new ebay taxes

craig44

my question is this, when I sell, I never do it to pay bills/mortgage, etc. the money brought in is only ever used to buy more cards for my PC.

it is a constant cycle. does this mean that on my 1099 from eBay net taxable income will be zero?

If I was running business (which i am not) I would have no income, it would always be either zero or at a loss every year because of ebay fees etc.

does this mean no taxable "income"?

dontippet

your 1099 just shows your total sales. You can use that as your profit, but the smart thing to do is deduct your expenses, fees, shipping costs, and what you originally paid for the item. That is your profit. It doesn't matter what you did with that profit. If you spent more on cards to resale, then the process just starts over again.

craig44

@dontippet said:
your 1099 just shows your total sales. You can use that as your profit, but the smart thing to do is deduct your expenses, fees, shipping costs, and what you originally paid for the item. That is your profit. It doesn't matter what you did with that profit. If you spent more on cards to resale, then the process just starts over again.

so, if i read you correct, for instance. I sell a card for 1k. say I pay $100 in fees, $10 shipping and i paid $750 for the item, my net income would be $140 and that is what I would claim as income?

what if I just put all $890 i have left from sale after fees/shipping right back into cards. would that mean no net income to report?

Batpig

Nope, each card (or group of cards) is it’s own entity with its own cost and sale price (if you sell). The new purchase price(s) are just the cost basis for those cards when you go to sell them.

jay0791

I am asking the same question.
I am nota dealer and do sell on ebay.
However I take all that and just buy more cards.

burghman

Similar to stocks, I think. Buy a stock for $750, sell it for $1k and $110 in fees, you made $140. Sink that $140 into another stock, and you still have a profit of $140, it's just re-invested in another "thing" that includes that $140 of value.

If you bought something for $1k and sold it for $750 with $110 in fees, you have a loss that can be deducted from your profits.

Some hobbies have special rules around them, though - I'm no CPA, so I'm not sure my stock example is apples-to-apples, but that's my understanding after looking into it for 2020 taxes.

craig44

ok, i think i have it now. I just need to get a spreadsheet going and record all this stuff. the problem will be when I sell something i have had for a long time and dont have proof of purchase.

weaselpuppy

correct, this will be an accounting rat's nest for millions of ebay sellers.

daltex

Please see your tax pro, but I'm pretty sure 1031 exchanges only work for real estate, and only under certain conditions.

craig44

can you explain what a 1031 exchange is?

LarkinCollector

@craig44 said:
can you explain what a 1031 exchange is?

Doing what you want to do with sportscards with real estate and avoiding capital gains taxes by rolling any proceeds into another property (with a litany of rules that must be followed).

craig44

got you. thanks!

RufussCkingston

I think to put it clearly, taxes are based on the sale of PAST purchases. New purchases or past purchases that you have NOT sold yet have NO tax implications. However, if you were to file a schedule C (google it), the form asks for your starting inventory, ending inventory, total sales before expenses (though you can just do income as ebay/pp take out all the fees for you), and the cost of NEW purchases during the tax year. BTW, the inventory amounts are what you PAID for the item, not what it is worth at any point in time...

mtcards

I am not a tax expert, nor did I stay at a Holiday Inn Express, but I think a schedule C would be the way to go if you got a 1099 from ebay

prgsdw

I'd think for a casual seller that wasn't running a business Schedule D (capital gains / losses) would work as well. I'm I wrong in that thinking?

Autos4Alex

Based on my limited research and non-professional opinion there would be value to starting a business. Getting a new tax ID number costs something like $25 then your expense of new card inventory can offset your sales.

RufussCkingston

@Autos4Alex said:
Based on my limited research and non-professional opinion there would be value to starting a business. Getting a new tax ID number costs something like $25 then your expense of new card inventory can offset your sales.

