Storm Questions New E-Bay IRS E-Mail ???

thedutymon

Evening Storm,

I know this subject has been discussed but I guess now with this E-Mail from Half-Bay, expect my E-Bay one any moment, I do business on both. And it brings up a lot of questions right off the bat.


Dear thedutymon,

We're writing to let you know that starting with transactions occurring on or after January 1, 2011, new Internal Revenue Service (IRS) regulations require Half.com (and other businesses that process payments) to file a Form 1099-K for all sellers with more than 200 transactions and $20,000 USD in sales per year.

If you're a high-volume seller who has met or is close to meeting the IRS thresholds, we may need to generate a Form 1099-K for you. If you have multiple accounts, we'll take all of them into consideration when calculating your volume status. If you exceed the IRS thresholds, we'll send your first Form 1099-K to you in early 2012. Your Form 1099-K will give you a consolidated report of all payments received through Half.com for 2011. This information will also be reported to the IRS.

Assuming you continue to exceed the IRS thresholds, we will send a Form 1099-K to you annually, and we'll also report your payments to the IRS. If your Half.com volume does not exceed the IRS thresholds in a particular year, you will not receive a Form 1099-K and we will not report any amounts to the IRS for that year, even if you have given us your Taxpayer Identification Number (TIN) and Social Security Number (SSN).

Next steps
To prepare your Form 1099-K (when required), we need either your TIN or SSN for our records. Your TIN/SSN will be kept secure in compliance with the applicable laws and our privacy and information security policies.

You'll be able to give us your TIN/SSN online in the Personal Information section of My Account. We'll let you know when this feature is available, and we'll email you to remind you that we need your TIN/SSN number. You'll never be asked to provide your TIN/SSN over the phone. For security purposes, please don't call with or email us your TIN/SSN.

If you don't provide us with your TIN/SSN before you meet the thresholds, payments to your account could be frozen, we may be required to withhold taxes from your payments, your listings could be removed, and your ability to sell on Half.com could be suspended, in addition to other consequences. We want to avoid any disruption to your selling status, so please make sure you give us your TIN/SSN when we request it.

More information
Frequently asked questions
Learn more about the new IRS regulation
Read our Privacy Policy for more on how we keep your information secure.

If you have any questions or comments about this new regulation, please don't hesitate to contact us.

Thanks again for being a loyal Half.com seller.

Regards,

Half.com

Frequently asked questions

Overview of the new IRS 1099-K regulation
Starting January 1, 2011, new IRS regulations require all businesses that process payments to file a Form 1099-K for all sellers with more than 200 transactions and $20,000 USD paid to them by Half.com (and other businesses that process payments) across all user accounts. If you meet these criteria, then we'll need your Tax Identification Number (TIN) or Social Security Number (SSN) so we can generate a Form 1099-K for you. Review the IRS proposed regulations.

What is a TIN/SSN?
A Taxpayer Identification Number (TIN) is a number used by the Internal Revenue Service (IRS) in the administration of tax laws. Your TIN could be your Social Security Number (SSN), or if you run a small business, you may have a TIN issued for that business by the IRS. For individuals, you can request a SSN through the Social Security Administration office near you. For business owners, you can apply for a TIN online at the IRS website. Learn more about Taxpayer Identification Numbers.

Who needs to provide a TIN/SSN?
Under the new IRS 1099-K regulation, all US sellers with more than 200 transactions and $20,000 USD paid to them by Half.com during a calendar year are required to provide Half.com with a TIN/SSN. If you have multiple accounts, they will all be taken into consideration when calculating your volume status.

Is this regulation change specific for Half.com?
No. This regulation change impacts all businesses that process payments.

How does Half.com protect my personal information?
Your TIN/SSN will be kept secure in accordance with privacy laws and security standards. This includes the secure storage and transmission of private information such as your credit card number, Social Security Number, and Tax ID Number. Read our Privacy Policy or visit our Security Center for more on how we keep your information secure.

What will happen if I don't provide my TIN/SSN?
We're required by the IRS to collect your TIN/SSN for reporting purposes. If you don't provide your TIN/SSN before you reach the IRS thresholds, payments to your account could be frozen, we may be required to withhold tax from your payments, your listings could be removed, and your ability to sell on Half.com could be suspended, in addition to other consequences. We want to avoid any disruption to your selling status, so please make sure you give us your TIN/SSN as soon as we request it.

How do I give you my TIN/SSN?
In the early half of 2011, you'll be able to give us your TIN/SSN online in the Personal Information section of My Account. If you are close to meeting the threshold, we'll let you know when this feature is available, and as time progresses we'll email to remind you that we need your number. For large sellers, we'll let you know when this feature is available, and as time progresses your account representative will contact you to remind you. Important: For security purposes, you'll never be asked to provide your TIN over the phone. Please do not call with or email your TIN to us.

