The states want their sales tax ? Fine , but if you expect me to send in eight returns to states I sold to and 42 filings showing zero due to the others, it would stop me from selling on the bay. Why dont they do as my state of connecticut does. If you buy, say clothing ,from LL Bean or Lands End , and that business has no retail outlet in Conn, they do not charge the 6% . The buyer declares it on his State of Conn 1040 return . I have enough to keep track of in-state
<< <i>Can we declare losses for the items we list that don't sell? >>
Not a loss--it would be recorded as unsold inventory at the end of the year. You don't pay taxes on unsold inventory. You can record a loss on items that sell for less than what you paid, of course. So, sell a few $1000 St Gaudens to your sister for $10 a coin, and then have her gift 10K worth back to you.
<< <i>If Ebay sends a seller a demand for records, does that seller have to provide those records? I think they do, even with no additional legislation. >>
Now why would eBay have to do that; they already have the info. They keep a running total of what you pay in fees to them so they could very easily find the total proceeds from your listings. If they don't already keep a running total they could easily set their software to do that; in fact they would probably keep a year to date summary just like your employer does for your wages and deductions, Cmon folks this aint rocket science.
<< <i>If Ebay sends a seller a demand for records, does that seller have to provide those records? I think they do, even with no additional legislation. >>
Now why would eBay have to do that; they already have the info. They keep a running total of what you pay in fees to them so they could very easily find the total proceeds from your listings. If they don't already keep a running total they could easily set their software to do that; in fact they would probably keep a year to date summary just like your employer does for your wages and deductions, Cmon folks this aint rocket science.[/
I typed too fast and did not edit, I meant to say IRS instead of Ebay. My mistake, and I have corrected the line.
Proud recipient of YOU SUCK more than once and less than 100 times.
(1) If the IRS does proceed with this, where is the line drawn? What new class of venues does Congress declare responsible for maintaining and providing this data? Can't be just eBay or interstate auction companies like eBay. I have never been asked by Teletrade, HNAI, ... for my SSN. Will hey be reporting my buys and sells to the government? What about the coin clubs or dealers who run a little auction once a year among their memberships? The devil is definitely in the details.
(2) Are you responsible for paying income tax for some illegal who uses your SSN a thousand miles from where you live? Would you be responsible for eBay sales conducted on your highjacked account, perhaps unused and forgotten by you for months?
<< <i>I have never been asked by Teletrade, HNAI, ... for my SSN. >>
Thats because TeleTrade DOES NOT send you a 1099 or otherwise report your auction proceeds to the IRS. I do wonder who they tell the IRS that they got their commission income from.
(1) If the IRS does proceed with this, where is the line drawn? What new class of venues does Congress declare responsible for maintaining and providing this data? Can't be just eBay or interstate auction companies like eBay. I have never been asked by Teletrade, HNAI, ... for my SSN. Will hey be reporting my buys and sells to the government? What about the coin clubs or dealers who run a little auction once a year among their memberships? The devil is definitely in the details.
(2) Are you responsible for paying income tax for some illegal who uses your SSN a thousand miles from where you live? Would you be responsible for eBay sales conducted on your highjacked account, perhaps unused and forgotten by you for months? >>
John:
Answering 2 first I think you could have a real mess in that situation. You would probably not be ultimately held responsible but the burden would be on you to disprove the liability. That has been my experience.
On the first question, I would imagine that the tax statutes are broad enough that the government can inquire of any entity as to financial relationships with you. The IRS is not bound by our constitutional protections; search and seizure that you and I would not tolerate from law enforcement are the SOP for the IRS. Ultimatley, it comes down to what I initially posted: it is an individual's obligation to report any financial transaction in which they participate. The way Congress has set up the tax system an individual can be literally destroyed financially trying to prove a negative: No I did not cheat the government. Again, protections codified in the Constitution and Bill of Rights do not extend to citizens under investigation by the IRS.
Rick
Proud recipient of YOU SUCK more than once and less than 100 times.
(1) If the IRS does proceed with this, where is the line drawn? What new class of venues does Congress declare responsible for maintaining and providing this data? Can't be just eBay or interstate auction companies like eBay. I have never been asked by Teletrade, HNAI, ... for my SSN. Will hey be reporting my buys and sells to the government? What about the coin clubs or dealers who run a little auction once a year among their memberships? The devil is definitely in the details.
(2) Are you responsible for paying income tax for some illegal who uses your SSN a thousand miles from where you live? Would you be responsible for eBay sales conducted on your highjacked account, perhaps unused and forgotten by you for months? >>
John:
Answering 2 first I think you could have a real mess in that situation. You would probably not be ultimately held responsible but the burden would be on you to disprove the liability. That has been my experience.
On the first question, I would imagine that the tax statutes are broad enough that the government can inquire of any entity as to financial relationships with you. The IRS is not bound by our constitutional protections; search and seizure that you and I would not tolerate from law enforcement are the SOP for the IRS. Ultimatley, it comes down to what I initially posted: it is an individual's obligation to report any financial transaction in which they participate. The way Congress has set up the tax system an individual can be literally destroyed financially trying to prove a negative: No I did not cheat the government. Again, protections codified in the Constitution and Bill of Rights do not extend to citizens under investigation by the IRS.
Don't forget that if you receive a check for over $10,000 from an auction company and deposit it in your bank account your bank is required to report the transaction no matter where the funds are from. It is getting more and more difficult to keep track of everything.
(1) If the IRS does proceed with this, where is the line drawn? What new class of venues does Congress declare responsible for maintaining and providing this data? Can't be just eBay or interstate auction companies like eBay. I have never been asked by Teletrade, HNAI, ... for my SSN. Will hey be reporting my buys and sells to the government? What about the coin clubs or dealers who run a little auction once a year among their memberships? The devil is definitely in the details.
(2) Are you responsible for paying income tax for some illegal who uses your SSN a thousand miles from where you live? Would you be responsible for eBay sales conducted on your highjacked account, perhaps unused and forgotten by you for months? >>
Good points Coxe, but the IRS does not need to worry about drawing the line. Unless specififically exempted by congress income is taxable.
"Times they are a changing",
The IRS Has invested huge money in multi-year computer upgrades. Their ability to process and match information from outside sources with tax returns is growing every year. I think we will see alot more of these types reporting requirements in the future.
In addition the IRS is currently wrapping up a sample of 5000 small business audits they performed for 2004(I think 2004. Thank God none of our clients were affected) tax returns and has gone on record that there is a huge tax gap (under payment of income taxes) with regard to self employed and small business entities.
I know by reading the thread that everyone on this board reports all their income, my personal opinion is that if you know someone who does not comply, now is a good time to get into compliance.
If the government imposes new tax laws on E-bay or its sellers, they would have to issue some sort of guide lines for complience. to keep records like a business would be to difficult for most E-bayer`s. they would likely issue a % fee on all sales, then require e-bay to collect it. JMO
<< <i>If the government imposes new tax laws on E-bay or its sellers, they would have to issue some sort of guide lines for complience. to keep records like a business would be to difficult for most E-bayer`s. they would likely issue a % fee on all sales, then require e-bay to collect it. JMO >>
Coinmaster,
I don't understand this issue to be so much about new tax laws, as a mechanism to ensure compliance with existing tax laws.
