, mlansdown said:

I agree that the iPad is no longer worth $550, but Schedule C (where I report 1099-K income) simply asks for cost of goods sold - not the depreciated cost.  I'm not offering or looking for tax advice here - just thought I would introduce a potential silver lining when PayPal lumps all of your sales into a single sales total.  Check with your CPA to determine if this strategy is appropriate for your tax situation!

Trust me, I'm not giving advice I'm looking to learn. I'm not a business, just a guy selling some books I had since I was a kid. Picked a bad year to do with the new changes. I have no problem paying the taxes I just don't want to save all the post office receipts etc, to prove what's profit and what's not.

Edited April 6, 2021 by garyt1957

[SilverAgeGuy]

If I will have to keep detailed financial records of all items I put up on ebay and further, calculate depreciation on household items, I will definitely be closing my ebay store this year.

[WolverineX]

4 minutes ago, SilverAgeGuy said:

If I will have to keep detailed financial records of all items I put up on ebay and further, calculate depreciation on household items, I will definitely be closing my ebay store this year.

Agreed.  what a PIA

[Poe]

 

So I assume everyone will be selling like mad this year since the new reporting standards don't kick in until 2022?

 

 

[awakeintheashes]

On 3/29/2021 at 8:26 PM, garyt1957 said:

I understand PayPal is now issuing 1099's for sales over $1000 a year? That really sucks.  I don't even mind paying the taxes but the paperwork will be horrible since everything you sell for less than you paid is non taxable.  Then you'll have to keep all your mailing receipts to prove shipping costs, etc

Are you referring to a 1099 you received for 2020 taxes? If so, that may be because your state has a lower threshold.

[garyt1957]

2 hours ago, awakeintheashes said:

Are you referring to a 1099 you received for 2020 taxes? If so, that may be because your state has a lower threshold.

Yes. Although I didn't personally receive one for 2020 as I was under the threshhold. I believe your right about it being a state issue.

[Robot Man]

18 hours ago, SilverAgeGuy said:

If I will have to keep detailed financial records of all items I put up on ebay and further, calculate depreciation on household items, I will definitely be closing my ebay store this year.

I just reopened mine after letting it lapse because of the new payment program. I didn’t want eBay or PayPal to have any access to my bank account so I just opened a new one for eBay. 

I realized that I need it more than they need me. I deal in a lot of other stuff other than comics and for some things, sadly, there is just no better venue. I have decided to severely cut back on what I put up. I just need that option.

I spoke to my tax lady about it and this is what she recommended. She mentioned deductions and the benefits. But I just want to do what I do best. Buy and sell junk. I will set up a spread sheet and keep track of what I sell and the cost of doing it. But if that 1099 comes, I figure out t would be just easier to pay up. Shouldn’t be much and worth it in the long run. It won’t be a ton of transactions or huge money. The great days of the bay are long gone. It has finally caught up with us...

[jas1vans]