How would you expect ebay to know how much you PAID for your cards?? I'm confused.

I figured consigning to auction houses cost less than selling on eBay years ago and now eBay craps just getting worst. Not only the tax perspective but dealing with non-payers, potential return, threaten of leaving neg feedbks by the buyers, eBay not returning fees becuz of disputes....etc etc etc

eBay just isn't a happy place to sell anymore.

Do auction houses submit the same info as eBay for sales by consignors?

No I think that obligation is on the consignor.

I have noticed an uptick of sellers online now saying no more paypal goods and services. Probably has to do with this change.

Technically, no, AHs don't have to give 1099s to consigners. First off, 1099s are normally given to mostly show what someone was paid for their service or labor (think independent contractor), intangible income (interest and dividends), or the proceeds from the sale of intangible investments (stocks and bonds). This recently added reporting of sales via 1099-K forms is specifically designed and geared/targeted towards third-party payment platforms/services. If you use a payment service such as Paypal, you can have money go into and out of your Paypal account for all kinds of transactions, with nothing ever going through a bank account where the IRS can easily access and check your activity records. The IRS can'/won't do it and go through accounts with Paypal, or similar payment platforms like Zelle, Venmo, etc., so they added 1099-K reporting so people couldn't completely run a business the IRS couldn't find out about and/or have the activity records easily checked if they want.

The sales of cards and items through an AH are what are known as the sales of tangible personal property, and there are currently no direct laws requiring the sales of tangible personal property be reported to the IRS via a form 1099. AHs don't own or technically sell anything. Consignors hire AHs to assist them in listing and selling their items, for an agreed upon fee/commission. It is NOT the AH paying consignors, it is the auction winners that pay the consignors, so the AH wouldn't really be the one responsible for sending a 1099 to the consignors anyway, if 1099 reporting were currently required on sales of tangible personal property, which it is not. In fact, if there is technically anyone that may be required to issue a 1099 as a result of an auction, it would be the consignors issuing one to the AH (if the AH is not incorporated), along with a copy to the IRS, to report the commissions/fees they paid the AH for the labor and service they provided in helping to sell the consignor's goods. The same way someone would report what they paid an independent contractor for work they had done for them.

For the record, very briefly back in 2010 I believe, there was a law passed that would have potentially forced places like AHs to start reporting such sales activity to the government. But apparently it was quickly caught and reversed in 2011, before anything ever took effect. But that doesn't mean the laws can't/aren't going to be changed requiring such reporting in the future. Fun stuff, huh?

Sorry, double post!

Well, I'm the polar opposite of you, and definitely not new to taxes. LOL

I was afraid from what you were typing that you might not be familiar with how this works tax-wise in regards to cards and our hobby, so jumped in to hopefully provide some guidance. I've typed way too many answers for things like this already so, rather than repeating myself and just typing more, go back and read anything else I already posted in this thread. And then do a search for posts I've made and you can go read through and catch up on all the tax related posts I've made. You will find a wealth of knowledge in them. Just remember though, tax laws can (and sometimes do) dramatically change overnight, so something I wrote/said a while back may not be 100% valid anymore. And when in doubt, reach out and try to check with a qualified tax professional, especially one familiar with the state you're in.

As for this whole thing being so egregious for the small-time sellers, I don't necessarily disagree. The government is out for the bigger fish, but unfortunately these new reporting laws and thresholds are seen by them as the most efficient, thorough, and possibly politically correct ways to go about seeking better compliance with and enforcement of our tax laws. Unfortunately, for these new laws/methods to work, they kind of have to cover and be applicable to everyone to work. Don't forget that part of this is also to deter others from skirting the tax laws in the future. And the big fish of tomorrow usually start out as the little fish of today. So unfortunately, I doubt you'll see these new rules/laws being repealed anytime soon, if ever at all.