What do I do if I have questions?
If you have any questions or concerns, please don't hesitate to contact us. We cannot, however, give tax advice, so you should consult your tax advisor if you have questions about how this new regulation may affect you.

Will I receive a Form 1099-K for sales in 2010?
No. While we'll base whether or not we need your TIN/SSN on your 2010 sales numbers, the 1099-K requirement only applies starting in the 2011 calendar year.

Where will I receive my 1099-K?
Your Form 1099-K will be mailed to the registered address we have for you on Half.com. Please be sure that your contact information is up to date.

Storm,

1. It asks for my SSN, what if I just choose to not provide it?

2. I know that the State of Co. (Where I am at) has a Lawsuit going on with Amazon about providing Sales info to the Feds, they (State of Co.) passed a law that Amazon is disputing.

3. I actually understand that this is going to happen, what do I need to focus on as it regards Record keeping moving into 2011? I am going to eclipse the $20K by 2-3 times and have over 2000 transactions this year, so that part is a no brainer!!! Next year hopefully should be 50-60K, so they are going to involve me, no matter what!! That doesn't mean I am going to profit that much money, 60-70% goes directly into my collecting or flipping!! Need to mitigate this situation!!!!!

4. ??????

Thanks Storm

Neil

bobbyw8469

Ugg...that doesn't look good....Big Brother wants you to pay taxes everywhere!! Even on used items that have already been taxed originally.

calaban7

People wanted change REAL bad and its coming.

See lines below----- Sonny

otwcards

I'm not sure where the problem is. If you're doing over 200 transactions and/or $20,000+ in sales, then you are operating a business and are responsible for paying taxes. Aren't cars (automobiles) taxed every time they sell and resell?

CrazyMind2017

<< <i>People wanted change REAL bad and its coming.

See lines below----- Sonny >>


It has been nearly 98 years since the wool was pulled over the eyes of most. This is not a new idea, unfortunately, and not dependent on platform ties.

CrazyMind2017

Ultimately, I don't fully understand all the intricate details of the tax code (since it's not a "law"), but basically, what Neil has to do is declare his "personal" collection as part of his "inventory" and keep good records. If he spends more than he takes in, he can deduct the difference as a loss or business expense. If he takes in more than he spends, he'll owe income tax on the profits only, not the amount of total sales.

All he has to do for his personal collection, if the tax man should come knocking, is have all his personal stuff designated as static inventory that he's holding until the "collectibles and memorabilia market recovers."

Again, the main thing is to keep good records of all expenses. Half/ebay will keep track of total sales income and this number will be reflected in the 1099-K.

otwcards

<< <i>Ultimately, I don't fully understand all the intricate details of the tax law, but basically, what Neil has to do is declare his "personal" collection as part of his "inventory" and keep good records. If he spends more than he takes in, he can deduct the difference as a loss or business expense. If he takes in more than he spends, he'll owe income tax on the profits only, not the amount of total sales.

All he has to do for his personal collection, if the tax man should come knocking, is have all his personal stuff designated as static inventory that he's holding until the "collectibles and memorabilia market recovers."

Again, the main thing is to keep good records of all expenses. Half/ebay will keep track of total sales income and this number will be reflected in the 1099-K. >>



Bingo...

CrazyMind2017

<< <i>I'm not sure where the problem is. If you're doing over 200 transactions and/or $20,000+ in sales, then you are operating a business and are responsible for paying taxes. Aren't cars (automobiles) taxed every time they sell and resell? >>

Maybe that's so, but that doesn't make it right.

CrazyMind2017

Also, just to add, the reason it's critical to keep records of all expenses is because if there are no expense records, the IRS will see the total sales amount on the 1099-K and assume the cost basis was $0, meaning the full amount of the 1099-K will have to be declared as income.

gemint

If I ever have to claim my hobby as a business, I'll convert my office into my business office and write it off on my taxes. The IRS would make out better if they treat me as a hobby and not a business. If I had the time and were so inclined, I'd actually save on taxes if I claimed it as a business.

MeteoriteGuy

Also, note the $20,000 level, and that they will use 2010 numbers to predetermine your 2011 tax level.

CrazyMind2017

<< <i>Also, note the $20,000 level, and that they will use 2010 numbers to predetermine your 2011 tax level. >>


So based on my novice interpretation, I think this means that Neil's 2010 sales of over $20K have gotten him put on ebay's list of sellers who have received the notification he copied in the first post.

If he does not provide his SSN (state slave number), they will start to freeze his payments in 2011 once he reaches around $18K or $19K in gross sales. Once he provides it, the funds will be unfrozen.

