Quote:
Originally Posted by ValKehl
Paul - The purchase of inventory for resale is not a business expense; in other words, purchsing inventory for resale does not create an income tax deduction. Rather, a business expense/tax deduction occurs when an inventory item is sold. If the item is sold for more than it cost, the resulting gross profit would be taxable, unless it is offset by other business expenses (such as selling costs).
Val
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True. This also includes "personal collection" buying. The only tax event is when an item is sold and you pay taxes if you had a profit, and you don't if you had a loss (simple example ignoring rent and other overhead).
As for why sellers do this, it's simple. You can sell 20 items every day at 5% profit and you won't do better than selling 1 item a day for 100% profit. Plus preparing 1 package instead of 20 is a lot easier. The problem is that occasionally someone bites and pays the high price. They are keeping the prices unreasonable.