If you sell on ebay as a way to pay for your hobby, should be a good way to reduce taxes for two years. Want a new computer? under section 179 can depreciate it 100% the first year. Going to the post office to ship cards? $0.55 a mile. Going on the road looking for the latest Topps release? $0.55 a mile Want to go to the National? hotel, food, transportation, etc. all business expense Going to an Orioles game? business expense Got 1,000 crap commons? sell them for $1.00, assuming you have them valued in inventory at $0.18 each, that's a loss of $179 and at a tax rate of 28% you get $50+ tax reduction - no way could get $50 selling them
Record keeping will be a little onerous. But a hobby is a hobby, the IRS will sting the person making an unreported living off ebay, and if the IRS wants proof that it's my hobby wait until they see my 2011 Schedule C.
The government has expenses for the public good. It is necessary to get everyone to pay their fair share. Over the last several years they have done a good job of raising compliance. First those greedy waitresses not reporting their tips. Well now it is reported for them. Next those irresponsible seniors not paying tax on their social security. They may say they paid tax on it when they made it but that is irrelevant to the situation. Now it is taxable. Also those lazy laid off workers collecting unemployment compensation. Now they will have to get a job to pay the tax on their unemployment. I must admit I learned my lesson about paying my fair share. A few years ago I did a quarterly form and sent a check. Well I made a mathmatical error. I sent $10 too much. My fault, my mistake. I received a notice that I sent an incorrect form and they had a complicated formula to show the penalty. They charged me $134 for my mistake but credited the $10 towards my fine.
<< <i>The government has expenses for the public good. It is necessary to get everyone to pay their fair share. Over the last several years they have done a good job of raising compliance. First those greedy waitresses not reporting their tips. Well now it is reported for them. Next those irresponsible seniors not paying tax on their social security. They may say they paid tax on it when they made it but that is irrelevant to the situation. Now it is taxable. Also those lazy laid off workers collecting unemployment compensation. Now they will have to get a job to pay the tax on their unemployment. I must admit I learned my lesson about paying my fair share. A few years ago I did a quarterly form and sent a check. Well I made a mathmatical error. I sent $10 too much. My fault, my mistake. I received a notice that I sent an incorrect form and they had a complicated formula to show the penalty. They charged me $134 for my mistake but credited the $10 towards my fine. >>
Now that more and more states are going broke and in the red, the tax man will probably find more and more ways to tax the little guys. Higher "sin" taxes, hobbies, stricter driving laws like dui, dus, and texting while driving, etc.
Sounds like it is time to return to the world of local shows and do most of that on a cash basis.
Plano, Tx. Card Show #5, Sunday March 6, 2016 at Adat Chaverim (Northeast Corner Independence and Spring Creek) in Plano Tx 9Am to 4 PM. See you there!
<< <i>If you sell on ebay as a way to pay for your hobby, should be a good way to reduce taxes for two years. Want a new computer? under section 179 can depreciate it 100% the first year. Going to the post office to ship cards? $0.55 a mile. Going on the road looking for the latest Topps release? $0.55 a mile Want to go to the National? hotel, food, transportation, etc. all business expense Going to an Orioles game? business expense Got 1,000 crap commons? sell them for $1.00, assuming you have them valued in inventory at $0.18 each, that's a loss of $179 and at a tax rate of 28% you get $50+ tax reduction - no way could get $50 selling them
Record keeping will be a little onerous. But a hobby is a hobby, the IRS will sting the person making an unreported living off ebay, and if the IRS wants proof that it's my hobby wait until they see my 2011 Schedule C. >>
Good Day,
Bingo and Bingo !!!!!!!!!!!!!!!!!!
I do sell well well over 20K in a year and have thousands of transactions....So this is going to apply to me...But you can bet Yur A$$ that I will paperwork (Read this as Reciepts) it down to next to nothing !!!
YeeHah
Neil
Actually Collect Non Sport, but am just so full of myself I post all over the place !!!!!!!
I expect sales of generic receipt pads to skyrocket at your local office supply store.
---------------------- Working on the following: 1970 Baseball PSA, 1970-1976 Raw, World Series Subsets PSA, 1969 Expansion Teams PSA, Fleer World Series Sets, Texas Rangers Topps Run 1972-1989 ----------------------
Successful deals to date: thedudeabides,gameusedhoop,golfcollector,tigerdean,treetop,bkritz, CapeMOGuy,WeekendHacker,jeff8877,backbidder,Salinas,milbroco,bbuckner22,VitoCo1972,ddfamf,gemint,K,fatty macs,waltersobchak,dboneesq
<< <i>Sounds like it is time to return to the world of local shows and do most of that on a cash basis. >>
Cash is king.
Well, until the dollar hits the carpper but that's another story.
