Reporting sales of large $$ items
 

What is the "right" way to report sales of large $$ items and what is the obligation for paying taxes on those sales?

Intuitively, I would think that if a sale is made, then for simplicity, let's just call it PRICE SOLD - PRICE PAID = PROFIT.

Is there a difference between a "collector/hobbyist" and "dealer" when it comes to paying taxes on PROFIT?

My guess is that most of the "collector/hobbyist" types pretty much ignore paying a "capital gains" tax on the profit because the profit was minimal and the hassle of filing is just that, a hassle.

What happens in today's market when cards that may have been purchased for a few hundred dollars are now being sold for thousands of dollars? For example, a decade ago you could easily buy T206 Cobbs for under a grand. Let's say you bought about 20 of them a decade or more ago and are now liquidating because it's a good time to sell them. You could easily be looking at $40K of pure PROFIT. How is that supposed to be reported?

How many people ("collectors/hobbyist) on this board will actually, or already have, paid taxes on these PROFITS?

What are the ramifications of NOT paying these taxes? I would think that it would be impossible for the government to go after everyone because there have got to be a lot of people out there making unreported sales. I'm going to go out on a limb and guess that the number of people ("collectors/hobbyist") buying/selling/trading that are actually paying taxes on these gains, is minimal.

Perhaps I should have started a poll with the following selections:

1 - I pay taxes on PROFITS (begrudgingly or willingly)
2 - No way Jose - I'm not paying a dime
3 - I pay taxes but my PROFITS are slightly understated
4 - I pay taxes but my PROFITS are grossly understated

Do auction houses report the amount of money that they pay out to consignors? I'm guessing they log all of this and that at some point, if the government asked for these records, then they would be obligated to provide that data.

A poll might be a better way to get your question answered

Taxes
 

I have always understood it this way.

Paid 15k for a card. Sold the card for 20k. Income tax is paid on the 5k profit.

Paid 1k for a card. Sold the card for $20k. Income tax is paid on the 19k profit.

Different rules may apply in different states. Where I live the income tax is about 25% of the profit I think.

When is ebay going to start sending the IRS sales information? Or did they already start? I sell things for a friend and I don't want to be accountable for those sales. Maybe I should have him start an ebay account and list things for him on there.
Bob

I believe you will get a 1099 on any sales you have, if you have more than $600 in a year. It used to be if you exceeded $20K of sales and 100 or 200 transactions, but the threshold now is lowered significantly. So you certainly should consider having your friend open a separate account for his activities.

Currently auctions in PA are not required to report consignor sales numbers but we are required to keep records for 7 years in case anyone comes looking IRS, Divorce lawyer, estate lawyer etc.

A related question -

I recently received a message in ebay asked for my tax id # (social security number) because I went above the $600 threshold here in 2021 and ebay says they're required to generate a 1099 for year 2021 due to IRS requirements. My question is I never received this request in previous years when I was above the $600.

Is this request new because they moved me to managed payments in August 2021 or did something else changed ?

I know in the year 2022, the thresholds change to $600, but year 2021 should be the $20,000 and 200 transactions. Correct ? Thanks.

Are you actually asking about the correct way to determine taxable income from card sales, and then how to properly report it on your federal tax return, or are you just asking others on here to say whether or not they even bother reporting any, some, or all of their income from card sales on their tax returns?

If it is the former, I can probably help with that.

If the latter, please keep in mind this is a public forum so any IRS, state, or local tax official can simply come on here then and see people talking about how they don't report and pay taxes on all their income from card sales. So do you really, really, really, really, really think it is a good idea to put such a questionnaire poll like that on here so people can publicly respond and possibly incriminate themselves for tax evasion?

The reporting of electronic sales by third parties to the IRS has been around for a few years now, and is accomplished through the filing of Form 1099-K. Form 1099-K is used to report income received from electronic payments such as credit cards, debit cards, PayPal, and other third party payers. In most cases, the payment settlement entity (PSE) will send you a 1099-K by January 31 of the following year. This income needs to be included in your total business earnings, or otherwise be included elsewhere in your return.

Under current law in effect through the end of 2021, the threshold for requiring a PSE to send a 1099-K to the seller and IRS is $20,000 or more of total gross sales for the taxable (calendar) year AND 200 or more total sales transactions. Beginning on January 1, 2022 and going forward, the threshold for required reporting by a PSE of electronic sales activity via form 1099-K is reduced to simply $600 of total gross sales for the taxable (calendar) year and no minimum required number of sales transactions.