{based on my novice opinion and interpretation}

stevek

<< <i>People wanted change REAL bad and its coming.

See lines below----- Sonny >>



Exactly right. Fortunately, I hope it may be getting better as I think most of the American public, you know the ones who actually work and pay taxes, and don't depend on the King for a living...we are absolutely sick & tired of being treated like sheep - No more, and I'm already looking forward to the first Tuesday after the first Monday in November 2012.

grote15

It really doesn't matter who's in control, the govt is always going to look for ways to raise money...

digicat

<< <i>It really doesn't matter who's in control, the govt is always going to look for ways to raise money... >>



Yup, and if there was no government, then the guy with the biggest guns and the most friends will be the one who comes calling.

Depending on where you live, you may have both!

storm888

This is no surprise to any of us; we have been talking about
it for almost two-years.

As has been noted many times, the filing of the 1099 is not
material as to whether or not taxes are due.

..........

I suspect PP would cancel an account, if the member refused to
furnish his SS/TIN/EIN. If the member simply delayed providing
the number, PP would likely continue to request it and not take
action against the account until they became convinced that the
number would not be furnished.

PP has been collecting numbers for years and there is really
no reason not to give it to them, if you want to do biznez
with them. (If you have a MM-account, PP credit card, or
Bill Me Later account, they already have the number.)

I see no way to mitigate paying taxes on profits, if any exist.
The "cost basis" of the goods sold are the primary determinant
of profits; purchase receipts for those goods - and other expenses -
are a seller's good friend.

Under provisions of recent seemingly unrelated legislation, merchant
accounts will also be furnishing 1099s to the Service, if they have
not previously been doing so.

Again, the filing of the 1099 has no bearing on taxes due.

DeutscherGeist

200 Transactions and $20K in sales.... That does not sound like a garage sale to me. A lot of businesses used ebay as a way to avoid taxes, so this new piece of legislation really does not change anything if you were honest all the time.

I keep records of everything I buy or sell. If you do not have an invoice on something you bought, the IRS considers it a $0 expense and that's how you have to record it. So, if in 1993 you bought a Frank Thomas rookie sensations card for $75 from a card shop and you paid in cash and the register receipt (if one was even present) does not specify store, time, date, product, you are SOL if you think you can claim the $74 loss because it sold for $1 in 2010.


I have heard from lawyers and tax experts more than once that we are allowed to have a gift of $13,000 a year maximum without the person giving or receiving to fill out a gift tax form of any kind. Does this mean that we can have $13,000 a year that we do not have to account for?

Its December guys. People give gifts this time of year. A lot of people also give gold, silver and currency as gifts. Just consolidate all that cash and deposit it in the bank on December 27 or something. If the accountant asks you where did this $3500 (or any number below the threshold) deposit come from, you can say its all the gifts your friends and relatives gave you that you bundled and deposited. Is that the way it works, or do you need a detailed list of who gave what?

swartz1

and the middle guys get screwed again...

big brother is watching and now wants to micro-manage...

stevek

<< <i>

<< <i>It really doesn't matter who's in control, the govt is always going to look for ways to raise money... >>



Yup, and if there was no government, then the guy with the biggest guns and the most friends will be the one who comes calling.

Depending on where you live, you may have both! >>



Nobody wants "no government" but Tim Pawlenty stated it very well in a TV interview saying (paraphrase) "what this administration is doing is like a government coup"...and Pawlenty is right. Enough is enough - November 2012 can't get here soon enough.

Grote15 has a point, but I think this time it's gonna be different - it has to be...there simply isn't enough money to raise to pay for what all the King wants...and the King's appetite is insatiable. The King will soon be going on a diet - a lean and mean diet compliments of "We the People".

Blacklabelsociety

<< <i>and the middle guys get screwed again...

... >>



The middle guys get screwed indeed. Not a good thing in times of very high unemployment.

bking

OK, whoever started using "and/or" in this chain got me worried needlessly. If I read the OP correctly, it's 200 transactions AND $20K. So, one set break isn't going to kick us all into this category (yet).

MeteoriteGuy

<< <i>

<< <i>People wanted change REAL bad and its coming.

See lines below----- Sonny >>



Exactly right. Fortunately, I hope it may be getting better as I think most of the American public, you know the ones who actually work and pay taxes, and don't depend on the King for a living...we are absolutely sick & tired of being treated like sheep - No more, and I'm already looking forward to the first Tuesday after the first Monday in November 2012. >>




Don't look up the history of this bill and who introduced it...it was not a dem.

dontippet

<< <i>200 Transactions and $20K in sales.... That does not sound like a garage sale to me. A lot of businesses used ebay as a way to avoid taxes, so this new piece of legislation really does not change anything if you were honest all the time.

