Ebay and 1099-K
BobSav
Posts: 937 ✭✭✭
I just broke down and sold a cryptocurrency farm. I'm well over the $600 1099-K threshold but I have receipts for all the equipment and it shows a loss from what I originally paid. Therefore I wont owe any capital gains.
But now if I decide to sell off some of my coins what " retail or list price" do I use to determine whether I made or lost money on the deal. Some coins I have receipts for, other coins were bought in Lots or collections where I paid x amount of dollar's for x amount of coins and those records are from 20-30 years ago and are vague or non-existent. I mean let's face it no collector that has been at it for decades has a receipt for every coin they own.
Any thoughts?
Past transactions with:
Lordmarcovan, WTCG, YogiBerraFan, Phoenin21, LindeDad, Coll3ctor, blue594, robkoll, Mike Dixon, BloodMan, Flakthat and others.
Lordmarcovan, WTCG, YogiBerraFan, Phoenin21, LindeDad, Coll3ctor, blue594, robkoll, Mike Dixon, BloodMan, Flakthat and others.
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Comments
Retail or list price is irrelevant. It's what you paid versus what you sell it for.
When in doubt, make a reasonable estimate. The IRS is pretty reasonable.
Use best estimate and back it up with research of auction/sales records when you do not have original documentation. Cheers, RickO
Offset your gains with losses - Piece of cake
Wisdom has been chasing you but, you've always been faster
Ok that's fine for determining present value but how do you prove what you paid for something 30 years ago with no receipts. I have hundreds if not a thousand coins that I bought starting back in the 1960's that have no purchase records.
Lordmarcovan, WTCG, YogiBerraFan, Phoenin21, LindeDad, Coll3ctor, blue594, robkoll, Mike Dixon, BloodMan, Flakthat and others.
How about using pcgs’ historical valuation guide to show what the coin was worth 30 years ago? Most coins trade for fair market value at the time.
Sidebar question: is the amount the item sells for, or how much you actually receive, minus ebay fees that is subject to reporting to the irs? This is my first year exceeding the $600 in sales.
BST transactions: dbldie55, jayPem, 78saen, UltraHighRelief, nibanny, liefgold, FallGuy, lkeigwin, mbogoman, Sandman70gt, keets, joeykoins, ianrussell (@GC), EagleEye, ThePennyLady, GRANDAM, Ilikecolor, Gluggo, okiedude, Voyageur, LJenkins11, fastfreddie, ms70, pursuitofliberty, ZoidMeister,Coin Finder, GotTheBug, edwardjulio, Coinnmore, Nickpatton, Namvet69,...
If I'm not mistaken I believe the 1099K shows gross payment to you so that would be the full sales price plus any shipping paid by the seller. You can deduct your cost plus eBay fees plus shipping that you pay. In addition any other costs you might have related to your "business" such as envelops, mailers, ink, toner, labels, etc., etc. would also be deductible.
it's crackers to slip a rozzer the dropsy in snide
My sales figures on eBay are net. The actual amount eBay disburses to me are the figures.
The 1099 should reflect the same. If it doesn't then I'll be backing out a sizable percentage immediately.
Just DONOT sell on eBay. That’s the best advice I can offer you. Try not to leave a money trail.
Happy hunting 😊
You report the total amount and deduct fees and shipping as expenses .
There goes $250,000 in sales...I feel lighter
That's one of the advantages of the BST. In addition to being free, there is no 1099 issued.
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
Not if you pay with Paypal
No one make a profit on coins.
That's what I was told years ago.
Now to get paperwork to prove it?
Good luck with that.
What if you buy from a trust member and pay by check.
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
And it is still potentially taxable.
Is the IRS monitoring bank accounts? I don't think they are there yet.
Currently, it's voluntary reporting, unless you use one of the third party apps like Venmo or PP (excluding FF) as examples, which very likely will result in receiving a 1099-k.
I'm not a tax advisor but I did stay at the Holiday Inn Express. Lol
USAF (Ret.) 1985 - 2005. E-4B Aircraft Maintenance Crew Chief and Contracting Officer.