If Ebay is asking for your social security/tax ID # now, and saying they are going to then issue and send you and the IRS a 1099-K form for 2021 based on a $600 gross sales threshold, they can do that. Even though the 2021 reporting threshold is still $20,000 of gross sales and 200 transactions, that is just the required minimum threshold. There is no rule or law that says the PSE can't report gross sales below the threshold, and it has always been like that.

It seems to me that Ebay may be starting to use this new reporting threshold early so they can start gathering everyone's tax and reporting data now so that next year (2022) they don't have any issues or problems implementing this when the new threshold really takes effect. You can try contacting Ebay and ask them why they need this tax info now if the new threshold doesn't take effect till 2022, and you aren't going to go over the 2021 sales or transaction threshold. My guess is they'll simply tell you they need the info now so they can start the proper reporting.

And failure to provide them with your proper tax iD information won't necessarily get you kicked off selling on Ebay, but it could ultimately result in the seller being subject to what is known as Backup Withholding. In that case, Ebay would be required to deduct Backup Withholding right off the top of a seller's gross sales, and send that money to the IRS. And I believe the current federal Backup Withholding rate is 24%.

So let's say you don't give Ebay your correct tax reporting ID info and become subject to mandated Backup Withholding. Now you sell something that cost you $75 on Ebay for $100. Ebay is going to take $24 of your money and send it to the IRS, they'll also take their commission and sales fees, and send you whatever is left over. So you probably just lost money. The only way to then get any overpayments from this Backup Withholding back is to file a tax return after the end of the year, claiming the proper income and expenses from your card sales on the return, and treating the Backup Withholding like an estimated federal tax payment or the federal withholding off you W-2 wages. Otherwise, the IRS just keeps the cash.

It is also possible that Ebay could alternatively terminate your ability to sell on their platform if you don't give them your proper tax ID info, but that will be up to them.

And as Scott from Aquarian said, his auction house currently isn't required to report gross sales of consignors to the IRS or his home state of PA. I believe that will be pretty much the same for all the other auction houses out there, at least for now. But that could change in the future. I would not be surprised if in the coming years the government institutes a further requirement of Nominee reporting of sales income by Scott/Aquarian to his consignors, as well as requiring it of all other auction houses and consignment type sellers out there. As Scott said, he's already required to hold onto the sales info to individual consignors for a number of years, so any appropriate tax authority could walk in and demand to see such information. Keep that in mind. (Scott, Sorry for using your and your AH in my example, but since you already posted in this thread, I figured you wouldn't mind. Thanks.)

Not at all. I try and explain without giving advice, sometimes I think people hear what they want.

Great information and in the end partner with your tax adviser for your specific situation and state laws

Thank you Bob !!!

Bob C. - Thanks very much for that information. It is very helpful!
Robert

I believe your profit equation should be: Price sold - Price Paid + expenses = Profit. I certainly take expenses when I file my income taxes for Past Ball Vintage Cards.

Are the polls taken on this board "anonymous"? If so, then polling responses would be interesting.

Thank you for the additional information.

Not looking to delve into any political debates (please) but there currently is a proposal to make "Unrealized capital gains" taxable. That basically means that if you bought a card 20 years ago for $100 and it's current value is $5,000, you would be taxed on the $4,900 worth of value your item has today even if you don't sell it. You would be taxed just for having it.

This is for informational purposes only...not for political debate.

Maybe the $600 rule will significantly boost buying and selling at shows?

Interesting. Can you post a source?

The unrealized gain is only currently being debated (if it's even getting any traction) on billionaires as I recall. AT THIS TIME it would not apply to average folk- only saying AT THIS TIME as often once a tax is established...

I run a business, and thus if I sold cards they would go through my schedule C. Of course I'd be liable for both halves of the FICA etc. But if I remember my rules correctly, for anyone not running a business, the gain is reported as a capital gain (just google capital gains on collectibles to read for yourself).

And I am certain everyone pays all taxes due.

Why is no one discussing capital losses to offset on these taxes? How often do we read of those posts the discuss a loss.

If we are cuffed into these nonsensical taxes on used goods we should be using the opposite to offset. This is commonplace in gambling and investments.