So basically my kid won't be able to go to college, but at least I'll have a set where the three most expensive cards are of a player I despise ~ CDsNuts
Coming from a tax accountant's position, it would seem much more logical to establish this as a schedule C business. You list your gross sales, and your fees such as PSA slabbing costs, Paypal and Ebay fees. Plus if you flip, you have cost of goods sold which is basically your 'inventory' purchases from ebay, shows, etc.
I saw one example of buying 50 cards for $100, keeping the Mantle and selling the other Commons for $1 a piece, well I would think you have gross receipts of $49 plus cost of goods sold of $98, plus any paypal, ebay, postage, supplies costs related to this sale. So effectively you'd have a 'loss' on that transaction.
Remember it is legal to avoid tax, but not to evaid it. Filing a Schedule C Business Return on your 1040 does have other implications, like self employment tax (you get half of it back as an above the line deduction) and if your effective tax rate is higher than 28% maybe you choose to report the sales as capital gains as a collectible and pay the 28%.
I think for several people this will be pretty much a non existant issue. As someone who prepares tax returns everyday for a living the more organized you are the better, remember excel is your friend. However for me it is an interesting issue as its basically my hobby vs. my profession.
<< <i>Remember it is legal to avoid tax, but not to evade it. >>
Exactly.
Most of us can agree that we do not like to pay taxes. But we should remember that our taxes go to such things as supporting our military in Afghanistan, paying for air traffic controllers to ensure our planes do not crash midflight, building the highways and bridges we drive on, and providing fire trucks so that our firefighters can put out fires. We can argue about whether some of our taxes go to things some of us find less deserving, but overall we have to agree that if too many of us avoid paying our fair share of taxes, those of us who do pay our taxes are paying a disproportionate amount. So we should encourage ways to level the playing field. And if it takes the government to go through 3rd parties to submit paperwork to keep tabs on the flow of money through our accounts, whether we like it or not, it may encourage more people to pay their fair share of taxes. And that, my friends, may prevent our own taxes to increase.
For me, card collecting is a hobby. And probably for most of you too. But for some, it is not a hobby, it is a business. And like any business owner, they should pay their fair share of taxes. If you reach the $20K income threshold, and have not already been paying taxes, there is no way you can reasonably argue that you have not been evading filing a tax return on that income.
And, the idea behind this new rule is to capture unpaid taxes, or what could be called "leakage" in tax collection. Think about it. If the government needs $1000 to keep the government running, and there are 1000 people to pay the tax, each person would only need to pay $1. But if only 800 people pay, the government is running at a $200 deficit. So the next year, the government needs to collect $1000 to keep the government running and at least $200 to pay back the principal and interest on the loan it needed to cover the $200 in uncollected taxes. Again the same 800 people pay the tax. Now the government is down an additional $200. Before long, the government will have either to raise tax rates to cover the shortfall and payback the interest, or the government can go and find the 200 delinquent taxpayers. It could send the IRS to knock on doors, or it could require paypal, etc. to provide it with documentation which may show who has been not reporting income.
I saw one example of buying 50 cards for $100, keeping the Mantle and selling the other Commons for $1 a piece, well I would think you have gross receipts of $49 plus cost of goods sold of $98, plus any paypal, ebay, postage, supplies costs related to this sale. So effectively you'd have a 'loss' on that transaction.
So...the IRS would be cool with valuing the Mick at $2 in that scenario? I've always assigned a sort of pro-rated value when figuring out my ending inventory (based on cost). The process I've used has never really been an exact science for cards bought in bulk that wereleft over at the end of the year; I've just tried to assign values that were reasonable (ie. where I would value them in my head when buying the whole lot). But, if I could do it like that, it would lower my ending inventory on the schedule c.
<< <i>I saw one example of buying 50 cards for $100, keeping the Mantle and selling the other Commons for $1 a piece, well I would think you have gross receipts of $49 plus cost of goods sold of $98, plus any paypal, ebay, postage, supplies costs related to this sale. So effectively you'd have a 'loss' on that transaction.
So...the IRS would be cool with valuing the Mick at $2 in that scenario? I've always assigned a sort of pro-rated value when figuring out my ending inventory (based on cost). The process I've used has never really been an exact science for cards bought in bulk that wereleft over at the end of the year; I've just tried to assign values that were reasonable (ie. where I would value them in my head when buying the whole lot). But, if I could do it like that, it would lower my ending inventory on the schedule c. >>
Honestly I think its as agressive as you want to be. If I was preparing your tax return and you handed me an excel schedule that summed your sales and expenses, I'm not questioning it as long as the totals look reasonable and especially if you had printouts of your ebay and paypal expenses. However if you got audited you might have substantiate how you valued your inventory. I think as long as you were consistent the IRS isn't going fight it too much. The thing is the IRS isn't that concerned with mom and pop schedule Cs as long as you aren't trying to abuse the system. If you made 20K and had roughly 20K in expenses or a little more, then I wouldn't worry. If you try and claim on 85K loss in year one I think a red flag goes up.