Current law is that if you sell something and make a profit on it, you are supposed to pay taxes on the profit. I don't think the IRS is looking for the casual ebayer that sells old household items. They are interested in the ebayers that regularly profit from online sales, when you really think about it this type of ebayer starts to sound like they have a business. The IRS code says all businesses are required to maintain proper books and records.
<< <i>If the government imposes new tax laws on E-bay or its sellers, they would have to issue some sort of guide lines for complience. to keep records like a business would be to difficult for most E-bayer`s. they would likely issue a % fee on all sales, then require e-bay to collect it. JMO >>
Coinmaster,
I don't understand this issue to be so much about new tax laws, as a mechanism to ensure compliance with existing tax laws.
Current law is that if you sell something and make a profit on it, you are supposed to pay taxes on the profit. I don't think the IRS is looking for the casual ebayer that sells old household items. They are interested in the ebayers that regularly profit from online sales, when you really think about it this type of ebayer starts to sound like they have a business. The IRS code says all businesses are required to maintain proper books and records. >>
Well said, that's what I have been saying since this thread started. There is a real problem of understanding tax obligations in ths country if I go by the people I know. The common misconception seems to be that taxes are owed on what is reported to the IRS. That is not true. If I sell an old car for a profit of $ 5,000 then I owe taxes on all of that $ 5,000. That is true if I have profit on 500 coins I sold on Ebay over the year as well.
Proud recipient of YOU SUCK more than once and less than 100 times.
<< <i>I don't think the IRS is looking for the casual ebayer that sells old household items. >>
I agree. The IRS has always targeted entities based on their perception of potential return for their efforts. I'd guess that they'll likely establish some revenue threshold below which the seller is relatively safe from audit.
This has many implications on so many different levels.
1. I saw no dates on the linkified pages. Are they new or is this simply a rehash of old news?
2. This puts U.S. sellers at a distinct disadvantage when competing with foreign sellers, both from an expense standpoint and from an administrative boondoggle standpoint.
3. For those who don't do this for a living, how would one compute the basis of a coin (or other collectible) broken down from a collection received in a trade back in 1991? Much of what I sell is material I acquired over the last 20 years...
My concern is how do hobbyists handle this? Those of us selling off duplicates or upgrading pieces from our collections. If I sell a coin for $150 on Ebay, the net proceeds are most likely turned around and sunk into another coin (or coins or stamps, etc.) for my collection. There is no net "positive" when all is said and done, but if all that is looked at is a gross sales number on Ebay, then it looks like a large amount of income is being made.
The problem is trying to accurately document hobby transactions and trades going back 20+ years.
<< <i>This has many implications on so many different levels.
1. I saw no dates on the linkified pages. Are they new or is this simply a rehash of old news?
2. This puts U.S. sellers at a distinct disadvantage when competing with foreign sellers, both from an expense standpoint and from an administrative boondoggle standpoint.
3. For those who don't do this for a living, how would one compute the basis of a coin (or other collectible) broken down from a collection received in a trade back in 1991? Much of what I sell is material I acquired over the last 20 years...
My concern is how do hobbyists handle this? Those of us selling off duplicates or upgrading pieces from our collections. If I sell a coin for $150 on Ebay, the net proceeds are most likely turned around and sunk into another coin (or coins or stamps, etc.) for my collection. There is no net "positive" when all is said and done, but if all that is looked at is a gross sales number on Ebay, then it looks like a large amount of income is being made.
The problem is trying to accurately document hobby transactions and trades going back 20+ years.
Talk about an administrative nightmare... >>
You are correct the administrative challenge is considerable. One would need to know exactly what something cost. Add that to the costs to sell and ship, subtract that from sales price and you have taxeable profit. As to foreign sellers, I believe they incurr tax obligation as well.
Proud recipient of YOU SUCK more than once and less than 100 times.
<< <i>If I sell a coin for $150 on Ebay, the net proceeds are most likely turned around and sunk into another coin (or coins or stamps, etc.) for my collection. There is no net "positive" when all is said and done >>
Thats irrelevant what you do with the $150. The point is that you sold a coin on eBay for $150 and for which you may have made a profit and that you owe taxes on that profit. Whether you spent the $150 on another coin or a hooker don't matter to the taxman.
<< <i>If I sell a coin for $150 on Ebay, the net proceeds are most likely turned around and sunk into another coin (or coins or stamps, etc.) for my collection. There is no net "positive" when all is said and done >>
Thats irrelevant what you do with the $150. The point is that you sold a coin on eBay for $150 and for which you may have made a profit and that you owe taxes on that profit. Whether you spent the $150 on another coin or a hooker don't matter to the taxman.[/
The biggest problem with this is that many people don't have evidence of their original cost basis for items purchased many years ago. Of course, most regular household stuff depreciates when used and resold, so there's really no tax implication there. But for coins, antiques and other collectibles, it can be a dilemma.
Obviously the safest thing at this point is to save all receipts and invoices for anything that could have even a remote chance of appreciating in value. But then again, I don't think the IRS is looking to nail anyone selling a handful of inexpensive items a year. It's the frequent sellers and people who are making a de facto "business" out of buying and selling at a profit that they're after, I'm sure.
2006 Tax Year: Start w/$100 in capital. Buy a coin for $100. Sell it for $150. Buy another coin for $150. Year ends.
2006 income statement: Sales $150, COGS $100 (NOT $250!!! - i.e. $150 inventory DOES NOT go into current year COGS!), Gross Profit $50 (i.e. maximum taxable income).
Balance Sheet End of 2006/Beginning of 2007: Inventory $150, Paid in Capital $100, Retained Earnings $50 (the difference between the value of the inventory and the PIC).
If/when you sell that $150 of inventory for $150, there will be no further tax implication. If you sell it for more, there will be. If you sell it for less, you'll have a loss carryback (max $50 if 2-3 years hence) & a loss carryforward for the remainder.
The IRS loves to play these one-sided games that always favor the government.
If you're a collector and you sell a coin at a loss, you generally cannot claim the loss against your other income.
However, if you're a collector and you sell a coin at a profit, you must include the profit with your other income.
I sold my car at a loss recently - a loss of $20,000 over what I paid for it. What can I deduct that against? Nothing.
I would have more respect for this system if it weren't utterly one-sided and unfair.
"Men who had never shown any ability to make or increase fortunes for themselves abounded in brilliant plans for creating and increasing wealth for the country at large." Fiat Money Inflation in France, Andrew Dickson White (1912)
I think the gist of all of these responses is that you should use a competent tax professional to prepare your return and handle your tax questions/matters. The waters are just too deep and treacherous to do otherwise. If you have an ethical CPA or tax lawyer, then stick with him or her. With the amount of money at stake and the potential for jail time, it is money well spent. A lot of people here spend tens of thousands of dollars on numismatic counsel per year, but then try to do their tax returns using Turbo Tax.