To expound on my earlier fish analogy, think of the government/IRS as fishermen casting out their nets to get a great catch. As in reality with real fishermen though, when they pull the nets back in they will, along with the big fish they sought to catch, also inevitably have ensnared a lot of little fish and other unintended creatures they weren't really after. Not much else they can do though if they really want to crack down on the tax evasion/fraud problem. Good luck, and feel free to ask if you have any more questions.

Paying taxes you owe isn't new. The only thing that is new is eBay reporting our sales to the IRS directly so they can catch scofflaws who do not report their income or pay taxes on their profits. If you maintain accurate books and declare your income from cards already, the 1099 is a popcorn fart. I get dozens of them every year (lawyers get 1099d for everything) and just toss 'em in the shredder since I have accurate books I can document as needed.

Note that taxes are paid on profits, not gross receipts, as Bob pointed out. If you sell a card for $10 that cost you $9 you pay tax on the $1 profit. If that puts you at a loss with eBay fees, you need to be in a different business because your margins are too thin.

Adam,

You need to incorporate so they don't have to send you 1099s anymore. LOL

For the ones you do get though, I hope you at least take a quick look at them before they are shredded. In the past, I've had clients get 1099s that reported incorrect amounts, and we'd contact the issuer to get it corrected before filing my client's tax return so it didn't screw things up. You never know! :)

you are supposed to claim the income to the IRS regardless of a 1099

At some point in 2022 this is going to cease to be breaking news, right?

People were getting their piss hot about this last August.

Last August??? This was signed into law back on 3/11/2021. A colleague and I were talking about it right after, and knew then this would create one heck of a $#%©storm when everyone finally realized what was happening. Some people/clients we told about it right away were having a fit after we had explained what this would mean. Thing is, it was buried in the American Rescue Plan Act, and no one in the media ever really talked about it. That is what usually happens with some of these random tax law changes, until the tax season hits, and then everyone finally hears about it and creates an uproar. This delayed reaction isn't something new. In fact, I can almost guarantee that come this time next year, there will still be people just finding out about this reporting change when their 1099-K form shows up in their mailboxes, totally unexpected! LOL

Bob,

I admire your willingness to assist all of the handwringers. And gratis, no less! The patience of Job. I get it all the time even from people in my own office. Explaining the UCC code and District of Columbia statutes on property law. I learned 4 simple rules over 30 years ago that have helped. I sleep quite well obeying them.

1. Use/consult a tax professional.
2. Report your income.
3. Pay your taxes.
4 When in doubt refer to Rule #1.

I have used the same person since 1989 and the guidance has been invaluable.

Thanks, appreciate that. I didn't bother chiming in much over the years, but more recently have gotten tired of seeing people who clearly have no real tax experience or knowledge posting tax related comments and responses that are so wrong, it is not funny. And then I think of all the people that end up reading those posts who may actually think what they are reading is true or correct, and it starts bothering the heck out of me. Especially with all the tax crap that has been happening over the last 4-5 years, and is going to continue going forward. I'm not really telling anyone what they should or shouldn't do when it comes to their taxes, just providing some info and background so they can hopefully make a better, more well-informed decision for themselves. And with the way flippers and investors have really invaded our hobby in recent years, along with the seemingly insane surge in prices, we are definitely becoming more noticeable to tax authorities. And they can (and already have in many cases) also influence and impact how people decide to eventually report their hobby activities and reflect such on their tax returns.

Glad to hear you've got your own trustworthy, long term, tax person. That can make life a lot easier for many people. Not necessarily for everyone, but for way more people than you can probably imagine. And absolutely love your four rules, especially #4. Have my own mantra I've repeated over the years that I always liked to tell clients: Tax evasion is a crime, but tax avoidance is your Constitutional and God given right!

And as for offering help gratis, wasn't looking for anything. But I do collect a lot of different pre- and post-war sets and cards, and seem to especially like oddball and obscure things. So if anyone got some knowledge and help from my posts, and feels so inclined to send me a duplicate or extra card/item or two they may have no real use or need for as thanks, I won't say no. LOL. :D

I don't know everything, but if someone has questions, I'll try to help. Thanks.