I keep records of everything I buy or sell. If you do not have an invoice on something you bought, the IRS considers it a $0 expense and that's how you have to record it. So, if in 1993 you bought a Frank Thomas rookie sensations card for $75 from a card shop and you paid in cash and the register receipt (if one was even present) does not specify store, time, date, product, you are SOL if you think you can claim the $74 loss because it sold for $1 in 2010.


I have heard from lawyers and tax experts more than once that we are allowed to have a gift of $13,000 a year maximum without the person giving or receiving to fill out a gift tax form of any kind. Does this mean that we can have $13,000 a year that we do not have to account for?

Its December guys. People give gifts this time of year. A lot of people also give gold, silver and currency as gifts. Just consolidate all that cash and deposit it in the bank on December 27 or something. If the accountant asks you where did this $3500 (or any number below the threshold) deposit come from, you can say its all the gifts your friends and relatives gave you that you bundled and deposited. Is that the way it works, or do you need a detailed list of who gave what? >>



I believe that the gifter has to be involved in this as well. I don't know exactly how it works, but it is geared towards giving your grandkids $13,000 per year per grandkid without them having to pay taxes on it like they would if you died and left them a big chunk all at once. I don't know if the giftee and gifter have to be related. I would think not.

thedutymon

<< <i>If I ever have to claim my hobby as a business, I'll convert my office into my business office and write it off on my taxes. The IRS would make out better if they treat me as a hobby and not a business. If I had the time and were so inclined, I'd actually save on taxes if I claimed it as a business. >>



Morning,

Herein lies the gist of my personal issue with this! Although when I got back into cards seriously 6-7 years ago it was simply as a Collector, my Wife informed me that I could do anything I wanted to with it as long as it did NOT involve any household money! So over time in order to feed my habits it has morphed into a Business per se. So the intent is/was not to make a profit but to simply fund my habit. Have I taken Profits out? Sure, what do you think paid for the National trip with my Son this year.....Wait a minute, that was Business trip, so all of it is deductible!!!!!!!
If the IRS wants to make my endeavors a Taxable enteprise, then they have opened a can of worms they may not appreciate. I can play by there rules and I can guarantee you that I can Lose money at this very easily. My time alone spent on this if calculated would be a break even scenario, not even factoring in anything else! I'll have to pay myself a Salary to do this, won't I?
They want a Business, they'll get a Business. I have been losing money on Rental Properties for 20+ years, losing money on Cards will be infinitly easier!!!!!!

YeeHah

Neil

alnavman

I am not a big time seller or buyer and have basically my own collection so if I have read what has been posted to this point correctly my best option on January 1, 2011 is to keep records of everything I bought and sold after that date and if at the end of year if the $$$ turns out on the plus side I have a profit, otherwise I have a loss. Anything I currently own, which unfortunately I don't have receipts for can be declared "static inventory" and as long as I don't sell any of it there is no tax liability on that. If I do sell something from my inventory, without the receipt I am tax liable for the entire sale amount. Is that correct???? Another point that hasn't been mentioned and I believe is also relevant is federal is only part of this equation, don't you also have to then file on your state and your local taxes also if there is a tax liablility??? thanks to anyone more educated than I.

al.

bking

<< <i>

<< <i>If I ever have to claim my hobby as a business, I'll convert my office into my business office and write it off on my taxes. The IRS would make out better if they treat me as a hobby and not a business. If I had the time and were so inclined, I'd actually save on taxes if I claimed it as a business. >>



Morning,

Herein lies the gist of my personal issue with this! Although when I got back into cards seriously 6-7 years ago it was simply as a Collector, my Wife informed me that I could do anything I wanted to with it as long as it did NOT involve any household money! So over time in order to feed my habits it has morphed into a Business per se. So the intent is/was not to make a profit but to simply fund my habit. Have I taken Profits out? Sure, what do you think paid for the National trip with my Son this year.....Wait a minute, that was Business trip, so all of it is deductible!!!!!!!
If the IRS wants to make my endeavors a Taxable enteprise, then they have opened a can of worms they may not appreciate. I can play by there rules and I can guarantee you that I can Lose money at this very easily. My time alone spent on this if calculated would be a break even scenario, not even factoring in anything else! I'll have to pay myself a Salary to do this, won't I?
They want a Business, they'll get a Business. I have been losing money on Rental Properties for 20+ years, losing money on Cards will be infinitly easier!!!!!!

YeeHah

Neil >>



Pretty sure they have rules about businesses losing money and how that affects deductibility. IOW, you can't simply set up a business, lose money every year, and write that off.