Thanks, that helpful. My card profits have shown a normal growth trend every year I've filed and I don't claim any of the risky expenses, so I doubt there's anything that would be a red flag with the feds.
what do most of you use to value your end of year inventories???? I've basically been using beckett's...is that a good enough pricing for one's inventory??? or do you base it on other things such as what the cards actually sell for??? based on ebay, shows, etc....although I would think this would be an awfully time consuming endeavor to do it that way...
Comments
<< <i>What if you have multiple ebay/PP accounts with seperate names like your wife? You sell 19,999 and she sells 19,999 then what? >>
///////////////////
Since the magic number is $20K per taxpayer, the answer to the Q is pretty clear.
Record keeping will be a little onerous. But a hobby is a hobby, the IRS will sting the person making an unreported living off ebay, and if the IRS wants proof that it's my hobby wait until they see my 2011 Schedule C.
I must admit I learned my lesson about paying my fair share. A few years ago I did a quarterly form and sent a check. Well I made a mathmatical error. I sent $10 too much. My fault, my mistake. I received a notice that I sent an incorrect form and they had a complicated formula to show the penalty. They charged me $134 for my mistake but credited the $10 towards my fine.
http://www.unisquare.com/store/brick/
Ralph
<< <i>The government has expenses for the public good. It is necessary to get everyone to pay their fair share. Over the last several years they have done a good job of raising compliance. First those greedy waitresses not reporting their tips. Well now it is reported for them. Next those irresponsible seniors not paying tax on their social security. They may say they paid tax on it when they made it but that is irrelevant to the situation. Now it is taxable. Also those lazy laid off workers collecting unemployment compensation. Now they will have to get a job to pay the tax on their unemployment.
I must admit I learned my lesson about paying my fair share. A few years ago I did a quarterly form and sent a check. Well I made a mathmatical error. I sent $10 too much. My fault, my mistake. I received a notice that I sent an incorrect form and they had a complicated formula to show the penalty. They charged me $134 for my mistake but credited the $10 towards my fine. >>
Now that more and more states are going broke and in the red, the tax man will probably find more and more ways to tax the little guys. Higher "sin" taxes, hobbies, stricter driving laws like dui, dus, and texting while driving, etc.
<< <i>If you sell on ebay as a way to pay for your hobby, should be a good way to reduce taxes for two years. Want a new computer? under section 179 can depreciate it 100% the first year. Going to the post office to ship cards? $0.55 a mile. Going on the road looking for the latest Topps release? $0.55 a mile Want to go to the National? hotel, food, transportation, etc. all business expense Going to an Orioles game? business expense Got 1,000 crap commons? sell them for $1.00, assuming you have them valued in inventory at $0.18 each, that's a loss of $179 and at a tax rate of 28% you get $50+ tax reduction - no way could get $50 selling them
Record keeping will be a little onerous. But a hobby is a hobby, the IRS will sting the person making an unreported living off ebay, and if the IRS wants proof that it's my hobby wait until they see my 2011 Schedule C. >>
Good Day,
Bingo and Bingo !!!!!!!!!!!!!!!!!!
I do sell well well over 20K in a year and have thousands of transactions....So this is going to apply to me...But you can bet Yur A$$ that I will paperwork (Read this as Reciepts) it down to next to nothing !!!
YeeHah
Neil
Working on the following: 1970 Baseball PSA, 1970-1976 Raw, World Series Subsets PSA, 1969 Expansion Teams PSA, Fleer World Series Sets, Texas Rangers Topps Run 1972-1989
----------------------
Successful deals to date: thedudeabides,gameusedhoop,golfcollector,tigerdean,treetop,bkritz, CapeMOGuy,WeekendHacker,jeff8877,backbidder,Salinas,milbroco,bbuckner22,VitoCo1972,ddfamf,gemint,K,fatty macs,waltersobchak,dboneesq
<< <i>Sounds like it is time to return to the world of local shows and do most of that on a cash basis. >>
Cash is king.
Well, until the dollar hits the carpper but that's another story.
I saw one example of buying 50 cards for $100, keeping the Mantle and selling the other Commons for $1 a piece, well I would think you have gross receipts of $49 plus cost of goods sold of $98, plus any paypal, ebay, postage, supplies costs related to this sale. So effectively you'd have a 'loss' on that transaction.
Remember it is legal to avoid tax, but not to evaid it. Filing a Schedule C Business Return on your 1040 does have other implications, like self employment tax (you get half of it back as an above the line deduction) and if your effective tax rate is higher than 28% maybe you choose to report the sales as capital gains as a collectible and pay the 28%.