I get what you are saying. With you, tax law, with me property law. I have been doing what I do for 36+ years. I know more than 95% or more of the attorneys when it comes to that. I got my second wife through property in law school. The attorneys always try to finesse it when I tell them something that should be done. When they hem and haw I just tell them that I keep ALL of my records. If it comes back across my desk in a year or two and the issue is not fixed the new attorney will know exactly who handled it the last time.

I have also used your mantra for 30 plus years. Unfortunately, it is lost on some people so I compose my rules.

It is a wise man who knows what he knows and is willing to admit what he doesn't.

I cannot help with the the cards. I do not collect baseball at all. I collect Olympic photography and buy and sell mainly pre-1980's Olympic autographs. I mainly contribute on the other side, but I like the community and read threads on the main page that catch my eye.

Ha Ha,

I hear you when it comes to attorneys. Usually when you get involved with an attorney in some sale/merger, or other big, complicated deal involving multiple people and/or entities, they always try to come in, take over, and act like the quarterback to, I guess, impress the client to justify their fees and have everything done how they like and want. I learned to just chill and sit back because the clients would never sign anything until I looked it over. I'd find all the mistakes and errors, and also point out the problems and omissions. I sometimes wondered if the attorneys actually ever paid attention when people told them what the deal/transaction was, or how it was supposed to go down and work tax-wise. Don't get me wrong, there are a lot of great attorneys, and then there are a lot of other attorneys. LOL

Add about 9-10 years on to your experience for me. I started in the '70s, so this is the 6th different decade I've worked in.

And I also like your saying about being a wise man. I have a little bit different take on that topic and have told people through the years that the more I know or learn, the dumber I feel. And they'd invariably ask me what I meant. And I'd tell them it seemed like every time I learned one new thing, I'd also discover there was like ten more things I didn't know and was now even dumber than before. It would always get a chuckle out of people, who would also agree I made a great point. LOL

Sounds like you have a great collecting activity/collection as well. I've never gotten that deep into the Olympics myself, but the athletes and stories behind a lot of the photographs you own have got to be truly amazing.

Take care.

Ah, but wouldn't you have to claim that card as income if someone considered it a 'payment' for your services? :cool:

But seriously, and to add to what someone already said, I appreciate all the information you are offering here. Even if a lot of it might not apply to me, it's still good to have a general understanding of the impact. Thanks!

LOL

Nice try, but since I wasn't billing anyone, the item would be considered more of a thank you gift, and gifts are not considered as taxable income. And as long as someone giving a gift(s) to another person keeps the total amount/value of all such gifts to that person at no more than $16,000 for the 2022 year (up from $15,000 in 2021), they don't have to report or do anything else in regards to those gifts, or owe any gift taxes on them. And if the person giving the gift(s) is married, they can actually double the amount of gifts they'd like to give me in 2022 from $16K to $32K, and still not have to worry about paying any gift tax on it. However, the person giving the gift(s) to me, and their spouse, would want to each file a Form 709 gift tax return for 2022 to report that they agreed to split the gift(s) one of them gave me, between the both of them now.

Again, nice try, but don't ever attempt to BS a BSer! :D

That $32,000 would probably buy a lot of nice vintage cards. Either that or one prism, refractor, blue chrome, laser cut, uniform patch signed on card 1/1 of the flavor of the month unproven rookie in the NBA or MLB who has not finished a full season, but had some good games.

Do appreciate the comments and sentiments. But just because something may not specifically apply to you today, it doesn't mean that may not change tomorrow, or at some other point down the road. Just knowing about a lot of what I'm telling everyone won't necessarily answer all your questions, but it sure as heck will help you to at least realize when to start asking more questions and looking for help.

Just got my 1099-K yesterday and had to redo my taxes while I wait for my last K1. After shipping costs, shipping supplies, travel to National, cost of cards/supplies sold, snacks, meals while at National, simplified home office deduction, utilities, travel to USPS, etc.....figures out to almost a wash.