Always took candy from strangers Didn't wanna get me no trade Never want to be like papa Working for the boss every night and day --"Happy", by the Rolling Stones (1972)
<< <i>I sold my car at a loss recently - a loss of $20,000 over what I paid for it. What can I deduct that against? Nothing.
I would have more respect for this system if it weren't utterly one-sided and unfair. >>
We finally dumped our house in Houston in November. After factoring in improvements and sales commissions, we lost $55,000 on it.
Not one cent of that was deductible, as Turbo Tax was so kind to remind me. >>
With one exception, improvements to a home are not tax deductible. I assume you were able to deduct the interest on the mortgage during the time you owned the home. Home improvements have never been deductible as far as I know.
Proud recipient of YOU SUCK more than once and less than 100 times.
<< <i>With one exception, improvements to a home are not tax deductible. I assume you were able to deduct the interest on the mortgage during the time you owned the home. >>
Actually, every other year we took the standard deduction. One year we'd make 13 mortgage payments and 2 years' of property tax (and itemized); the next year we'd make 11 mortgage payments and no property tax payments (and take the standard deduction). And whatever benefit we got from the mortgage interest deduction was minuscule compared to the $55,000 loss on the sale.
<< <i>Home improvements have never been deductible as far as I know. >>
If the improvements are truly improvements and not just routine maintenance, then they are not deductible directly but they DO add to the cost basis of the home and are thus potentially indirectly deductible upon sale.
Routine maintenance on an owner-occupied home is not deductible at all.
<< <i>With one exception, improvements to a home are not tax deductible. I assume you were able to deduct the interest on the mortgage during the time you owned the home. >>
Actually, every other year we took the standard deduction. One year we'd make 13 mortgage payments and 2 years' of property tax (and itemized); the next year we'd make 11 mortgage payments and no property tax payments (and take the standard deduction). And whatever benefit we got from the mortgage interest deduction was minuscule compared to the $55,000 loss on the sale.
<< <i>Home improvements have never been deductible as far as I know. >>
If the improvements are truly improvements and not just routine maintenance, then they are not deductible directly but they DO add to the cost basis of the home and are thus potentially indirectly deductible upon sale.
Routine maintenance on an owner-occupied home is not deductible at all. >>
You are correct that improvements add to the cost basis, and that is the exception I mentioned. So you did deduct the interest and taxes at least half the years. Oh well. Taxes are there, we all have to pay them.
Proud recipient of YOU SUCK more than once and less than 100 times.
<< <i>Just send the IRS all of your money and let them decide how much you need. We need tougher tax laws! >>
The bottom line is that federal income tax is entirely unnecessary in our economy. Monetary policy allows for dilution of the US dollar by printing what the government needs and issuing debt as a supplement. That form of effective taxation, however, taxes every dollar held by every entity exactly the the same. Income tax is nothing more than a bias added to that system, to make some entities pay more than others. There is a reason why some individuals, corporations and entire industries grow in wealth easily. Those at the top have the political resources to groom the tax code generally in their favor while performing misdirection via token 1040 line concessions and outright obfuscation via complicated code. The code is complicated because of all of the special interests manipulating it. When challenged on the complexity issue, they threaten back with a flat tax coupled with the elimination of the mortgage interest deduction (a threat to bankrupt the middle class in effect). Enough of the rant as it is admittedly OT.
<< <i>Those at the top have the political resources to groom the tax code... The code is complicated because of all of the special interests manipulating it. >>
I completely agree, but the real manipulation occurs on the corporate income tax side and US taxation of international transactions area, not the personal income tax side.
Always took candy from strangers Didn't wanna get me no trade Never want to be like papa Working for the boss every night and day --"Happy", by the Rolling Stones (1972)
<< <i>Just send the IRS all of your money and let them decide how much you need. We need tougher tax laws! >>
The bottom line is that federal income tax is entirely unnecessary in our economy. Monetary policy allows for dilution of the US dollar by printing what the government needs and issuing debt as a supplement. That form of effective taxation, however, taxes every dollar held by every entity exactly the the same. Income tax is nothing more than a bias added to that system, to make some entities pay more than others. There is a reason why some individuals, corporations and entire industries grow in wealth easily. Those at the top have the political resources to groom the tax code generally in their favor while performing misdirection via token 1040 line concessions and outright obfuscation via complicated code. The code is complicated because of all of the special interests manipulating it. When challenged on the complexity issue, they threaten back with a flat tax coupled with the elimination of the mortgage interest deduction (a threat to bankrupt the middle class in effect). Enough of the rant as it is admittedly OT. >>
This is exactly on topic John. I believe the complexity is intentional. Think of the attorneys and accountants who would be out of biz with a simple tax system.
Proud recipient of YOU SUCK more than once and less than 100 times.
It's amazing to consider that the Supreme Court in 1895 struck down the federal income tax law as unconstitutional... and that first income tax was only 2% on all incomes over $4,000 a year. The people in their "wisdom" then amended the Constitution to allow an income tax... resulting in much heavier taxation and an IRS that imposes incredible compliance burdens and invasions of privacy.
"Men who had never shown any ability to make or increase fortunes for themselves abounded in brilliant plans for creating and increasing wealth for the country at large." Fiat Money Inflation in France, Andrew Dickson White (1912)
I think the pandoras box which I did not see on pages 1 or 5 (I did not even bother to read 2, 3, or4) would be the states that use that info to match up to records of State Retail sales tax licenses, not to mention the counties or municipalities.
The government is wringing out every free dollar and this is a trend that will not abate. IMO the US citizen taxpayer is already hung. When I see "Scooter" Libby doing his dance and massive Enron'esque scandal combined with clear and obvious waste I have to think..."Its the best opportunity and the best place to live in the world but for who?"
Mom and Dad won the war against the Axis. But can we win the war against "ourselves". Don't throw in the towel yet, the Pilgrims did not pack up and go home either. We cannot continue to allow special interest and big commerce to rule our leaders. We need to take a tough stance on crime and poverty. Some times it is the carrot and sometimes it is by the stick. The wholesale erosion of morals and value in our country has chipped away good jobs, economic advantage (I know the economy is booming, but for who?), and opportunity for the people who have generations of allegiance. Even though we are at full employment, what will you do to employ all those soldiers who come home?
I could go on but who wants to when they have a huge hoard of pennies to look through. Smile Your on Candid camera!
I am just throwing cheese to the rats chewing on the chains of my sanity!
First Place Winner of the 2005 Rampage design contest!
<< <i>Are capital gains still treated as either long term/short term at different rates? >>
For stocks and mutual funds, yes. Unfortunately, all gains on the sale of coins are treated like "short term" gains, taxed at ordinary income rates. Even if you owned the coin for 50 years.
<< <i>We already pay our fair share in income, property, sales, gas and cigarette taxes. They squander and waste enough money. Hopefully this resolution is defeated. >>
You could help a little by not stealing Priority boxes.
<< <i>Are capital gains still treated as either long term/short term at different rates? >>
For stocks and mutual funds, yes. Unfortunately, all gains on the sale of coins are treated like "short term" gains, taxed at ordinary income rates. Even if you owned the coin for 50 years. >>
Which is complete and utter bullsh*t in and of itself.