How many of us actually have documentation proof of what we paid for even some of the items in our collection? Therefore taxes will be due on the entire sale amount. I had planned to liquidate much of my collection while alive but am now rethinking that idea due to the tax implications. Instead upon my death my sons will receive a stepped up basis when they sell with little tax due unless they hold the items for another 20 years. Any thoughts on this approach? I've heard rumors of the stepped up basis being eliminated. Wouldn't doubt it.

In the future could there be a scenario…..
 

Where someone paid $100 for an item, the owner can only sell it for $500 due to market conditions at the time is sale but the “book value” is $1000 so the seller can claim a capital loss? You can’t have one scenario without the other. So if there is an unrealized capital gain, couldn’t there be an unrealized capital loss as well?

Angyale

do not try to cheat the IRS. they will get you.

It makes more sense as an ownership tax than an unrealized capital gain tax….like taxes on real estate. You pay them every year even if you own the property outright. If it’s a gain-related tax, that would be a nightmare to track for everyone, including uncle sam.

Property taxes go up (or down) depending on what they are paid for. Things like schools, roads, sanitation. etc. The property owner gets value in return.

ownership tax would just be a general fund collection with no return value to the owner. Same with the unrealized capital gains tax

While the Federal threshold for 2021 is $20,000 some states have different thresholds for State income taxes. I'm in Maryland and I understand they use the $600 threshold now.

I'm sorry, if someone told me I'd have to pay taxes on the potential future value of a collectible, I'd tell them to go piss off or that I purchased it expecting it to drop in value and therefore will take the tax loss for it.

Next thing you know someone will come up with an ownership tax, to be paid yearly, for having the privilege of owning some cool cardboard. Guess what - I'll tell them to piss off on that one also.

I honestly don't know if the IRS could, or likely would, do this, but as Scott/Aquarian mentioned earlier, he has to keep the records of consignors sales available for quite a few years. So if some tax authority comes in asking for it, guess what, he's going to have to give them the info.

Now how do you think Leon (Hi Leon!) would like or appreciate it if one day an IRS agent shows up on his doorstep asking for names and contact info of people posting on here about not reporting and paying their taxes from cards they are selling? And yes, I know, you can make the poll anonymous, but there always seems to be a few people who will post on threads like that and go into the "what" and "why" they responded to the poll as they did. My warning is probably more so for them.

And even if we do the poll and people do come right out and say that they are in fact not reporting income and paying all their taxes, the chances of the IRS coming on here and following up to go after them is almost nil. But still, I liken posting that you're cheating on your taxes on a public forum to being a January 6 "capitol rioter" posting selfies of themself in Nancy Pelosi's office online. See where I'm going on this? Why take even an infinitisimally small chance on getting in trouble for something you don't have to do. I'm just playing Jiminy Crickett here, and trying to be helpful.

Yes. +1,000,000,....................................... .

Depends, are you filing and paying taxes on card sales as a Dealer, a Collector/Hobbyist, or as an Investor?

Taxes themselves are not a poltical debate. Remember the old adage - There are only two guaratees in life, death and taxes!

Or other sources like the B/S/T threads on here.

The hypothetical below is the way I understand things. If I'm wrong, someone please let me know.

Costs associated with the disposition of an asset should also be taken into account. To keep things simple, I'll use very small numbers.

Let's say you bought 1,000 Joe Shlabotnik cards a few years ago. they've doubled in price, so you sell them off.

You paid $10 each. You sold them at $20 each.

However, you also paid $4 in postage and supplies (bubble mailer, soft sleeve, top loader) for each one you shipped out.

Your total profit is $6 each after all is said and done. You would owe tax on the $6,000 profit.

I'm not a tax professional and may well be too conservative, but my understanding was that for a hobby (unless you are a reseller/dealer) you can't always add the costs of grading, postage, etc, to your cost basis, so I've always just gone with my gross cost. But if I'm wrong I hope someone will chime in!

it could also really open up the trading market. i'd personally prefer to trade all day long, since that's basically what i'm doing anyway. sell something to buy something else.

I have written about losses on various other threads on this forum already. But first off, why do you refer to such taxes as "nonsensical", can you explain what you mean by that?

Secondly, most tax discussions are not simple yes or no answers, so trying to give an accurate, general response can take up a lot of space. Also, you have three distinct types of card sale transactions that can occur depending on if the seller is a Dealer, Collector/Hobbyist, or an Investor, with the taxable outcome from a sale potentially (and probably) differing between all three types. And I would argue that any one of us selling cards can potentially be all three types of sellers at the exact same time, just to make things even more interesting and clear.

