Quote:
Originally Posted by forazzurri2axz
I think I understand that if you sell over $20, 000 with over 200 transactions in 2011, then paypal gives that figure to IRS--So is this entire amount then counted as income?? are you taxed above and beyond the 20K?? what if you don't have proof of purchase (s) from 5 yrs ago when the vintage prices were way higher and now you sell at a loss??? and finally, hopefully for a tax person to see this, if I am on Social Security and one's income can't exceed 14K+ , does this count towards income vs Soc Security benefits???????
thanks in advance
Bill
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You need to show a cost on the items purchased, and be filing a Schedule C for a self employed individual. Sadly, if you paid, say 10000 for the stuff, and can NOT prove what you paid, the entire 20K is taxed. Now, without a business schedule C, whic shows other costs of a BUSINESS, such as advertising, computer costs. mileage, etc, then you probably would need to put the entire 20K as a capital gain, or estimate the cost. Then, that NET amount is taxes at the "collectibles" rate, which is 28 pct I believe right now. Its kinda complicated, all depends on how you have handled paypal sales before too.
Far as the SS amt, the "NET PROFIT" goes toward earnings amount. So, if you can't come up w a "defendable cost" to reduce the 20K net profit figure, then yes, you would need to include the whole 20, as if it was all just cash income.
Also, if you are not in a BUSINESS of buying/selling and put the 20K on schedule D, you can NOT show a higher cost and deduct the whole amt of the loss, only a 3K max. Again tho, I don't recommend putting a higher cost figure, unless you are somewhat sure of what you paid, and have some documentation.
PM me if you can give me more details. Im an accountant, who files a small schedule C for my ebay and NET54stuff, so I can help best I can, maybe in addition to what I said here.