CrazyMind2017

DISCLAIMER: I am not a lawyer or expert. What I know, or think I know, I've mostly learned from reading the forums at fatwallet.com


<< <i>DeutscherGeist
I have heard from lawyers and tax experts more than once that we are allowed to have a gift of $13,000 a year maximum without the person giving or receiving to fill out a gift tax form of any kind. Does this mean that we can have $13,000 a year that we do not have to account for?

Its December guys. People give gifts this time of year. A lot of people also give gold, silver and currency as gifts. Just consolidate all that cash and deposit it in the bank on December 27 or something. If the accountant asks you where did this $3500 (or any number below the threshold) deposit come from, you can say its all the gifts your friends and relatives gave you that you bundled and deposited. Is that the way it works, or do you need a detailed list of who gave what? >>

If you have unaccounted income for which no 1099 or W2 was ever issued, and it's a relatively small amount, and you're not self-employed and you don't work in the financial industry, chances are you can easily get away with not reporting it. That doesn't mean there won't be penalties if the IRS finds out about it somehow. That's how big ebay sellers have been getting away with it for years. They sell crap on ebay and there's no 1099 paper trail. Until now.

The problem with your plan is that if you get audited, you're going to have to specify where these so-called "gifts" came from, and when the IRS investigates they will attempt to confirm your story. If you claim your long-lost aunt and uncle gave you $13K each to account for the mysterious $26K that you can't account for (which would be totally permissible in theory if it had really happened, but this $26K is really your annual profit for selling illegal drugs on a street corner) and the IRS discovers this aunt and uncle don't really exist OR they do exist and can't substantiate the $26K gift, you're SOL and you'll be getting in trouble with the gestapo.

<< <i>thedutymon
If the IRS wants to make my endeavors a Taxable enteprise, then they have opened a can of worms they may not appreciate. I can play by there rules and I can guarantee you that I can Lose money at this very easily. My time alone spent on this if calculated would be a break even scenario, not even factoring in anything else! I'll have to pay myself a Salary to do this, won't I?
They want a Business, they'll get a Business. I have been losing money on Rental Properties for 20+ years, losing money on Cards will be infinitly easier!!!!!! >>


Your wife was right the first time. You have to lose money at this without involving household money, and that means NOT paying yourself a salary.

Theoretically, you could pay yourself a salary from your business and write it off as a business expense, but then your personal income would increase and you'd owe personal taxes on the additional income. Since you're a "one person business" your business money is going to get mixed with your personal and household money anyway for tax purposes (don't tell the wife and hope she doesn't investigate too deeply or that she'll at least understand and approve if she does - she's not the one who prepares your taxes, is she?) and it will be a total wash. You're a smart guy - you can figure it out. If I were you, I'd start printing out (or saving to disk) as many PayPal receipts and any other expenses that you can easily document. Anything you've bought in the last 3 months that still has an ebay page should be printed or saved immediately to document your basis in that particular item. Then try to find a way to substantiate your basis on everything else in your collection that you might sell in the next year or two.

While technically not allowed, you can easily substitute older items for which you have no expense record for newer ones that can be easily proven. Shhhhh I didn't really say that.

<< <i>stevekNobody wants "no government" but Tim Pawlenty stated it very well in a TV interview saying (paraphrase) "what this administration is doing is like a government coup"...and Pawlenty is right. Enough is enough - November 2012 can't get here soon enough.

Grote15 has a point, but I think this time it's gonna be different - it has to be...there simply isn't enough money to raise to pay for what all the King wants...and the King's appetite is insatiable. The King will soon be going on a diet - a lean and mean diet compliments of "We the People". >>

Hahahahaha how does that sand taste? Is it getting in your eyes?

<< <i>do both thresholds have to met?

meaning, would it be a no go if a seller sold one (1) car for $50,000.00 or had 1000 transactions that totaled only $10,000.00 in sales? >>

If I understand your question, the answer is yes, both thresholds have to be met. If you only sell 100 items a year, you are not considered a big enough deal for them to bother issuing a 1099, even if they're all big ticket items that total more than $20K. If you sell a ton of crap for $0.01 each and you have 25,000 transactions that total only $15K in sales, you are not considered a big enough deal for them to bother issuing a 1099, even though you conducted 25,000 transactions.