So do you maybe have a more specific question(s) you wanted to ask that won't take a novel to answer?

I have never seen any reference in filing as to being an "investor" for cards, or coins or another genre. You are either in the business of buying and selling(legit entity) and file accordingly OR you pay the "collectibles" rate on any gains realized. How does one become an investor for tax purposes?? Which I presume would claim any gains at their appropriate capital gains rate based on their income level/AGI.

If that is an option, everyone in a low or no capital gains tier would claim they were investors and not collectors, thus avoiding the higher collectibles tax rate.

Just Google and look for "proposed taxes on appreciated assets/investments/stocks", or even "Biden proposed taxes", and you should get lots of threads talking about the speculated changes the current administration may yet propose and try to pass as new tax legislation.

And the specific thing you're asking about in regards to possibly making people pay taxes on investments they own, but haven't acually sold, has a name to it, and is in fact already enforced on certain specific business taxpayers. It is called "Mark to Market". The idea is to impose this "Mark to Market" strategy on very well-off taxpayers by setting some as of yet undecided upon minimum threshold measure. Then when a taxpayer exceeds that threshold, they'll have to look at all their investment/stock holdings at the end of the tax year and see what their then current FMV is as of the year-end date. They would then compare that year-end FMV to what they actually paid (tax basis) for their investments, and to the extent the year-end FMV exceeded their tax basis, report that increase as taxable income on their return and pay the appropriate taxes on the appreciated (or unrealized) gain, as whatever they end up deciding those taxes (and the rates for them) are to be.

Nothing has been finalized in regards to this proposed idea yet, and none of it will matter if this isn't enacted into law. But, I wouldn't be surprised if it doesn't pass into law because while it would tax very wealthy people like Jeff Bezos when his Amazon stock goes up, by now taxing his unsold shares, that will reset Bezos' tax basis in those Amazon shares to the FMV they were taxed on. So then in the following year if the Amazon shares go down in value, Bezos could now in all likelihood claim a loss and possibly be due a big tax refund. Can already hear the masses screaming about how this is really just another tax loophole for the rich then.

And if this did somehow pass, I don't think anyone need worry about having to pay such taxes on their card collection. I would imagine the government would restrict any such "Mark to Market" taxes to only those investments/assets that have an easily discernible and universally accepted method in determing their year-end FMVs, like public traded stocks. The idea of otherwise having people be forced to get annual appraisals of their non-conventional assets/investments is sheer insanity.

Now is the Perfect Time To Sell

It would be easier for the woke left just to confiscate people's collections. Redistribute them. End of political commentary.

Just because you may have to estimate things like basis of your cards doesn't mean you can't. Believe it or not, IRS agents are also people and can be reasonable and work with you. They are not like they often get reflected as in movies and on TV.

However, the idea of waiting till someone passes away so they can leave their card collection to whomever they wish, at a Stepped-Up tax basis equal to the FMV of the collection at the time of their passing, is a perfectly good and viable way to save on income taxes when/if the collection is sold, at least as the law currently stands.

You are also correct that there has been talk and rumors of possibly doing away with this Basis Step-Up provision under the current federal estate tax laws, but nothing has been passed into law yet, I'm not so sure that will happen either. The government wants money now, right? Well, by inclusion of a card collection in someone's estate, the then FMV of the collection becomes subject to federal estate taxes. Now you've already got a large chunk of the population screaming about how federal estate taxes are an unfair money grab by our government, and are tantamount to unfair double-taxation on the value of property and assets that the deceased person worked hard for over their entire life, and bought/paid for with money that had already been taxed (hence the double-taxation factor). So once the FMV value of the deceased's card collection has been subjected to the federal estate tax, whether any federal estate tax ended up being due on it or not, they Step-Up the basis of the collection to the FMV used for the estate tax calculation so they now don't potentially subject the card collection to triple-taxation when whoever inherited the collection sells it for more than what was originally paid for it (tax basis) by the deceased. The one thing I hadn't mentioned yet is that everyone also gets a federal estate tax exemption, kind of like the standard deduction everyone gets that they can take each year on their income tax return. The federal estate tax exemption just got bumped up to $12.06M per person, beginning in 2022. That means that normally when someone passes away in 2022, the first $12.06M of their estate value has $0 federal estate tax on it.

