Dealers - Do you issue a 1099 for large purchases?

ndleo

And in a related question, when consigning to auction houses do they 1099 you?

WinPitcher

Although not a tax attorney I have always been interested in how taxres are collected or not collected.



Text



SD

A761506

I have always thought about the tax ramifications of my sales on eBay, none of which I report because they are relatively insignificant amounts, but someone who is generating sales upwards of $20-30K/annually theoretically could get away with not reporting the sales because there is really no way for the IRS to enforce it as it currently stands. Since receipts are few and far between when it comes to the purchase of collectables (like sports cards), it is next to impossible to track gains and losses for the sake of taxes. I doubt there are too many individuals (not businesses) filing for a taxable loss based on the buying and selling of sports cards, seems like that would trigger an audit pretty easily if there was enough money involved... while at the same time, I highly doubt individual collectors like myself who buy and occasionally sell stuff we no longer want but manage to make a few bucks in the process are reporting those sales as income, and paying taxes on the gains. I and many others view eBay as a garage sale type environment when it comes to taxation.

It would be a devastating blow to eBay and its freelance sellers like myself if the IRS ever tried to crack down and force record keeping and taxation and the likes. But in reality, I think it would be a tough job for them to even attempt. I don't see how they could possibly patrol such a vast place that spans the globe.

On another note - when you consign an item to an auction house, how do they handle that reporting as far as it relates to you? Are you forced to report it?

MuckyMutt

If you are buying them for your personnal collection or use, I would say no. However, if you are buying them for resale, then you really need to study up on the tax implications of running a business. The requirement to issue 1099's applies to someone running a business and making a purchase for resale, AFAIK.

MuckyMutt

OK, after a little research, the answer is a definite NO! You do not have to file a 1099 for the purchase of merchadise. You would for the purchase of services. (Trust me - I post on internet forums )

jackstraw

The IRS will soon be patroling Ebay . I bet by the end of 06 and if you are generating 30,000+ a year for the past 2 or 3 years its up to you to show proof not them. They will say ok you did 42,899.48 in sales on ebay for tax period 05? Do you have receipts or should we just count that as income? If you bought a Mantle card in 00 for 600 and had it graded a 9 and then sold it in 04 for 7000 dollars you just made 6400 dollars under the table! I doubt the IRS is gonna sit back an allow these types of profits without any tax implications?

Stone193

I've given so much money to the IRS, that I've started declaring them as a dependent!

WinPitcher

For every dollar I make selling cards I lose 2, I do not have to worry.

It is in this way that I come out ahead.


SD

MuckyMutt

ndleo, what do you mean by the "hobby tax" rule?

MuckyMutt

ndleo, ah ha - that's what I thought you meant. That's not quite true though. The "hobby rule" is regarding those "enterprises" that LOSE money, and the rule says that you cannot deduct the losses for tax purposes. In other words, the IRS has basically taken the stance that if you make money, you pay tax - but if you lose money, you can't deduct the losses because they'll say it's a hobby. I think you have to make a profit at least one year out of three to keep it from being called a hobby.

Hope that information helps.

jackstraw

Steve
You still have to have proof. The only proof the IRS has is EOA and Paypal payments? Its up to you to save receipts to prove that you are losing money? I will guess and say that you are going to have to fill out some sort of tax application to sell on ebay? If you don't then you can not sell, everything will be linked to your social or business number. This will cause tax on every sale regardless of what state you are in. Then of course the state will get their cut too!

packCollector

<< <i> I will guess and say that you are going to have to fill out some sort of tax application to sell on ebay? If you don't then you can not sell, everything will be linked to your social or business number. >>



I signed up a long time ago but I don't believe ebay requires a ss# to sell ? Am I correct? This is a major hurdle for an government agency that wants to collect tax.

rbdjr1

<< <i>

<< <i> I will guess and say that you are going to have to fill out some sort of tax application to sell on ebay? If you don't then you can not sell, everything will be linked to your social or business number. >>



I signed up a long time ago but I don't believe ebay requires a ss# to sell ? Am I correct? This is a major hurdle for an government agency that wants to collect tax. >>




I was in the middle of a real estate transaction last week, extracted $ 12,000 at the closing. Nobody knew (...or even asked for my Social Security number!). No 1099 will be issued to me. Should I tell "Uncle Sam" I may have made some mazzola on that deal? (...well, you can bet I would be surely be quick to tell (the IRS) if I lost twelve grand! LOL!)...

I think the fact that a Social Security number is not needed to make money in the "good olde USA", does not mean one does not owe our "uncle" a "taste from our newly acquired shashes"?

rbd

matrixbend247

was in the middle of a real estate transaction last week, extracted $ 12,000 at the closing. Nobody knew (...or even asked for my Social Security number!). No 1099 will be issued to me. Should I tell "Uncle Sam" I may have made some mazzola on that deal? (...well, you can bet I would be surely be quick to tell (the IRS) if I lost twelve grand! LOL!)...

once you deposit that check in the bank. you better have an explanation where it came from if you get audited. matrix