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Uncle Sam and the benefits of being a dealer

yspsalesyspsales Posts: 2,025 ✭✭✭✭✭

Would like to hear pros and cons from coin dealers (or others professions)

I sold nearly $15K in my ebay store just blowing out collectibles in 2020 on a PT basis. Could hit $40K this year in baseball cards alone.

File with the state etc... so technically suppose I am a dealer.

Diving into the David Lisot videos in the Newman Numismatic Portal, I came across a 1990's video on taxation and coins.

Essentially it covered... dealer vs collector vs investor.

He theorized only making a few transactions a year could change your status from collector to investor. He outlined some benefits of being a dealer.

Granted it was more than two decades old, but given the current technology and ease of online sales (ebay) it seems most of us could be classified as dealers.

For many reasons, he stressed record keeping (cost basis/fraud)

It got me thinking... might as well jump in with both feet.

What other benefits of classifying myself as a dealer in the 21st Century?

One right off the top, writing off travel expenses to shows to small and major shows? How about travel if I vest pocket for a few years?

Any guidance much appreciated (free... I know what that is worth).

BST: KindaNewish (3/21/21), WQuarterFreddie (3/30/21), Meltdown (4/6/21), DBSTrader2 (5/5/21) AKA- unclemonkey on Blow Out

Comments

  • 291fifth291fifth Posts: 23,716 ✭✭✭✭✭

    Free advice given here would be worth exactly that much, just as you guess.

    All glory is fleeting.
  • jmlanzafjmlanzaf Posts: 30,300 ✭✭✭✭✭

    There are advantages, but it is really beyond your control. You can't claim to be a dealer if you're not. And you also can't claim to not be a dealer if you are.

    Yes, you can write off expenses if you are a dealer. But if you aren't showing a net profit by the end of the year and paying taxes on that profit, you are a hobbyist not a dealer.

    Keep in mind that dealer profits can easily end up in a 50% tax bracket. In NYS, I've got 25% federal + 8% NYS + 15% self-employment tax. If you are just a collector and occasionally selling things, you end up filing on Schedule D instead of Schedule C and you aren't paying the 15% self-employment tax.

    As @291fifth mentioned, contact a professional as your individual situation matters.

  • HydrantHydrant Posts: 7,773 ✭✭✭✭✭

    Uncle Sam and benefits is not something that has ever touched my life in a personal sense. So....I can't help you.

  • BryceMBryceM Posts: 11,589 ✭✭✭✭✭

    @jmlanzaf nailed it. Keep in mind large parts of the tax code have changed over that time span.

    In any case, keeping careful records is absolutely essential. Most collectors loose money, on average, so the tax implications for that are minimal if you can prove what you paid to acquire the coins. If you're actually making money, you have to report it one way or another. Use a tax professional.

  • nwcoastnwcoast Posts: 2,702 ✭✭✭✭✭
    edited February 8, 2021 8:53AM

    Deleted
    ;-)

    Happy, humble, honored and proud recipient of the “You Suck” award 10/22/2014

  • rickoricko Posts: 98,724 ✭✭✭✭✭

    Decisions such as this demand professional advice... i.e. a tax professional and/or attorney. Not a good idea to venture in unprepared and uninformed. Cheers, RickO

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