<< <i>Unfortunately, all gains on the sale of coins are treated like "short term" gains, taxed at ordinary income rates. Even if you owned the coin for 50 years. >>
Actually for coins [and maybe some other collectibles] I thought that the rate was 28% period irregardless of the size of the gain or your tax bracket.
<< <i>In addition the IRS is currently wrapping up a sample of 5000 small business audits they performed for 2004(I think 2004. Thank God none of our clients were affected) tax returns and has gone on record that there is a huge tax gap (under payment of income taxes) with regard to self employed and small business entities. >>
I am currently representing a client on one of those audits. The IRS is smack in the middle of those audits.
One oif the areas the IRS is quite concerned is the proliferation of the use of contract laboe vis a vis employee payroll. Fortunately, I have been ahead of my clients and advised my clients to put their subcontractors on the payroll or try to get them to incorporate or form LLC's, etc.
A piece of advice: By the way, selling a $1000 FMV (and cost) coin for $10 to a sister and trying to deduct the loss as a capital loss is blatently illegal under the IRS tax regulations. Having the sister gift the coin back to the seller is evidence of blatent negligence, in my opinion, and would subject you to a negligence penalty.
The rules are clear; selling to immediate family, even at a legitimate capital loss, cannot be recognized as a capital loss.
FURTHERMORE, SELLING SUCH COINS AT SUCH A "LOSS" WHEN EXCEEDING $12,000 PER CALENDAR YEAR WOULD SUBJECT THE SELLER TO HAVING TO FILE A GIFT TAX RETURN ON TOP OF IT!!!!
<< <i><< Unfortunately, all gains on the sale of coins are treated like "short term" gains, taxed at ordinary income rates. Even if you owned the coin for 50 years. >>
Actually for coins [and maybe some other collectibles] I thought that the rate was 28% period irregardless of the size of the gain or your tax bracket. >>
BAJJERFAN's response is also mostly incorrect:
On coins and collectibles:
SHORT term (less than 1 year) are treated and reported as "short term" gains, taxed at ordinary income rates.
LONG term (1 year or more) are treated as long term capital gains with the only privoso that maximum rates are capped at 28% not the usual 20/15% or even lower long term capital gain rates currentlly in effect.
With the long term capital gains capped at 28%, if your personal ordinary tax bracket is only 10% or 15% then the person selling such coin pays only his or her (or their) personal ordinary marginal tax bracket rate NOT the 28% rate!
This does create tax planning opportunities to legitimately gift coins to College kids and senior citizens to allow them to sell coins in their lower personal tax brackets. But document your gifts to the nth degree.
Oreville, here's a hypothetical scenario for you. Let's say I bought a car in 2001 for $50,000 and sold it in 2006 for $20,000, i.e., with a loss of $30,000.
Let's say I also bought a coin for $20,000 in 2001 and sold it in 2006 for $50,000, i.e., with a gain of $30,000.
Why in our crazy f-ed up tax system do I have to pay tax on the $30,000 coin profit and not get to deduct or offset anything against the loss from the sale of my car?
"Men who had never shown any ability to make or increase fortunes for themselves abounded in brilliant plans for creating and increasing wealth for the country at large." Fiat Money Inflation in France, Andrew Dickson White (1912)
<< <i>Oreville, here's a hypothetical scenario for you. Let's say I bought a car in 2001 for $50,000 and sold it in 2006 for $20,000, i.e., with a loss of $30,000.
Let's say I also bought a coin for $20,000 in 2001 and sold it in 2006 for $50,000, i.e., with a gain of $30,000.
Why in our crazy f-ed up tax system do I have to pay tax on the $30,000 coin profit and not get to deduct or offset anything against the loss from the sale of my car? >>
It is a question of risk, a question of use. If the car was used in your business or if you are in the business of buying and selling cars you could deduct the loss perhaps. Certainly business vehicles are depreciated which is how businesses recapture the cost of capital goods. If it is personal use, no you can not deduct the loss in market value. I think the tax system presumes you are not going to pay $ 20,000 for a silver dollar expecting to use it as designed; that is either a personal investment or business inventory. We do not get to deduct decline in worth of personal use items.
That is my understanding but I may be wrong.
Proud recipient of YOU SUCK more than once and less than 100 times.
I think there is more juice to squeeze out of the international tax apple than domestic Ebay profits. See below about a recent bill introduced. Whenever I see something like this, I see the Tax Attorney Full Employment Act:
********************** U.S. Senator Dorgan Seeks to End Offshore Tax Haven Abuse
U.S. Senator Byron L. Dorgan, D-North Dakota, on January 26 introduced a bill to disallow the tax deferral benefit provided to U.S. companies that set up controlled foreign subsidiaries in tax haven countries, saying it is "unfair to businesses and families who pay their taxes in full." Date: Jan. 26, 2007
January 26, 2007
(WASHINGTON, D.C.) -- U.S.Senator Byron Dorgan(D-ND) introduced legislation Thursday along with Senators Carl Levin (D-MI) and Russ Feingold (D-WI) to help put an end to offshore tax haven abuses and make sure that U.S.companies pay the taxes they owe. "It is outrageous that many U.S.companies have escaped paying tens of billions of dollars in taxes each year by shifting their profits to foreign tax havens," said Dorgan. "It is wrong to give these companies an unfair advantage over other domestic companies on Main Street, and unfair to businesses and families who pay their taxes in full."
This legislation would deny the tax "deferral" benefit to U.S.multinational companies that set up controlled foreign subsidiaries in tax haven countries, and instead continue to treat these foreign corporations as U.S.companies as if they never left. The bill includes a list of tax haven countries and gives the Secretary of the Treasury the ability to add or remove a foreign country from the list. Businesses would have until December 31, 2008, to restructure their operations before the Internal Revenue Service (IRS) enforces these tax policies.
Always took candy from strangers Didn't wanna get me no trade Never want to be like papa Working for the boss every night and day --"Happy", by the Rolling Stones (1972)
If the car... is personal use, no you can not deduct the loss in market value. I think the tax system presumes you are not going to pay $ 20,000 for a silver dollar expecting to use it as designed; that is either a personal investment or business inventory. We do not get to deduct decline in worth of personal use items.
The tax system doesn't treat the coin as an investment (i.e., it doesn't get long-term capital gains treatment); the gain is taxed at the much higher ordinary income rate. Yet the coin is just an item of personal property I bought, and the car is also personal property. One went up in value, the other went down.
Yet I have to pay tax on the gain from the sale of the coin, but I can't offset that gain against a loss from the sale of the car - which is also personal property? WTF ?!
"Men who had never shown any ability to make or increase fortunes for themselves abounded in brilliant plans for creating and increasing wealth for the country at large." Fiat Money Inflation in France, Andrew Dickson White (1912)
<< <i>If the car... is personal use, no you can not deduct the loss in market value. I think the tax system presumes you are not going to pay $ 20,000 for a silver dollar expecting to use it as designed; that is either a personal investment or business inventory. We do not get to deduct decline in worth of personal use items.