Now remember my saying how the government is always looking for more tax money? Well if the person in my example passes away in 2022 and their total estate at the time, including the card collection, is worth less than $12.06M, they pay no estate tax on the value of the collection. And then, whether they Stepped-Up the tax basis of the card collection or not, if the person who inherited the collection decides to keep and not sell it, the government has no sale to tax and gets diddly-squat. The easiest thing for the government to do to possibly speed up their tax collections then is to simply reduce the federal estate tax exemption they give everybody. Remember when Hillary ran against Trump, she talked about dropping the exemption all the way back to just $1M per person. By lowering the federal estate tax exemption enough in my example, the card collection could end up becoming subject to the federal estate tax after all, and the decedent's estate ends up paying the estate tax owed on that collection's value right now. So by dropping the federal estate tax exemption, the the government gets it tax money now, without having to pass laws to stop the Basis Step-Up of inherited property and getting accused of now trying to triple-tax it, and they don't have to wait for the heir to sell it. So that is my best guess, currently, as to what the government may/will do.

That is another possible problem if the government were to pass a new "Mark to Market" tax law on some individual's and their investments/assets. Say you are subject to this tax law and buy something for $100 during the year. At the end of the year the item's value has jumped to $1,000, so you now have to report and pay the tax on your $900 gain. So you go to sell the asset to cover the tax due, but find out that since the prior year-end the value dropped down to $500, and you sell it for that. You still have to pay the tax on the prior year's $900 gain, but because of the sale, you've now created a $500 loss to report, but you have to wait to do that on next year's tax return. Ugh!

Which is a big part of the reason they may likely not do it.

For federal purposes it would likely go into the general tax revenue fund, which supposedly benefits all of us.

After reading all of this mumble jumble I don't understand.......I think I will just give everything away........UGH!
Bob

And exactly why I suggested talking to a certified tax professional about your specific state.

Good lord Peter, don't go giving anyone any more ideas! :eek: LOL

See Post #38, paragraph 4.

John, I believe a seemingly small, but important, adjustment to your basic profit equation is needed, as follows: Price sold - (Price paid + expenses) = Profit.

That's not necessarily true, the direct costs to acquire and sell something can generally be deducted as part of the sales transaction. The big difference between deducting costs as a business (ie: Dealer) versus deducting costs as part of a hobby (ie: Collector or also as an Investor) is the person in business gets to also deduct the costs to operate and run the business. For example, a Dealer who operates a card business out of their house can take a deduction for having a home office, in other words, some utilities, RE taxes, R&M, and maybe even some mortgage interest expenses. A Collector, or an Investor, would generally not be able to deduct any of those types of expenses. Same would be true for other things like insurance on the cards or rental fees for a safe deposit box where your cards are kept, yes, deductible by a Dealer in business, and no, not deductible by a Collector or an Investor. And as for paying to have cards graded, I would say yes to those costs being deductible whether you're in business as a Dealer, or you're a Collector or an Investor. In the case of grading fees though, the business Dealer wouldn't just deduct those costs on his/her return every year, they would capitalize them and add them onto the the inventory (tax basis) cost of the card that was graded, and only get to deduct them when that particular card is actually sold. For Collectors and also Investors, they never get to deduct any direct costs in acquiring (or selling) a card, till it actually gets sold. Trust this helps better explain the differences.

Not so fast there!

You do know that if instead of selling someone a card for money, you trade a card(s) you have for a card(s) that someone else has, that technically in the IRS' eyes you just completed a taxable sale? And that goes for whether you're a Dealer, Collector, or Investor. Now, will the IRS ever likely know about it? Probably not, unless you or the person you traded with informs them. But just letting you and everyone know, even a card trade is supposed to be reported as a taxable sales transaction on your income tax return.

And before anyone jumps on to try telling me I'm wrong because of the Like-Kind Exchange rules, please note that in regard to Section 1031 of the IRC, in the case of cards, that probably would have worked only if you and your buddy swapped the exact same card. But that was in the past anyway since the tax law changes passed and enacted when Trump was in office in 2018 also included changes to the Like-Kind Exchange rules of Section 1031 of the tax code, where going forward, Like-Kind Exchange tax treatment only applied anymore to exchanges of real estate, period!

Scot, I saved your post for last to respond to tonight in this thread.