I think for several people this will be pretty much a non existant issue. As someone who prepares tax returns everyday for a living the more organized you are the better, remember excel is your friend. However for me it is an interesting issue as its basically my hobby vs. my profession.
What I'm selling
Building Sets, Collecting Texas Rangers, and Texas Tech Red Raiders
<< <i>Remember it is legal to avoid tax, but not to evaid it. >>
should have tee shirts printed with this on it, lol,, bj
<< <i>This really seems like it opens a huge capital gains issue. >>
Profits from the sale of baseball cards are regular income, not capital gains. The IRS is quite clear on that subject.
Correction: The profits are taxes as regular income, but you still have to compute the capital gains.
<< <i>Remember it is legal to avoid tax, but not to evade it. >>
Exactly.
Most of us can agree that we do not like to pay taxes. But we should remember that our taxes go to such things as supporting our military in Afghanistan, paying for air traffic controllers to ensure our planes do not crash midflight, building the highways and bridges we drive on, and providing fire trucks so that our firefighters can put out fires. We can argue about whether some of our taxes go to things some of us find less deserving, but overall we have to agree that if too many of us avoid paying our fair share of taxes, those of us who do pay our taxes are paying a disproportionate amount. So we should encourage ways to level the playing field. And if it takes the government to go through 3rd parties to submit paperwork to keep tabs on the flow of money through our accounts, whether we like it or not, it may encourage more people to pay their fair share of taxes. And that, my friends, may prevent our own taxes to increase.
For me, card collecting is a hobby. And probably for most of you too.
But for some, it is not a hobby, it is a business. And like any business owner, they should pay their fair share of taxes.
If you reach the $20K income threshold, and have not already been paying taxes, there is no way you can reasonably argue that you have not been evading filing a tax return on that income.
And, the idea behind this new rule is to capture unpaid taxes, or what could be called "leakage" in tax collection. Think about it. If the government needs $1000 to keep the government running, and there are 1000 people to pay the tax, each person would only need to pay $1. But if only 800 people pay, the government is running at a $200 deficit. So the next year, the government needs to collect $1000 to keep the government running and at least $200 to pay back the principal and interest on the loan it needed to cover the $200 in uncollected taxes. Again the same 800 people pay the tax. Now the government is down an additional $200. Before long, the government will have either to raise tax rates to cover the shortfall and payback the interest, or the government can go and find the 200 delinquent taxpayers. It could send the IRS to knock on doors, or it could require paypal, etc. to provide it with documentation which may show who has been not reporting income.
Successful transactions with bouwob, lifeshouldbefun, SDSportsFan, Bkritz, tsalems1, kwtoz, johnny1976, Topps29, Calaban7, nascar20, bking, bedellsonics, Beck6, Dialj, Echocanyon, mdkuom, gosteelers, artimus.
So...the IRS would be cool with valuing the Mick at $2 in that scenario? I've always assigned a sort of pro-rated value when figuring out my ending inventory (based on cost). The process I've used has never really been an exact science for cards bought in bulk that wereleft over at the end of the year; I've just tried to assign values that were reasonable (ie. where I would value them in my head when buying the whole lot). But, if I could do it like that, it would lower my ending inventory on the schedule c.
<< <i>I saw one example of buying 50 cards for $100, keeping the Mantle and selling the other Commons for $1 a piece, well I would think you have gross receipts of $49 plus cost of goods sold of $98, plus any paypal, ebay, postage, supplies costs related to this sale. So effectively you'd have a 'loss' on that transaction.
So...the IRS would be cool with valuing the Mick at $2 in that scenario? I've always assigned a sort of pro-rated value when figuring out my ending inventory (based on cost). The process I've used has never really been an exact science for cards bought in bulk that wereleft over at the end of the year; I've just tried to assign values that were reasonable (ie. where I would value them in my head when buying the whole lot). But, if I could do it like that, it would lower my ending inventory on the schedule c. >>
Honestly I think its as agressive as you want to be. If I was preparing your tax return and you handed me an excel schedule that summed your sales and expenses, I'm not questioning it as long as the totals look reasonable and especially if you had printouts of your ebay and paypal expenses. However if you got audited you might have substantiate how you valued your inventory. I think as long as you were consistent the IRS isn't going fight it too much. The thing is the IRS isn't that concerned with mom and pop schedule Cs as long as you aren't trying to abuse the system. If you made 20K and had roughly 20K in expenses or a little more, then I wouldn't worry. If you try and claim on 85K loss in year one I think a red flag goes up.
What I'm selling
Building Sets, Collecting Texas Rangers, and Texas Tech Red Raiders