The tax system doesn't treat the coin as an investment (i.e., it doesn't get long-term capital gains treatment); the gain is taxed at the much higher ordinary income rate. Yet the coin is just an item of personal property I bought, and the car is also personal property. One went up in value, the other went down.
Yet I have to pay tax on the gain from the sale of the coin, but I can't offset that gain against a loss from the sale of the car - which is also personal property? WTF ?! >>
The big, huge difference is you aren't going to use the coin for it's as-designed use. Without regard to that, if you had sold the car for $ 100,000 you would owe taxes on the gain.
Proud recipient of YOU SUCK more than once and less than 100 times.
The big, huge difference is you aren't going to use the coin for it's as-designed use. Without regard to that, if you had sold the car for $ 100,000 you would owe taxes on the gain
Both of them are personal property. It doesn't any difference what I use it for, and I'm not claiming that it's being used for business purposes. My question is why I cannot offset my gain from the sale of personal property (coin, car, alarm clock, whatever) with loss on the sale of personal property (toothbrush, shoes, car, coin, whatever).
"Men who had never shown any ability to make or increase fortunes for themselves abounded in brilliant plans for creating and increasing wealth for the country at large." Fiat Money Inflation in France, Andrew Dickson White (1912)
Comments
expect me to send in eight returns to states I sold
to and 42 filings showing zero due to the others, it
would stop me from selling on the bay.
Why dont they do as my state of connecticut does.
If you buy, say clothing ,from LL Bean or Lands End ,
and that business has no retail outlet in Conn, they
do not charge the 6% . The buyer declares it on his
State of Conn 1040 return . I have enough to keep
track of in-state
<< <i>Can we declare losses for the items we list that don't sell? >>
Not a loss--it would be recorded as unsold inventory at the end of the year. You don't pay taxes on unsold inventory. You can record a loss on items that sell for less than what you paid, of course. So, sell a few $1000 St Gaudens to your sister for $10 a coin, and then have her gift 10K worth back to you.
<< <i>If Ebay sends a seller a demand for records, does that seller have to provide those records? I think they do, even with no additional legislation. >>
Now why would eBay have to do that; they already have the info. They keep a running total of what you pay in fees to them so they could very easily find the total proceeds from your listings. If they don't already keep a running total they could easily set their software to do that; in fact they would probably keep a year to date summary just like your employer does for your wages and deductions, Cmon folks this aint rocket science.
<< <i>
<< <i>If Ebay sends a seller a demand for records, does that seller have to provide those records? I think they do, even with no additional legislation. >>
Now why would eBay have to do that; they already have the info. They keep a running total of what you pay in fees to them so they could very easily find the total proceeds from your listings. If they don't already keep a running total they could easily set their software to do that; in fact they would probably keep a year to date summary just like your employer does for your wages and deductions, Cmon folks this aint rocket science.[/
I typed too fast and did not edit, I meant to say IRS instead of Ebay. My mistake, and I have corrected the line.
(1) If the IRS does proceed with this, where is the line drawn? What new class of venues does Congress declare responsible for maintaining and providing this data? Can't be just eBay or interstate auction companies like eBay. I have never been asked by Teletrade, HNAI, ... for my SSN. Will hey be reporting my buys and sells to the government? What about the coin clubs or dealers who run a little auction once a year among their memberships? The devil is definitely in the details.
(2) Are you responsible for paying income tax for some illegal who uses your SSN a thousand miles from where you live? Would you be responsible for eBay sales conducted on your highjacked account, perhaps unused and forgotten by you for months?
NSDR - Life Member
SSDC - Life Member
ANA - Pay As I Go Member
<< <i>I have never been asked by Teletrade, HNAI, ... for my SSN. >>
Thats because TeleTrade DOES NOT send you a 1099 or otherwise report your auction proceeds to the IRS. I do wonder who they tell the IRS that they got their commission income from.
<< <i>Two thing come to mind.
(1) If the IRS does proceed with this, where is the line drawn? What new class of venues does Congress declare responsible for maintaining and providing this data? Can't be just eBay or interstate auction companies like eBay. I have never been asked by Teletrade, HNAI, ... for my SSN. Will hey be reporting my buys and sells to the government? What about the coin clubs or dealers who run a little auction once a year among their memberships? The devil is definitely in the details.
(2) Are you responsible for paying income tax for some illegal who uses your SSN a thousand miles from where you live? Would you be responsible for eBay sales conducted on your highjacked account, perhaps unused and forgotten by you for months? >>
John:
Answering 2 first I think you could have a real mess in that situation. You would probably not be ultimately held responsible but the burden would be on you to disprove the liability. That has been my experience.
On the first question, I would imagine that the tax statutes are broad enough that the government can inquire of any entity as to financial relationships with you. The IRS is not bound by our constitutional protections; search and seizure that you and I would not tolerate from law enforcement are the SOP for the IRS. Ultimatley, it comes down to what I initially posted: it is an individual's obligation to report any financial transaction in which they participate. The way Congress has set up the tax system an individual can be literally destroyed financially trying to prove a negative: No I did not cheat the government. Again, protections codified in the Constitution and Bill of Rights do not extend to citizens under investigation by the IRS.
Rick
<< <i>
<< <i>Two thing come to mind.
(1) If the IRS does proceed with this, where is the line drawn? What new class of venues does Congress declare responsible for maintaining and providing this data? Can't be just eBay or interstate auction companies like eBay. I have never been asked by Teletrade, HNAI, ... for my SSN. Will hey be reporting my buys and sells to the government? What about the coin clubs or dealers who run a little auction once a year among their memberships? The devil is definitely in the details.
(2) Are you responsible for paying income tax for some illegal who uses your SSN a thousand miles from where you live? Would you be responsible for eBay sales conducted on your highjacked account, perhaps unused and forgotten by you for months? >>
John:
Answering 2 first I think you could have a real mess in that situation. You would probably not be ultimately held responsible but the burden would be on you to disprove the liability. That has been my experience.
On the first question, I would imagine that the tax statutes are broad enough that the government can inquire of any entity as to financial relationships with you. The IRS is not bound by our constitutional protections; search and seizure that you and I would not tolerate from law enforcement are the SOP for the IRS. Ultimatley, it comes down to what I initially posted: it is an individual's obligation to report any financial transaction in which they participate. The way Congress has set up the tax system an individual can be literally destroyed financially trying to prove a negative: No I did not cheat the government. Again, protections codified in the Constitution and Bill of Rights do not extend to citizens under investigation by the IRS.
Don't forget that if you receive a check for over $10,000 from an auction company and deposit it in your bank account your bank is required to report the transaction no matter where the funds are from. It is getting more and more difficult to keep track of everything.
Rick >>
<< <i>Two thing come to mind.
(1) If the IRS does proceed with this, where is the line drawn? What new class of venues does Congress declare responsible for maintaining and providing this data? Can't be just eBay or interstate auction companies like eBay. I have never been asked by Teletrade, HNAI, ... for my SSN. Will hey be reporting my buys and sells to the government? What about the coin clubs or dealers who run a little auction once a year among their memberships? The devil is definitely in the details.