The idea of someone being an Investor, as opposed to a Collector or Dealer, may not be as far-fetched as one might think. In recent years we've talked more and more about how a lot of the new money and people coming into the hobby are doing so to invest in cards and their potential upside, not to collect a particular set or complete a HOF player run, or whatever. Stories about cards and their record prices/values are now getting reported about in places like the Wall Street Journal or on CNN, so the public at large is also starting to think more about and realize their investment potential. With that kind of exposure and treatment of cards in such traditional and other sources and outlets for the investment community, you have to think the perception of cards may be changing overall, and at least in some instances be now viewed and treated as Investments, and not simply as Collectibles.

I would have no qualms arguing such a point with the IRS, and feel pretty confident that they would finally acquiesce to the position that cards can, and in some cases should, be treated as Investments.

Granted, when you look at federal tax returns, they don't so clearly spell out where and how to properly report the differences between Investment and Collectible sales on them. They both get treated as capital gain items, but the one huge difference is that Investments that sell at a loss generate capital losses, which may get deducted on a person's tax return, at least as an offset to capital gains from other Investments sold. However, if you sell an item that is strictly a Collectible (ie:sold by a Collector and not an Investor), and it sells for a loss, you cannot deduct that Collectible capital loss anywhere on your tax return, not even as an offset to Collectible capital gains.

And as far as the question about the potentially higher tax rate for Collectible capital gains, I'd have to double check, but I seem to remember the special treament for not realizing and incurring capital gains taxes on Investments sold applied only to what was referred to as qualified capital gains (ie:like the capital gains from the sales of publicly traded stocks of domestic U.S. companies). And in that case, the capital gains from the sale of cards would not likely be considered as qualified capital gains, and because of the underlying Collectibles nature of cards, the tax treatment of any capital gains on their sales would likely revert back to the tax treatment of capital gains on Collectbles, subject to the potentially higher Collectibles tax rate, whether the cards sold were considered and treated as Investments or Collectibles. Again, I think this is right, but may need to double check.

Now differentiating between and providing proof to support one's position that their cards are Investments as opposed to Collectibles isn't a straightforward and necessarily simple thing to demonstrate. You'd have to look at the owner and the collection to see how the aspects of it are specificallly treated by that owner. Though not necessarily a definitive answer, the simplest way I can think of to maybe decide what a person's card collection is, is by asking the owner where and how they keep it. And if they tell me they walk into their man cave to look at items framed and hanging on the walls or in display cases around the room, they are probably a Collector/Hobbyist and their cards are Collectibles. If they instead tell me they fire up their computer to go online and view the cards they have sitting in PWCC's vault in Oregon, they may more likely be an Investor and their cards are Investments. This is a very simplified answer to a not so simple question though, just to give an idea of how the diferrence between a Collector and an Investor may be perceived and shown. Would always suggest seeking the advice of a qualified tax professional in making any such determinations. Hope this helps to explain what all I've been talking about.

Just wanted to point that, so far at least, it appears that if the Democrats do manage to pass the 1.85 tr reconciliation bill, they are actually more likely to lower taxes for the rich than to raise them, since the proposals for the wealth tax, higher corporate taxes, higher top marginal income tax rates, etc have been taken out, while there is a big push to increase the limit of the SALT deduction: https://www.politico.com/news/2021/1...ms-plan-521004

Mmm
 

Thanks for the stupid comment.

I thought it was spot on.
Taking money from someone who earned it and giving it to someone who didn't earn it, is just wrong.
.

Leon
 

Leon, I thought you didn't allow political posts. Peter's post was in a thread about paying taxes on card profits. I'm not sure why he felt the need to post a political statement.

Why are you allowing political statements on nearly every thread? I don't want to hear from the right or the left , from the conservatives or the radicals, or from the Republicans or the Democrats. You used to run a tight forum, but lately, it is anything goes.

How about sticking to cards?

Nonsensical Keith O b is about is far left as they come but has a kick ass collection. Love how Leon lets up this right wing political trash talk.

I agree with just sticking to cards!

Agreed
 

..http://imagehost.vendio.com/a/204295...S_0002_NEW.JPG

I hope you guys aren't upset or mad with me in regards to threads I post in that end up getting into taxes as part of this hobby/business. I post to hopefully give out information and advice in response to specific tax questions, correct or expand on posts of others that may not be accurate or fully answer a tax related question, and maybe provide helpful guidance to others just reading along. I try to keep all my tax related posts as apolitical as possible, though I may mention a politician's name or an administration involved in some tax related law or change, solely as a point of reference or contex and not to politicize or condone/condemn anyone's specific politics or point of view. Unfortunately, since tax laws are passed and enforced by our government, and our government is basically run by politicians, it is virtually impossible to entirely and completely separate the two, taxes and politics. If you all prefer, I'll just never respond to any tax questions again.