My current Registry sets:
✓ Everyman Mint State Carson City Morgan Dollars (1878 – 1893)
✓ Everyman Mint State Lincoln Cents (1909 – 1958)
✓ Morgan Dollar GSA Hoard (1878 – 1891)
Irrespective of whether or not you receive a 1099, you still owe taxes on any net profits made from the sale of collectibles. of course, if you have no records of purchases, nor, anyone issued a 1099, it will be very difficult for you, or the IRS to make a determination as to what your tax liability may be. I am not a tax specialist, and do not know whether or not net losses from sales of collectibles can be used to offset other income, such as wages from a job, etc.
Unfortunately, taxes are a necessary part of life. Someone must pay for all of the things the federal government provides, including, the military, FCC, EEOC, FDA, as well as all of the other federal agencies, benefits, and detriments as well, and at the state and local level, things such as police, fire, roads, infrastructure, etc.
They sometimes do what are called "anal probing audits" where they look at your bank accounts and ask you to "splain" any large deposits not due to a paycheck. If the check is from a nationwide bank such as B of A you simply go to a local branch and they should cash it. No need to deposit it or the cash into your own account
If you can't prove your basis the IRS will assume it is zero or maybe face value. Losses on coins can probably be used to offset gains on other coins, but probably not any other investments or income from wages.
I doubt they will take " my guess" when it comes to 1000 transactions
Lordmarcovan, WTCG, YogiBerraFan, Phoenin21, LindeDad, Coll3ctor, blue594, robkoll, Mike Dixon, BloodMan, Flakthat and others.
This.
Accounting advice for free on the CU Forum.
Priceless!
So much misinformation and incomplete information above. Read the publications on the IRS website and consult a tax advisor.
Edited to add that the first couple responses to the OP were good and it went downhill from there. There are instructions in the IRS publications of what to do if no receipts are available.
You'd be surprised. Especially for smaller dollar amounts, they are not going to spend a lot of time arguing with you. They won't even know without an audit. If your numbers seem reasonable, they will accept them.
People think the IRS are much more unreasonable than they are. The two times I had issues, a phone call cleared it up without even the need to supply additional documentation. The one time their $12,000 bill turned into a 64 cent refund just based on a corrected filing and a letter of explanation. And that was based on $150,000ish in sales that year and I supplied zero receipts during the entire process.
You will also receive a 1099k for pp ff. It is up to you, when filing your taxes, to identify that it was a gift and not a financial transaction.
Right now the IRS is very short handed and way behind. If you keep your potential 1099-K small there is very little chance of getting audited. Somehow tho they managed to find that the trust account of which my wife is trustee had overpaid taxes due by $13 and that was from a couple years ago. It turns out another family member paid the $13 also. It took a bit of wrangling, but it finally got straightened out after the IRS told her where the extra $13 came from.
The IRS can and does get copies of bank records when they audit taxpayers.
Can you link to a verification for this? When did it change?
I did find this from about a year ago.
https://ledgible.io/taxe-implications-of-paypal-friends-and-family/
"Friends and Family Tax Regulation
According to IRC Section 6050W, PayPal is required to report transactions of $20,000 or more to the IRS. So if you're sending or receiving large amounts of money via PayPal's F&F feature, the IRS will eventually be notified."
Truth be known the biggest reason for using PPFF is because the PP fee is more punitive than the tax bite. You buy an item for $1800 and sell it for $1875. If you accept PP for the $1875 the PP fee is $54.68 leaving you with 20 bucks.
Can you give us a link to the correct publication? Not for a moment doubting you, but have had too much experience trying to navigate government websites.
Maybe here.
https://www.irs.gov/pub/irs-pdf/p551.pdf
Or here.
https://www.irs.gov/pub/taxpros/fs-2023-06.pdf
Or search 1099-k.
Actually, it's fairly easy for the IRS if they get involved.
The cost basis is zero. It's all taxable profit.
It's up to you to demonstrate differently.
I used to work (in IT for a Big 8 accounting firm, the deal was that we fixed the tax people's computers, they helped us with taxes and we both told the accountants to pound sand). They taught me to always look at the IRS publications.
https://www.irs.gov/pub/irs-news/fs-08-23.pdf
So no tax benefit, but if you make money it's taxable.
If you are a business, normal business rules apply.