(2) Are you responsible for paying income tax for some illegal who uses your SSN a thousand miles from where you live? Would you be responsible for eBay sales conducted on your highjacked account, perhaps unused and forgotten by you for months? >>
Good points Coxe, but the IRS does not need to worry about drawing the line. Unless specififically exempted by congress income is taxable.
"Times they are a changing",
The IRS Has invested huge money in multi-year computer upgrades. Their ability to process and match information from outside sources with tax returns is growing every year. I think we will see alot more of these types reporting requirements in the future.
In addition the IRS is currently wrapping up a sample of 5000 small business audits they performed for 2004(I think 2004. Thank God none of our clients were affected) tax returns and has gone on record that there is a huge tax gap (under payment of income taxes) with regard to self employed and small business entities.
I know by reading the thread that everyone on this board reports all their income, my personal opinion is that if you know someone who does not comply, now is a good time to get into compliance.
<< <i>If the government imposes new tax laws on E-bay or its sellers, they would have to issue some sort of guide lines for complience. to keep records like a business would be to difficult for most E-bayer`s. they would likely issue a % fee on all sales, then require e-bay to collect it. JMO
Coinmaster,
I don't understand this issue to be so much about new tax laws, as a mechanism to ensure compliance with existing tax laws.
Current law is that if you sell something and make a profit on it, you are supposed to pay taxes on the profit. I don't think the IRS is looking for the casual ebayer that sells old household items. They are interested in the ebayers that regularly profit from online sales, when you really think about it this type of ebayer starts to sound like they have a business. The IRS code says all businesses are required to maintain proper books and records.
<< <i>
<< <i>If the government imposes new tax laws on E-bay or its sellers, they would have to issue some sort of guide lines for complience. to keep records like a business would be to difficult for most E-bayer`s. they would likely issue a % fee on all sales, then require e-bay to collect it. JMO
Coinmaster,
I don't understand this issue to be so much about new tax laws, as a mechanism to ensure compliance with existing tax laws.
Current law is that if you sell something and make a profit on it, you are supposed to pay taxes on the profit. I don't think the IRS is looking for the casual ebayer that sells old household items. They are interested in the ebayers that regularly profit from online sales, when you really think about it this type of ebayer starts to sound like they have a business. The IRS code says all businesses are required to maintain proper books and records. >>
Well said, that's what I have been saying since this thread started. There is a real problem of understanding tax obligations in ths country if I go by the people I know. The common misconception seems to be that taxes are owed on what is reported to the IRS. That is not true. If I sell an old car for a profit of $ 5,000 then I owe taxes on all of that $ 5,000. That is true if I have profit on 500 coins I sold on Ebay over the year as well.
<< <i>I don't think the IRS is looking for the casual ebayer that sells old household items. >>
I agree. The IRS has always targeted entities based on their perception of potential return for their efforts. I'd guess that they'll likely establish some revenue threshold below which the seller is relatively safe from audit.
Russ, NCNE
1. I saw no dates on the linkified pages. Are they new or is this simply a rehash of old news?
2. This puts U.S. sellers at a distinct disadvantage when competing with foreign sellers, both from an expense standpoint and from an administrative boondoggle standpoint.
3. For those who don't do this for a living, how would one compute the basis of a coin (or other collectible) broken down from a collection received in a trade back in 1991? Much of what I sell is material I acquired over the last 20 years...
My concern is how do hobbyists handle this? Those of us selling off duplicates or upgrading pieces from our collections. If I sell a coin for $150 on Ebay, the net proceeds are most likely turned around and sunk into another coin (or coins or stamps, etc.) for my collection. There is no net "positive" when all is said and done, but if all that is looked at is a gross sales number on Ebay, then it looks like a large amount of income is being made.
The problem is trying to accurately document hobby transactions and trades going back 20+ years.
Talk about an administrative nightmare...
1/2 Cents
U.S. Revenue Stamps
<< <i>This has many implications on so many different levels.
1. I saw no dates on the linkified pages. Are they new or is this simply a rehash of old news?
2. This puts U.S. sellers at a distinct disadvantage when competing with foreign sellers, both from an expense standpoint and from an administrative boondoggle standpoint.
3. For those who don't do this for a living, how would one compute the basis of a coin (or other collectible) broken down from a collection received in a trade back in 1991? Much of what I sell is material I acquired over the last 20 years...
My concern is how do hobbyists handle this? Those of us selling off duplicates or upgrading pieces from our collections. If I sell a coin for $150 on Ebay, the net proceeds are most likely turned around and sunk into another coin (or coins or stamps, etc.) for my collection. There is no net "positive" when all is said and done, but if all that is looked at is a gross sales number on Ebay, then it looks like a large amount of income is being made.
The problem is trying to accurately document hobby transactions and trades going back 20+ years.
Talk about an administrative nightmare... >>
You are correct the administrative challenge is considerable. One would need to know exactly what something cost. Add that to the costs to sell and ship, subtract that from sales price and you have taxeable profit. As to foreign sellers, I believe they incurr tax obligation as well.
<< <i>If I sell a coin for $150 on Ebay, the net proceeds are most likely turned around and sunk into another coin (or coins or stamps, etc.) for my collection. There is no net "positive" when all is said and done >>
Thats irrelevant what you do with the $150. The point is that you sold a coin on eBay for $150 and for which you may have made a profit and that you owe taxes on that profit. Whether you spent the $150 on another coin or a hooker don't matter to the taxman.
<< <i>
<< <i>If I sell a coin for $150 on Ebay, the net proceeds are most likely turned around and sunk into another coin (or coins or stamps, etc.) for my collection. There is no net "positive" when all is said and done >>
Thats irrelevant what you do with the $150. The point is that you sold a coin on eBay for $150 and for which you may have made a profit and that you owe taxes on that profit. Whether you spent the $150 on another coin or a hooker don't matter to the taxman.[/
I Agree
Obviously the safest thing at this point is to save all receipts and invoices for anything that could have even a remote chance of appreciating in value. But then again, I don't think the IRS is looking to nail anyone selling a handful of inexpensive items a year. It's the frequent sellers and people who are making a de facto "business" out of buying and selling at a profit that they're after, I'm sure.
"Bajjerfans Coin Shop"
2006 Tax Year: Start w/$100 in capital. Buy a coin for $100. Sell it for $150. Buy another coin for $150. Year ends.
2006 income statement: Sales $150, COGS $100 (NOT $250!!! - i.e. $150 inventory DOES NOT go into current year COGS!), Gross Profit $50 (i.e. maximum taxable income).
Balance Sheet End of 2006/Beginning of 2007: Inventory $150, Paid in Capital $100, Retained Earnings $50 (the difference between the value of the inventory and the PIC).
If/when you sell that $150 of inventory for $150, there will be no further tax implication. If you sell it for more, there will be. If you sell it for less, you'll have a loss carryback (max $50 if 2-3 years hence) & a loss carryforward for the remainder.
If you're a collector and you sell a coin at a loss, you generally cannot claim the loss against your other income.