You mean an EIN, and they are free......

https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online

And NO, your "expense of new card inventory" CANNOT offset your sales... Only the cost of your sales can offset sales, which would technically be OLD card inventory. Inventory is not an expense, it is an asset until sold.

thedutymon11

Afternoon,

As my Accountant has told me for years as far as Real Estate Rentals go, If You Can't Lose $$$ on Residential Real Estate Rentals, then get out, you don't know what you are doing. I lost on paper on most of my Rentals almost every year for 25 years! But after 4-5 years of No Income, you would have to have a OK year, so as not to trigger Audits. I e-mailed him today about the Card situation and E-Bay 1099, and he said Do the same things I used to do for my Rentals...Record, Document, Record, Document! I just printed the Orders page from all of my Sales from this year and Purchases last year and to date. It will take time but I will go through every Sales Purchase Order and correlate it with its Sales Order, for loss or gain

Understand I am not couching you to do anything illegal as far as the IRS. What I am saying is there are So Many legal Loopholes its easy to minimize your E-Bay Card Income. And their legit!

I pulled out my Binders from 2009-2012 that I got 1099'd from and in those 4 years I paid on Card sales in 2009 of $41,000 I paid Tax on Income of $500, 2010 I had Net Sales of $300 on Gross Revenue of 36K, (I was Learning!) 2011 my Sales were $56K and I offset 100% of the Income, in 2012 I made $46K on my 1099 and had a Card net income of Zero Dollars!.

Some of the Creative CPA approved ways to offset costs are as follows, and believe me they start to add up:

1. My Post Office is 3 miles away, I go almost every day, so you can deduct the mileage at 6 miles per day for 300 days of the year. Mileage Log Book
2. 3 times this year I have picked up product in a Town 98 miles from me so another 600 mileage deduction
3. Card related trips to Card Stores to explore consigning criteria, all mileage deductions all in a Mileage Log Book
4. If you go to the National (Or any other Shows) then all your expenses can be deducted as Business expenses to obtain new product! I mean everything, Admissions, Airfare, Hotels, Meals.......
5. Every Postal Cost for the entire year
6. E-Bay Fees, Paypal Fees
7. Any Sales Tax You Paid....my Customers pay all this through E-Bay, so I don't have to deal with this
8. All monies spent this year on PSA Grading services. If the money is spent in 2021, it is a Business cost, not the Card or increase in value, but the $3K I will spend this year for Grading , if its invoiced and paid in 2021 its Deductible, CHK'D and Double Checked!
9. DO NOT use the Home Office scenario for your Card gig, this is the One AND Biggest Trigger of IRS Audits
10. I bought 2 shelving units to put Wax Boxes for storage a few weeks ago, Deductible!
11. I used almost a complete Set of Ink Cartridges printing all my Sales for my records today! Deductible!
12. Average 6 reams of paper per year with receipts. Deductible!
13. I bought Pens, Sharpies, Sticky Notesa 3 ring binder, tabs, 3 Hole Punch....All Deductible
14. So far this year I've spent several hundreds of dollars in Card Savers and other Card Supplies, Deductible!
15. I buy sets and Cherry pick them and then resell them, almost always for less than I paid because I like picked 19 of the 88 cards set to be sent to PSA. So what you paid Now is offset by what you Sold the mostly same set for. If your accountant gets really picky he may deduct 20% off the Cost because the Sale was not exactly the same. But he only did this on a Couple Higher Dollar sets I bought, usually over $1000. Most he did not! Deductible!

Many Many others!

Rough and Tough right now, my On Paper E-Bay Sales are at $6K so far for 2021, my deductions Rough and Tough are already estimated to be in the $20K range for the year but will go up as Sales go up!, so No Taxes Owed as of now!

Thanks

YeeHaw!

Neil

tonylags

@RufussCkingston said:

@Autos4Alex said:
Based on my limited research and non-professional opinion there would be value to starting a business. Getting a new tax ID number costs something like $25 then your expense of new card inventory can offset your sales.

You mean an EIN, and they are free......

https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online

And NO, your "expense of new card inventory" CANNOT offset your sales... Only the cost of your sales can offset sales, which would technically be OLD card inventory. Inventory is not an expense, it is an asset until sold.

all of this correct; I am only allowed by my accountant to take a COGS on sold inventory