The problem is going to be for people in the latter category who have a one-time big ticket item to sell, such as a car, that will bump them over the $20K threshold. Since their plethora of $0.01 transactions already have them meeting the minimum 200 transaction threshold, the price of the car (let's say it's $6K) is going to get added to their other transactions (in this case, $15K) and the total will exceed the other threshold of $20K. In this type of situation, both thresholds will have been met, and there will be a 1099-K issued.

mtcards

The govt is crooked period, the old class warfare trick is being used here. "We're only taxing the rich evil ebayers who sell over $20k per year, not the poor ebay sellers" is what they say now, wait 10 years and we'll all be paying it. I dont mind paying for things EVERYONE uses, like defense, civil services like police and fire and other "Meaningful" items, its when my tax money is used to pay for other people's kids, and their food and clothing and healthcare. They have money to buy X-Boxes, new cars, jewelry, etc ect, but not pay for their own food and shelter?
-
-
As for the ebay situation, since a 1099 will be issued, you can write off anything against your "profit". My suggestion would be to keep a record of anything you buy related to the computer, ie hard drives, repair, internet subscription, new chairs, purchases of any card related item (hard covers, penny sleeves), postage items (bubble mailers) and just about any other expense you can think of and more than likely you will have a zero sum game.

CrazyMind2017

<< <i>Pretty sure they have rules about businesses losing money and how that affects deductibility. IOW, you can't simply set up a business, lose money every year, and write that off. >>

Sure you can! But it's usually a losing proposition for most, so it probably doesn't pay. You'd have to "lose" more than the standard deduction, and once you claim more than the standard deduction, your chance of getting audited increases significantly.

If you have a rock-solid way to document "business" losses, then by all means, go for it! It's called cheating on your taxes, and it's part of the American dream!

CrazyMind2017

<< <i>The govt is crooked period, the old class warfare trick is being used here. "We're only taxing the rich evil ebayers who sell over $20k per year, not the poor ebay sellers" is what they say now, wait 10 years and we'll all be paying it. I dont mind paying for things EVERYONE uses, like defense, civil services like police and fire and other "Meaningful" items, its when my tax money is used to pay for other people's kids, and their food and clothing and healthcare. They have money to buy X-Boxes, new cars, jewelry, etc ect, but not pay for their own food and shelter? >>

You'll enjoy reading this: Civil Disobedience

I did.

<< <i>As for the ebay situation, since a 1099 will be issued, you can write off anything against your "profit". My suggestion would be to keep a record of anything you buy related to the computer, ie hard drives, repair, internet subscription, new chairs, purchases of any card related item (hard covers, penny sleeves), postage items (bubble mailers) and just about any other expense you can think of and more than likely you will have a zero sum game. >>

This is exactly correct. Virtually anything necessary or related to selling stuff on ebay can be used as a deduction.

thedutymon

<< <i>

<< <i>Pretty sure they have rules about businesses losing money and how that affects deductibility. IOW, you can't simply set up a business, lose money every year, and write that off. >>

Sure you can! But it's usually a losing proposition for most, so it probably doesn't pay. You'd have to "lose" more than the standard deduction, and once you claim more than the standard deduction, your chance of getting audited increases significantly.

If you have a rock-solid way to document "business" losses, then by all means, go for it! It's called cheating on your taxes, and it's part of the American dream! >>



And actually it is all perfectly legal and above board, in the case I noted, I have been losing on my Rentals for 20 plus years. If it was a real business, then sure, nobody would run a Bussiness that lost money for that period of time. But with Rentals you can lose thousands every year because of the items related to the Rental which is not money out of your pocket (Ie: Mileage, Interest, Depreciation, ect. as well as the real costs) and somebody else is paying for your property.
I just have to figure out how to do this with my cards, it will just be a little more complicated, but as somebody mentioned I'll start with getting printouts from every source that I can.

Question: Paypal, E-bay, and Half only show Sales/Listings ect going back 90 or 120 days. If they are using information to report to the IRS your Sales info over the course of a year, don't recordkeeping laws say they have to have all the records for that time frame? Don't they have to supply that to you? I will answer that myself, as I am going to call E-bay right now and ask for a copy of everything pertaining to me for the last year.

Neil

SidePocket

What would be the easiest way to save an eBay page to disk?

MULLINS5

This is great news to hear.

My father owns a small retail shop and has a section dedicated to hobbies (remote control cars, trucks, planes, helicopters).

The hobby side of the business has picked up a lot over the last couple years, but I suppose with any hobby (or at least ours) the customers always want something for nothing and haggle with him all day on his prices.

Customer: What can you do the Blade SR for?

Dad: $***.00

Customer: I can get it at www.****.com for $***.00

Dad: Yes, but then you have to pay $**.00 for shipping.

Customer: Yeah, but I don't have to pay tax.


If you sell a Mantle for $25,000 on eBay you will not be taxed, but if you sell 200 $100 items you will have to report it (as one should).