However, if you're a collector and you sell a coin at a profit, you must include the profit with your other income.
I sold my car at a loss recently - a loss of $20,000 over what I paid for it. What can I deduct that against? Nothing.
I would have more respect for this system if it weren't utterly one-sided and unfair.
Didn't wanna get me no trade
Never want to be like papa
Working for the boss every night and day
--"Happy", by the Rolling Stones (1972)
<< <i>I sold my car at a loss recently - a loss of $20,000 over what I paid for it. What can I deduct that against? Nothing.
I would have more respect for this system if it weren't utterly one-sided and unfair. >>
We finally dumped our house in Houston in November. After factoring in improvements and sales commissions, we lost $55,000 on it.
Not one cent of that was deductible, as Turbo Tax was so kind to remind me.
<< <i>
<< <i>I sold my car at a loss recently - a loss of $20,000 over what I paid for it. What can I deduct that against? Nothing.
I would have more respect for this system if it weren't utterly one-sided and unfair. >>
We finally dumped our house in Houston in November. After factoring in improvements and sales commissions, we lost $55,000 on it.
Not one cent of that was deductible, as Turbo Tax was so kind to remind me. >>
With one exception, improvements to a home are not tax deductible. I assume you were able to deduct the interest on the mortgage during the time you owned the home. Home improvements have never been deductible as far as I know.
<< <i>With one exception, improvements to a home are not tax deductible. I assume you were able to deduct the interest on the mortgage during the time you owned the home. >>
Actually, every other year we took the standard deduction. One year we'd make 13 mortgage payments and 2 years' of property tax (and itemized); the next year we'd make 11 mortgage payments and no property tax payments (and take the standard deduction). And whatever benefit we got from the mortgage interest deduction was minuscule compared to the $55,000 loss on the sale.
<< <i>Home improvements have never been deductible as far as I know. >>
If the improvements are truly improvements and not just routine maintenance, then they are not deductible directly but they DO add to the cost basis of the home and are thus potentially indirectly deductible upon sale.
Routine maintenance on an owner-occupied home is not deductible at all.
hear hear!
<< <i>
<< <i>With one exception, improvements to a home are not tax deductible. I assume you were able to deduct the interest on the mortgage during the time you owned the home. >>
Actually, every other year we took the standard deduction. One year we'd make 13 mortgage payments and 2 years' of property tax (and itemized); the next year we'd make 11 mortgage payments and no property tax payments (and take the standard deduction). And whatever benefit we got from the mortgage interest deduction was minuscule compared to the $55,000 loss on the sale.
<< <i>Home improvements have never been deductible as far as I know. >>
If the improvements are truly improvements and not just routine maintenance, then they are not deductible directly but they DO add to the cost basis of the home and are thus potentially indirectly deductible upon sale.
Routine maintenance on an owner-occupied home is not deductible at all. >>
You are correct that improvements add to the cost basis, and that is the exception I mentioned. So you did deduct the interest and taxes at least half the years. Oh well. Taxes are there, we all have to pay them.
<< <i>Just send the IRS all of your money and let them decide how much you need. We need tougher tax laws! >>
The bottom line is that federal income tax is entirely unnecessary in our economy. Monetary policy allows for dilution of the US dollar by printing what the government needs and issuing debt as a supplement. That form of effective taxation, however, taxes every dollar held by every entity exactly the the same. Income tax is nothing more than a bias added to that system, to make some entities pay more than others. There is a reason why some individuals, corporations and entire industries grow in wealth easily. Those at the top have the political resources to groom the tax code generally in their favor while performing misdirection via token 1040 line concessions and outright obfuscation via complicated code. The code is complicated because of all of the special interests manipulating it. When challenged on the complexity issue, they threaten back with a flat tax coupled with the elimination of the mortgage interest deduction (a threat to bankrupt the middle class in effect). Enough of the rant as it is admittedly OT.
NSDR - Life Member
SSDC - Life Member
ANA - Pay As I Go Member
<< <i>Those at the top have the political resources to groom the tax code... The code is complicated because of all of the special interests manipulating it. >>
I completely agree, but the real manipulation occurs on the corporate income tax side and US taxation of international transactions area, not the personal income tax side.
Didn't wanna get me no trade
Never want to be like papa
Working for the boss every night and day
--"Happy", by the Rolling Stones (1972)
<< <i>
<< <i>Just send the IRS all of your money and let them decide how much you need. We need tougher tax laws! >>
The bottom line is that federal income tax is entirely unnecessary in our economy. Monetary policy allows for dilution of the US dollar by printing what the government needs and issuing debt as a supplement. That form of effective taxation, however, taxes every dollar held by every entity exactly the the same. Income tax is nothing more than a bias added to that system, to make some entities pay more than others. There is a reason why some individuals, corporations and entire industries grow in wealth easily. Those at the top have the political resources to groom the tax code generally in their favor while performing misdirection via token 1040 line concessions and outright obfuscation via complicated code. The code is complicated because of all of the special interests manipulating it. When challenged on the complexity issue, they threaten back with a flat tax coupled with the elimination of the mortgage interest deduction (a threat to bankrupt the middle class in effect). Enough of the rant as it is admittedly OT. >>
This is exactly on topic John. I believe the complexity is intentional. Think of the attorneys and accountants who would be out of biz with a simple tax system.
The government is wringing out every free dollar and this is a trend that will not abate. IMO the US citizen taxpayer is already hung. When I see "Scooter" Libby doing his dance and massive Enron'esque scandal combined with clear and obvious waste I have to think..."Its the best opportunity and the best place to live in the world but for who?"
Mom and Dad won the war against the Axis. But can we win the war against "ourselves". Don't throw in the towel yet, the Pilgrims did not pack up and go home either. We cannot continue to allow special interest and big commerce to rule our leaders. We need to take a tough stance on crime and poverty. Some times it is the carrot and sometimes it is by the stick. The wholesale erosion of morals and value in our country has chipped away good jobs, economic advantage (I know the economy is booming, but for who?), and opportunity for the people who have generations of allegiance. Even though we are at full employment, what will you do to employ all those soldiers who come home?
I could go on but who wants to when they have a huge hoard of pennies to look through. Smile Your on Candid camera!
First Place Winner of the 2005 Rampage design contest!
If so that would further add to a bookeeping headache, no?
and they're cold.
I don't want nobody to shoot me in the foxhole."
Mary
Best Franklin Website
<< <i>Are capital gains still treated as either long term/short term at different rates? >>
For stocks and mutual funds, yes. Unfortunately, all gains on the sale of coins are treated like "short term" gains, taxed at ordinary income rates. Even if you owned the coin for 50 years.
<< <i>We already pay our fair share in income, property, sales, gas and cigarette taxes. They squander and waste enough money. Hopefully this resolution is defeated. >>
You could help a little by not stealing Priority boxes.
<< <i>
<< <i>Are capital gains still treated as either long term/short term at different rates? >>
For stocks and mutual funds, yes. Unfortunately, all gains on the sale of coins are treated like "short term" gains, taxed at ordinary income rates. Even if you owned the coin for 50 years. >>
Which is complete and utter bullsh*t in and of itself.