Elections have consequences. And we are sure as heck paying the price now.

They do, but did you like it better when the IRS was toothless and people weren't paying their fair share? Why blame the currently-elected people for this?

My students have games to play when it's indoor recess. Two of the games have a gazillion pieces, and often they are left lying around. So I have pulled those games from the shelf. Some students blame me because they can't play them now, and some students blame the kids who couldn't clean the games up in the first place. Who would you blame?

You.

I think it’s an undeniable fact that a particular party that won the last election wrote the bill and voted for it. One can debate whether the IRS should be going after people making a few hundred dollars on the side and be for or against it, but I don’t see how we can possibly deny that the policy is in effect because of the currently elected people that wrote and passed it.

This part, that it happened and a certain group made it happen, I don’t see any room for a debate on. They wrote it, they passed it, they are responsible for these new laws. If that’s good or bad is up to the individual.

YUP!!!

But to be fair, probably doesn't matter who's in office as they need to cover and at least try to start paying back all the increased debt we've had due to the pandemic. The interest alone we paid last year was over half a trillion $ I believe. If they have to start raising interest rates in an attempt to curb inflation, we could be in for a world of hurt.

And for now, they're initially trying to increase compliance and enforcement of the existing tax laws before raising the rates, or creating new ones. Or they may just wait. Don't forget that a large part of the individual tax laws and reductions passed back in 2017 are scheduled to expire at the end of 2025, with no one doing anything.

"Whom" would you blame, not "Who". Hope you don't teach English. :D

I also want someone to define "fair share". There's never a number associated with that phrase.

I believe the majority of folks wouldn't mind 'a toothless IRS', as the vast majority of us are sick of being taxed to death on everything, everyday and watching them just piss it away on stupid 'Government Funded' crap nobody truly cares about. The currently 'installed' politicians are part of a criminal syndicate, IMO.

Taxation without representation

Be careful of debating politics......and also if you are going to debate your name is going to be out here. I don't like anonymous debating too much. thanks
.

Not debating politics, I offered no opinion myself on legislative priorities or IRS priorities. I said it is an indisputable fact who wrote and voted for the bill and is thus responsible for its status as law today and that this is on pubic record. If it violates a rule to state that that is a fact, I'll censor the post.

It's talking about politics. Fact or not doesn't matter. Just talk about cards. :).

Actually, either who or whom could be correct. If the answer to the question is he or she then who would be correct. If the answer is they or them then whom would be correct.

Who's on first?

Canada Tax Rules are Different
 

So I was speaking with my tax advisor who validated that any sales below $1000 are not subject to Capital Gains tax in Canada. Collectibles are classified as Listed Personal Property (LPP) which is "personal use property that usually increases in value over time". Sales of these items are subject to capital gains tax unless the acquiring cost and selling price are both below $1000 for an individual item.

Bob, just want to express deep appreciation for the clarity you provide on tax related issues. I feel like my tax accountant has, at times, struggled to articulate what I need to do to be a law-abiding, tax paying citizen in this area. He's meticulous, but doesn't deal with this specific type of income much.

I'd like to formally motion to the Board, that Bob C. hereby be proclaimed the Grand Poobah of Revenue Recognition & Taxation! I'll be placing your new avitar (below) in my forum contacts list. Truly, thanks again. Joe R.

Thanks for this. Been wondering about this for awhile.

Cheers...

Hello all...A lot of knowledge on this forum which is why I joined. Thank you for that.

I read this thread (well nearly all of it) with great interest as I am a long time collector that would like to begin to liquidate. This has become a more intimidating and daunting task than maybe it was 20 years ago and I'd like to do it with the least hassle and most profit. My collection was always intended to supplement retirement so it's important, I take the best avenue while liquidating.

Last week, I did meet with a tax professional. She was knowledgeable, but as you might guess not an expert on sports cards/memorabilia. She spelled out several options for me:

1) Starting a sole proprietorship. This would allow me all the Schedule C deductions I encounter, however, she discouraged this because of self employment taxes. She mentioned income here would be taxed at my normal income tax rate (24%).