DeutscherGeist

DutyMoon,

Like you, I have a rental business too. I am in the process of setting up the depreciation and then I will also be running losses year after year. You can do this with rentals, but probably not in most other businesses. I understand where you are coming from. CrazyMind is correct when he said you are a smart guy and can figure this out. You can find all kinds of legal tax write offs for your collectibles "business." Some have already been mentioned. There are creative ways to do it. I have a feeling you know what to do now. I am not one that has a problem with taxes as a principle, but I am also the first to encourage taking full advantage of legal deductions.


CrazyMind,

About the Aunt and Uncle scenario you pointed out. If you are talking about $26K, that has to be substantiated with written letters from the gift giver. Also, I think the limit is $13K for an individual to receive as a combined total (or am I missing something?). In all seriousness, when my birthday or Christmas comes along I really do get a few hundred or a few thousand dollars combined from friends and relatives. We are talking about a sum of no more than $3500 on a good harvest per year on both holidays combined. Do I have to make a checklist of the givers on that kind of sum, or is it small enough that just stating holiday gifts is enough?

Here is another idea I want to throw out there. As a business, the holiday gifts of $25 or less that you give to your favorite clients or employees is also a legit tax deduction. An easy gift to buy and then give are $25 gift cards from Target, Nordstrom, Macy's, etc. I give those out to my favorite vendors and if tenants pay rent early for December or January. We are talking about 10 cards total each year. Do I have to state the name, address and telephone number of the people I gave the cards out to? I would venture to guess the rule of thumb is if the deduction sounds reasonable, a detailed investigation is not necessary and its enough to simply state that $250 were given to tenants and vendors. If we are talking about $5000 in gift cards, maybe then there has to be some questions asked. Not that $5000 is very unreasonable, but it would depend on how many tenants and vendors are we talking about here? I have 6 tenants and my vendors include a cleaning lady, gardener, plumber, painter, tile guy, flooring specialist, cabinet specialist, etc. I guess 10 cards is kind of conservative.

CrazyMind2017

<< <i>About the Aunt and Uncle scenario you pointed out. If you are talking about $26K, that has to be substantiated with written letters from the gift giver. Also, I think the limit is $13K for an individual to receive as a combined total (or am I missing something?). In all seriousness, when my birthday or Christmas comes along I really do get a few hundred or a few thousand dollars combined from friends and relatives. We are talking about a sum of no more than $3500 on a good harvest per year on both holidays combined. Do I have to make a checklist of the givers on that kind of sum, or is it small enough that just stating holiday gifts is enough? >>

The husband and wife can each give up to $13K per year to an individual tax free, for a combined $26K. If they give more, the recipient is not responsible for the taxes - THE GIVER(S) ARE. The lifetime exemption is equal to the estate tax in a given year, I think. So in other words, let's say your aunt and uncle combined are worth $10M and they're both 99 and die on the same day, and let's say they die in a year when the estate tax threshold is $3.5M, meaning the first $7M of their combined estates can be inherited tax-free. Then the other $3M would be subject to a 55% estate/inheritance. BUT, and here's the curveball, 10 years ago, when they were both 89, they gave you a gift of $500K. Nobody would have owed taxes at the time of the gift, but now that $500K counts against the minimum threshold for their estates, and therefore, $3.5M (instead of $3M) would be subject to estate tax upon their deaths.

I could be wrong about this, but this is exactly how it was explained to me when I asked a somewhat similar question on fatwallet.

<< <i>Here is another idea I want to throw out there. As a business, the holiday gifts of $25 or less that you give to your favorite clients or employees is also a legit tax deduction. An easy gift to buy and then give are $25 gift cards from Target, Nordstrom, Macy's, etc. I give those out to my favorite vendors and if tenants pay rent early for December or January. We are talking about 10 cards total each year. Do I have to state the name, address and telephone number of the people I gave the cards out to? I would venture to guess the rule of thumb is if the deduction sounds reasonable, a detailed investigation is not necessary and its enough to simply state that $250 were given to tenants and vendors. If we are talking about $5000 in gift cards, maybe then there has to be some questions asked. Not that $5000 is very unreasonable, but it would depend on how many tenants and vendors are we talking about here? I have 6 tenants and my vendors include a cleaning lady, gardener, plumber, painter, tile guy, flooring specialist, cabinet specialist, etc. I guess 10 cards is kind of conservative. >>

As far as record keeping is concerned, yes, you should have a detailed list of exactly who your gift recipients are. If you can't prove that the recipients are somehow integral to your business, the IRS can claim that you just bought a bunch of gift cards and gave them out to your friends.

Only if you get audited will any questions be asked. So based on the overall audit rate, there's more than a 98% chance you won't have to answer to anyone. But audits are usually not selected at random, so if you have a lot of large or otherwise unusual deductions, that increases your chances for an audit. Only if you itemize your deductions will any of this be relevant anyway.