The difference? Back to FS-2008-24:
ANA 50 year/Life Member (now "Emeritus")
If you don't have evidence of your actual cost basis, you can reconstruct it. IRS is supposed to act fairly and It's not reasonable to assume most valuable coins have face value or nothing as cost basis. The reconstruction method has to reasonable with as much outside verification and proof as possible. The IRS examiner is not required to accept the reconstructed number, but they often will. If the examiner doesn't agree and the numbers are large enough then you probably have a decent case to appeal or file in tax court.
None of which is even an issue unless there's an audit. If the OP posts $1000 sale price against an $800 purchase price and pays the tax on the $200, the IRS will be happy and not even ask.
And when you sell the $1000 stereo you bought 10 years ago for $100 on ebay, you can now take a $900 capital loss.
http://ProofCollection.Net
What you put on a tax return is never an issue unless the IRS audits you. Some people cheat their whole lives and never get caught, others aren't so lucky.
I got is a spat once with the IRS, 20+ years ago. They called me in, and they tried to squeeze me for $8,000. I argued with the guy about some deductions I'd taken. Nice enough guy, but he didn't think they were valid, and I did. We went back and forth, back and forth. After about 30 minutes he said 'Tell you what, write me a check for $4,000 today, and we can resolve this right now'. I said no way, my return is 100% correct. After a few more minutes, he stood up and said 'Well, we're not putting you in prison for not paying $8K, but you'll never get a tax refund again, until this is paid in full'. I said that's ridiculous. Anyway, he pointed toward the door and I walked out. Never heard another thing about it, and I've received tax refunds every year since. Guess I was a small enough fish, I wasn't worth chasing....
Dave
Except when you get your 1099-k and do your taxes properly you can't claim a net loss, but you've got $900 in losses to offset $900 in gains from selling like kind things. For certain investments and no doubt other things, you can claim up to $3K in capital loss and if you have more than that you can carry it over to the next year.
You might want to check with a tax professional on that...
This is misleading at best…
What, you only pay taxes when you have capital gains but not when you lose money?
http://ProofCollection.Net
Sarcasm aside, that is not accurate. The stereos value was not impaired by market movement but by use, it is not a capital loss. Driving a car for 10 years is not a capital loss, it is deterioration from use. You can deduct coin losses from coin gains.
I would then argue that I "use" my coins every day when I look at them and if they happen to gain value that's because I used them so much. What about collectible shoes if you wear them some times and they gain or lose value?
http://ProofCollection.Net
You pay taxes when you have taxable income. Losses on hobby items like your stereo, coins, Pokemon cards, etc.are not deductible from your gross income. They can be used to offset gains from selling similar items, but you can't claim a net loss.
You can Not take a $900 capital loss…
According to the IRS publications cited above, that's exactly correct when it comes to personal items. In fact they use as an example buying two tickets for personal use, one for $800 and one for $200, and then selling them both for $1000 a few months later. The $300 you made on the $200 ticket is taxable, but there are no tax implications on the $800 ticket.
Long story short: pubs say don't attempt to take a loss on your taxes unless you run a coin business, which is also defined.
As always, don't listen to some clown on the Internet (me). Instead ask your tax professional or read the pubs yourself.
Your math doesn't add up. You buy 2 tix 1 for $200 and 1 for $800 so total cost is $1000. If you later sell both for $1000 then $0.00 gain; if $1000 for each then you have a $1000 gain, $200 on 1 and $800 on the other.
Hey, read the pubs. I wasn't typing directly from them, but it's a close paraphrase. For personal use items you're not allowed to use your losses to offset your gains. I can extrapolate to coins by saying if you buy one for $10,000 and another for $100 and send them both to Great Collections and they sell for a (net) $250 each then you're liable for taxes on $150. That's just an extrapolation, but I think it's accurate based on how I read the pub.
But this covered in Q7 in the second pub that you, @BAJJERFAN linked to above.
you file sch c deducting your expenses
if you file a schedule C, you are telling the IRS that you are a business, rather than a hobbyist. If you are truly in a business buying and selling coins, any losses can be used to offset any profits.
I think daltex comment about not listening to some yo-yo on the Internet, including me, is spot on. Talk to a tax professional, or research it utilizing the IRS publications.