2) Starting a partnership with my silent partner wife, who would then become co-owner of the business (not worried about that) and would avoid self employment taxes. All of the benefits of the sole but with added tax advantage.

3) Just be a collectibles seller on ebay, where I would be able to deduct shipping, fees, supplies. Not sure what else. But I would be taxed at the higher collectibles tax rate, which I believe she said was 28%

So my question here is two fold:

1) What do you think most sellers in our hobby on ebay do? Option #3?
2) Is the added expense and complexity of #2 worth it? I'll assume #1 isn't a viable option unless there is some hidden benefit I can't remember her mentioning.
3) Edited to add a 3rd question...so I guess it's now three-fold. Do you need a TIN to sell at card shows?

Thank you in advance! These are complicated times in our once simple hobby.

Bob

Welcome to the forum. Great questions. Net54’s resident CPA, Bob C., will probably soon respond. He will probably thoroughly answer each question in great detail. :D

"1) What do you think most sellers in our hobby on ebay do?"

Until this year, pocketed the proceeds and never declared the income.

That's for sure -

Been on eBay for 25 years now and the fun has long since completely worn the eff off.....

So Done with them -

These are not quite mutually exclusive but maybe inversely proportionate.

+1

Least hassle or most profit……you can only choose one.

I would guess that's not limited to eBay. Cash is king at card shows too and I've never been given a receipt or been charged sales tax.

If you are looking to liquidate in the most time/cost effective manner possible, it may be worthwhile looking into consigners like Greg Morris Cards or Probstein or going to one of the big auction houses like Heritage or Goldin or one of the others. It obviously depends on what you have, how much you have, etc. But they will handle everything with regard to shipping to individual buyers, and it will simplify your tax bill as well.

Selling on ebay can be a huge hassle. Selling on the BST board here is easier. But if you are going to individually sell hundreds of cards, it will be a lot of work. You might save yourself a bit of money doing it yourself, because you arent paying consignment fees, but you also have to calculate how much your actual time is worth. Most people fail to consider what their own time is actually worth when trying to estimate something like this.

Thank you. All good points but I'm not interested in a 3rd party...other than possibly ebay...at this point. I'm good with it taking a few, even five or more years to sell. Not in a rush. My wife and I plan on working for 5 more years so just thinking about starting the process. If it becomes too labor intensive I may change my tune.

Right now I'm more concerned with which approach from the three I mentioned, makes the most sense.

Interesting...Does the Gov't define the big fish as those that make more than $600 but less than $20K? In theory anyway, wouldn't the same big fish be caught at the $20K threshold? At face value, it doesn't feel like those are the people they are going after.

I think the ideal solution here is simply to have ebay take out a portion of the final sale price to offset the tax that we'd ultimately have to pay and let ebay pay the government.

If I sell an item for $50, and ebay takes their 13% in fees, then takes 10% in what I'd typically have to pay as a gains tax, then at least I know that when I sell something, I get 77% of the hammer price, and thats my money and I don't have to worry about being taxed on it later. Then I can figure out what my minimum sale price should be.

What I am curious about is how auction houses handle the taxes now. I've never sold through Heritage or Mile High or Goldin. If you consign with them, do you get a 1099 form? Or do they pay the tax to the government? It seems like they have moved toward direct depositing the proceeds into bank accounts, so since there is no paypal in the middle, how does that work? I've heard that is how Probstein does it too. So if you send Probstein a bunch of stuff and they list it on ebay and it sells for $1000, they take out their cut and you get the rest, but do you get a 1099 in that case? I can't imagine how that would work.

the 1099 portion of this is a question i hear a lot from people who are casual sellers. and i'm far from a tax expert (and haven't read far into this thread), but maybe bob c can answer this:

with regards to the 1099, are people paying for the total amount collected on the cards, or is the amount you paid for the card taken into consideration?

sorry if this was answered already.