Options
Profit & Loss Calculation on Coins
Max2
Posts: 108
Very simple question:
For collectors, not professionals, or professionals with private collections -
When you buy a coin and enter the price paid, do you count postage?
For example, if you buy a coin for $400 ($20 p&H), and sell for $500, does your personal bookkeeping (however you do it), show you profited $100, or $80?
I have not counted postage starting many years ago when postage was less, but I think that is a mistake.
Max
For collectors, not professionals, or professionals with private collections -
When you buy a coin and enter the price paid, do you count postage?
For example, if you buy a coin for $400 ($20 p&H), and sell for $500, does your personal bookkeeping (however you do it), show you profited $100, or $80?
I have not counted postage starting many years ago when postage was less, but I think that is a mistake.
Max
0
Comments
Don't forget to also deduct any costs of sale from your gross sale price to determine your net.
60 years into this hobby and I'm still working on my Lincoln set!
When selling, profit/loss is determined by the net total I receive after all selling costs have been considered (auction fees, cost of postage, etc.)
I knew it would happen.
Sell price: the total amount you have after all expenses (outbound postage, eBay/Paypal fees, etc.) require to sell the item
Profit: Sell Price - Cost - any other amount you put into the item (grading, etc.)
Practice makes perfect & nobody is perfect. So, practice being nobody and be perfect !
I do not include postage in the price paid.
I consider that just another "cost of doing business" (participating in the hobby) and has nothing at all to do with the value of the coin. Just like I wouldn't assign a "fee" to a coin for SDB rental ....etc..
Of course you should.
A SDB isn't directly related to the cost basis, but postage certainly is.
I knew it would happen.
<< <i>Cost: the total amount you paid for the item to get to you >>
Not being argumentative, just asking a question:
Suppose you spend $400 attending an out-of-town coin show and end up buying just one $50 coin. Is your cost for that coin $450?
<< <i>Cost: the total amount you paid for the item to get to you
Sell price: the total amount you have after all expenses (outbound postage, eBay/Paypal fees, etc.) require to sell the item
Profit: Sell Price - Cost - any other amount you put into the item (grading, etc.) >>
This. If you paid a rep 5% to look an auction coin you won, this is also part of the coin's cost.
"Seu cabra da peste,
"Sou Mangueira......."
<< <i>Not being argumentative, just asking a question:
Suppose you spend $400 attending an out-of-town coin show and end up buying just one $50 coin. Is your cost for that coin $450? >>
Yes, economically.
Unless it's a cherrypick, and the coin you bought it really worth a lot more than $450, you've lost money in the short run. Maybe even in the long run, if the coin doesn't appreciate in value. Perhaps you've enjoyed the show, though, and perhaps you went to a casino in the area and won a lot of money or something, and that made the trip worth it, fiscally speaking. Perhaps you made friends with some buyer who'll buy thousands of dollars' worth of coins in the future and yield decent profits to you. Heck, maybe you learned something at the show that's invaluable and cannot be measured by dollars in the short run. If so, awesome.
But when we're talking about dollars, your coin cost you $450. Unless it's a good cherrypick, the coin won't even be worth $450. Now, if you bought 10 coins worth $50, your coins cost you $400+$500 = $900, and if you sold each one for $65, then you made $150... still not enough to pay for your trip!
What I do with my accounting sheets is just add up the immediate costs of all coins- that is, the cost of the coin only (not including shipping & insurance) and then group that cost into one. After that, I group all the insurance+shipping costs into another sum of costs. I then subtract both from my total revenue, and woop de do, I get an accurate reading of my profit. Whether that number matters or not is entirely up to the individual.
Side note: Suppose you were selling a coin for $50. It cost you $40. Someone came and bought it for $50. That very someone went out and sold it for $10,000, because you missed a little error on the coin. Basically, your buyer got away with a cherry pick. An accountant would tell you that your costs were only $40, but an economist would tell you that your cost was $9,950, because you lost an opportunity to sell the coin for a staggering amount. Hope this helps!
Interests:
Pre-Jump Grade Project
Toned Commemoratives
<< <i>
<< <i>Cost: the total amount you paid for the item to get to you >>
Not being argumentative, just asking a question:
Suppose you spend $400 attending an out-of-town coin show and end up buying just one $50 coin. Is your cost for that coin $450? >>
I think this would be hard to sell to the IRS, think they would associate that closer recreational costs that could not be tied directly to a specific coin. Although I could see a dealer trying this type of write-off, as a collector it might not fly IMO, time to consult your tax professional on this .
<< <i>I do not include postage in the price paid.
I consider that just another "cost of doing business" (participating in the hobby) and has nothing at all to do with the value of the coin. Just like I wouldn't assign a "fee" to a coin for SDB rental ....etc.. >>
As a hobbyist, I don't think you would be allowed to deduct SDB costs or ANA membership fees. There are some costs that are available as business deductions, but not as hobby deductions. Check with a tax pro.
MJ
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
<< <i>Very simple question:
For collectors, not professionals, or professionals with private collections -
When you buy a coin and enter the price paid, do you count postage?
For example, if you buy a coin for $400 ($20 p&H), and sell for $500, does your personal bookkeeping (however you do it), show you profited $100, or $80?
I have not counted postage starting many years ago when postage was less, but I think that is a mistake.
Max >>
I always count postage to me [or from me if paid by me] grading and CAC fees [as well as any postage paid for same] against the cost of the coin. It would be foolish not to. If you accept PayPal as payment any PP fees should be allowed for as well. Oftentimes such extra fees/costs can mean the difference between profit and loss. Trying to resell such coins and expecting the new buyer to pay postage to him can be a deal breaker if your costs approach market value of the coin.
<< <i>
<< <i>Cost: the total amount you paid for the item to get to you >>
Not being argumentative, just asking a question:
Suppose you spend $400 attending an out-of-town coin show and end up buying just one $50 coin. Is your cost for that coin $450? >>
As a hobbyist, I would doubt it. If you drove from Milwaukee to Omaha to pick up a purchase you could probably deduct that cost.
<< <i>
<< <i>
<< <i>Cost: the total amount you paid for the item to get to you >>
Not being argumentative, just asking a question:
Suppose you spend $400 attending an out-of-town coin show and end up buying just one $50 coin. Is your cost for that coin $450? >>
I think this would be hard to sell to the IRS, think they would associate that closer recreational costs that could not be tied directly to a specific coin. Although I could see a dealer trying this type of write-off, as a collector it might not fly IMO, time to consult your tax professional on this . >>
Of course that would be allowed to a dealer. Most of the costs of going to shows are deductible as a business expenses.
Do it real time - impossible to reconstruct years later.