1/2 Cents
U.S. Revenue Stamps
<< <i>Unfortunately, all gains on the sale of coins are treated like "short term" gains, taxed at ordinary income rates. Even if you owned the coin for 50 years. >>
Actually for coins [and maybe some other collectibles] I thought that the rate was 28% period irregardless of the size of the gain or your tax bracket.
<< <i>In addition the IRS is currently wrapping up a sample of 5000 small business audits they performed for 2004(I think 2004. Thank God none of our clients were affected) tax returns and has gone on record that there is a huge tax gap (under payment of income taxes) with regard to self employed and small business entities. >>
I am currently representing a client on one of those audits. The IRS is smack in the middle of those audits.
One oif the areas the IRS is quite concerned is the proliferation of the use of contract laboe vis a vis employee payroll. Fortunately, I have been ahead of my clients and advised my clients to put their subcontractors on the payroll or try to get them to incorporate or form LLC's, etc.
A piece of advice:
By the way, selling a $1000 FMV (and cost) coin for $10 to a sister and trying to deduct the loss as a capital loss is blatently illegal under the IRS tax regulations. Having the sister gift the coin back to the seller is evidence of blatent negligence, in my opinion, and would subject you to a negligence penalty.
The rules are clear; selling to immediate family, even at a legitimate capital loss, cannot be recognized as a capital loss.
FURTHERMORE, SELLING SUCH COINS AT SUCH A "LOSS" WHEN EXCEEDING $12,000 PER CALENDAR YEAR WOULD SUBJECT THE SELLER TO HAVING TO FILE A GIFT TAX RETURN ON TOP OF IT!!!!
<< <i><< Unfortunately, all gains on the sale of coins are treated like "short term" gains, taxed at ordinary income rates. Even if you owned the coin for 50 years. >>
Actually for coins [and maybe some other collectibles] I thought that the rate was 28% period irregardless of the size of the gain or your tax bracket.
>>
BAJJERFAN's response is also mostly incorrect:
On coins and collectibles:
SHORT term (less than 1 year) are treated and reported as "short term" gains, taxed at ordinary income rates.
LONG term (1 year or more) are treated as long term capital gains with the only privoso that maximum rates are capped at 28% not the usual 20/15% or even lower long term capital gain rates currentlly in effect.
With the long term capital gains capped at 28%, if your personal ordinary tax bracket is only 10% or 15%
then the person selling such coin pays only his or her (or their) personal ordinary marginal tax bracket rate NOT the 28% rate!
This does create tax planning opportunities to legitimately gift coins to College kids and senior citizens to allow them to sell coins in their lower personal tax brackets. But document your gifts to the nth degree.
Let's say I also bought a coin for $20,000 in 2001 and sold it in 2006 for $50,000, i.e., with a gain of $30,000.
Why in our crazy f-ed up tax system do I have to pay tax on the $30,000 coin profit and not get to deduct or offset anything against the loss from the sale of my car?
<< <i>Oreville, here's a hypothetical scenario for you. Let's say I bought a car in 2001 for $50,000 and sold it in 2006 for $20,000, i.e., with a loss of $30,000.
Let's say I also bought a coin for $20,000 in 2001 and sold it in 2006 for $50,000, i.e., with a gain of $30,000.
Why in our crazy f-ed up tax system do I have to pay tax on the $30,000 coin profit and not get to deduct or offset anything against the loss from the sale of my car? >>
It is a question of risk, a question of use. If the car was used in your business or if you are in the business of buying and selling cars you could deduct the loss perhaps. Certainly business vehicles are depreciated which is how businesses recapture the cost of capital goods. If it is personal use, no you can not deduct the loss in market value. I think the tax system presumes you are not going to pay $ 20,000 for a silver dollar expecting to use it as designed; that is either a personal investment or business inventory. We do not get to deduct decline in worth of personal use items.
That is my understanding but I may be wrong.
**********************
U.S. Senator Dorgan Seeks to End Offshore Tax Haven Abuse
U.S. Senator Byron L. Dorgan, D-North Dakota, on January 26 introduced a bill to disallow the tax deferral benefit provided to U.S. companies that set up controlled foreign subsidiaries in tax haven countries, saying it is "unfair to businesses and families who pay their taxes in full."
Date: Jan. 26, 2007
January 26, 2007
(WASHINGTON, D.C.) -- U.S.Senator Byron Dorgan(D-ND) introduced legislation Thursday along with Senators Carl Levin (D-MI) and Russ Feingold (D-WI) to help put an end to offshore tax haven abuses and make sure that U.S.companies pay the taxes they owe.
"It is outrageous that many U.S.companies have escaped paying tens of billions of dollars in taxes each year by shifting their profits to foreign tax havens," said Dorgan. "It is wrong to give these companies an unfair advantage over other domestic companies on Main Street, and unfair to businesses and families who pay their taxes in full."
This legislation would deny the tax "deferral" benefit to U.S.multinational companies that set up controlled foreign subsidiaries in tax haven countries, and instead continue to treat these foreign corporations as U.S.companies as if they never left. The bill includes a list of tax haven countries and gives the Secretary of the Treasury the ability to add or remove a foreign country from the list. Businesses would have until December 31, 2008, to restructure their operations before the Internal Revenue Service (IRS) enforces these tax policies.
Didn't wanna get me no trade
Never want to be like papa
Working for the boss every night and day
--"Happy", by the Rolling Stones (1972)
It is the peoples destiny, to pay the incresed taxes.
Camelot
The tax system doesn't treat the coin as an investment (i.e., it doesn't get long-term capital gains treatment); the gain is taxed at the much higher ordinary income rate. Yet the coin is just an item of personal property I bought, and the car is also personal property. One went up in value, the other went down.
Yet I have to pay tax on the gain from the sale of the coin, but I can't offset that gain against a loss from the sale of the car - which is also personal property? WTF ?!
<< <i>If the car... is personal use, no you can not deduct the loss in market value. I think the tax system presumes you are not going to pay $ 20,000 for a silver dollar expecting to use it as designed; that is either a personal investment or business inventory. We do not get to deduct decline in worth of personal use items.
The tax system doesn't treat the coin as an investment (i.e., it doesn't get long-term capital gains treatment); the gain is taxed at the much higher ordinary income rate. Yet the coin is just an item of personal property I bought, and the car is also personal property. One went up in value, the other went down.
Yet I have to pay tax on the gain from the sale of the coin, but I can't offset that gain against a loss from the sale of the car - which is also personal property? WTF ?! >>
The big, huge difference is you aren't going to use the coin for it's as-designed use. Without regard to that, if you had sold the car for $ 100,000 you would owe taxes on the gain.
Both of them are personal property. It doesn't any difference what I use it for, and I'm not claiming that it's being used for business purposes. My question is why I cannot offset my gain from the sale of personal property (coin, car, alarm clock, whatever) with loss on the sale of personal property (toothbrush, shoes, car, coin, whatever).
It is the peoples destiny, to pay the incresed taxes."
It's the Peoples destiny to throw the bums out and rewrite the tax code