Mickey71

If you sell 1 card for $50,000......This whole deal is only talking about the mandatory 1099 when certain thresholds are reached. If you sold enough you could and probably should pay taxes. Paypal and Ebay is tracking it all. When it is said and done the 200 transactions and the 20,000 bucks may not mean anything---they want it all regardless of # of transactions. Keep your receipts and be prepared if you only sell 20 1 thousand dollar items. Uncle Sam may want his cut and I'm sure with the right amount of pressure EBAY and PAYPAL will be more than willing to provide Uncle Sam with all the info.

CEOBIDMC

so both threshold have to be reached?

I can sell my car, a diamond ring, my soul and a collection of transformers in the original packaging for $35K and not worry about paying taxes......

or i can sell 2000 homemade birdhouses @11.99 a pop and expect to file forms.....

what are the odds this law gets repealed; as for the politics, this has nothing to do with the current man in charge, i really dont see too many politicians on either side of the aisle up in arms over this.
we have a swollen national debt and they arent getting the money from taxes thanks to the recent extension of unneccesary tax cuts.

what's to stop someone from having their spouse/ girlfriend/ boyfriend/aunt/sister/uncle open a paypal account/ebay account and have a dual business, just never meet the threshold in either account?

JMDVM

<< <i>I am not a big time seller or buyer and have basically my own collection so if I have read what has been posted to this point correctly my best option on January 1, 2011 is to keep records of everything I bought and sold after that date and if at the end of year if the $$$ turns out on the plus side I have a profit, otherwise I have a loss. Anything I currently own, which unfortunately I don't have receipts for can be declared "static inventory" and as long as I don't sell any of it there is no tax liability on that. If I do sell something from my inventory, without the receipt I am tax liable for the entire sale amount. Is that correct???? Another point that hasn't been mentioned and I believe is also relevant is federal is only part of this equation, don't you also have to then file on your state and your local taxes also if there is a tax liablility??? thanks to anyone more educated than I.

I have not kept receipts all these years, but I have recorded the price I have paid for every card I bought the past 20 years. Would that be sufficient? I like to think that this is no different than recording the business miles you drive. If the IRS accepts your mileage records, why wouldn't they accept your card purchase records? We need to hear from someone who is an accountant.....

DeutscherGeist

JMDVM,

Overdocumentation is always better than underdocumentation. On some transactions where you pay cash and the seller just hands you the item, I am sure it is plausible that you write down the date, item and purchase price for your own records (I did that too). The IRS requires that mileage be recorded contemporaneously. That would apply to the items where there is no credit card, invoice, check or reciept of any kind too. Your records will help, but its better to have more paperwork supporting that.

Whenever I donate to Goodwill, I keep a detailed description of the item and take a picture of it and save all that along with the receipt that Goodwill gives me. That is overdocumentation perhaps, but I just want to do things properly.

alnavman

alnavman

OOPs...was reading this thread and didn't mean to reply to it.......Apologize for bumping it to top.......al.

Goodsport40

I don't think this specific rule is going to affect most of us. $20K is a lot of sales and 99% of the people here aren't going to hit that number.My concern is that the states will use this data for sales tax purpose. The states are desperate after years of fiscal mismanagement and are looking for every nickel.


I think you are spot on with this analysis.

I have a friend who is currently reducing his listings on the bay because of this. He had averaged over 1,000 items listed at any given time throughout the year. He considers Ebay a neccessary evil but not the cash cow it was to him just a few years ago.

Could this be an opening for a return to the smaller shows that many of us used to enjoy back in the 80's and 90's? I hope so.

Robert

packCollector

been reporting everything for 4 years now , 1 year I paid , 3 years I lost money. if you keep track of things , there are usually enough "expenses" like an ipad, new computer, mileage to the post office , internet bills , bank fees , insurance , phone bills , entertainment expenses , etc to mitigate a majority of profits

bziddy

<< <i>Anything I currently own, which unfortunately I don't have receipts for can be declared "static inventory" and as long as I don't sell any of it there is no tax liability on that. If I do sell something from my inventory, without the receipt I am tax liable for the entire sale amount. Is that correct? >>



I didn't see this one answered. (I could have missed it). I don't have receipts for anything I collected the past 30 years. I may or may not hit the threshold -- but if I do, I'd like to be prepared before hand.

thanks
-bz

CEOBIDMC

the key is this: sellers with more than 200 transactions and $20,000 USD in sales per year.

both thresholds have to be met. If you pay plenty of taxes like most of us and dont wanna worry about this have your wife/husband/uncle or brother open a paypal account for you and dont meet the thresholds.

I have no intention of meeting either threshold.

Carew29

I guess i'll just wait to do my buying and selling @ the National. Unless the IRS plans on attending.........