I, for one, would be sad if that happened. Your posts, in my opinion, are informative and helpful.

+1

Don't know if you read all the way down to the end of your linked article...

"Even though most millionaires would receive a tax cut, people with seven-figure incomes — on average — would see their tax bills climb by $68,000, TPC estimates. That’s because one-third of millionaires would face tax increases averaging $228,000.

Aside from easing the SALT cap, Democrats are also proposing new surcharges on the very rich, with those earning more than $10 million facing a new 5 percent surtax. People making more than $25 million would pay another 3 percent on top of that.

So people above those income thresholds would typically pay more under Democrats' plan, even as they benefit from a higher SALT cap, while those making more than $1 million but not enough to face those surcharges would owe less."


Corporations and very wealthy individuals have far too many loopholes to forgo paying any taxes. Seems to me it's about time we ask them to start paying a fair share (especially on sales of their baseball cards). :-)

Actually Fred, such a thing has/does exist. Some states, or other taxinging authorities, may impose what is commonly known as a business personal property tax. In Ohio, where I'm from, they actually had such a tax in effect through around 2005. Luckily it was only on businesses though, but if you were a dealer, you had to add up the value of your card inventory on the last day of every taxable year, and pay a tax on the tangible inventory value. I'm not sure off the top of my head what other states may still have something similar in place.

That may be/have been one of the reasons, depending on where you lived, that you would always see businesses advertising year-end clearance sales. They wanted to clear as much inventory out as they could to pay less property tax.

I can't say I've read everyone of your posts fully as selling large $$ items is not something I plan on doing, however, your posts seem very informative and are definitely not the problem.

Put it this way - I cannot tell if you are a democrat or republican. :-)

How about you just scroll on you crybaby

+ 1

HI

I just play it safe and let my accountant handle the tax side. And I handle the paying the Tax side

Exactly the way it should be Jeff. When in doubt or facing a not so simple tax situation or question, get the help of a qualified tax professional. And, don't always wait till it is time to do your taxes before calling on one for help. To start, if it is in the middle of their tax season when you finally call, they'll already be busy and won't have as much time to help or advise you. And then, by people waiting till after the year ends before finally contacting their tax advisor, it very often makes it impossible for them to help that person because the tax year is already closed. Can't remember how many times I'd told someone I wish they'd called me before December 31.

Appreciate that.

Good! LOL

And truthfully I'm neither a Dem or a Rep. I'm for all of us and whoever will do the best for everybody.

And when it comes to taxes, my mantra has always been - Tax evasion is a crime, tax avoidance is your Constitutional and God given right! :)

Sometimes I allow my butler to wipe the slabs of my cards to ensure there's no glare when I look at them. But I'm weary the butler could be a part time IRS agent that is waiting for me to make a mistake...

Ha - would you like some Grey Poupon with that sir? :p:p:p :)

Good one!

But don't laugh too hard. Once had a client who got an 8 figure payout for turning in someone that wasn't quite honest in their dealings with the government. A whistleblower can get a cut..................

I can only hope I get generally better stuff.....

Like, ok take the 10,000 1981 Topps, give them to whoever. Maybe I get back a single nice card, maybe I get back a few hundred cards from a set where I might need a few.*

It would be like a huge nationwide hobby mystery trade! :D




* or with my usual luck a shoebox of P-F Smurfs and bald trolls.

Do you mean 8 figures as in $10M+ or are you counting the two far left as cents (which drops that down to $100K+ for the whistle blower payout)? If it's a true 8 figure payout, then I'm going to start watching the Monthly Pick Up threads and BST sales a bit more closely... :p

It was about $11M, but chopped down to almost $8M that he actually received after the attorneys got involved and took their cut. But the total pay out was a true 8 figure amount, or a 10 figure amount if you want to include the pennies.

Did he owe taxes on that $8 million???

Yes!

And actually he was lucky. Normally when someone wins a case or gets a settlement that the attorneys also take a portion of, you actually have to claim the gross amount of the settlement as income, and then try to deduct the attorney fees as a miscellaneous itemized deduction, subject to some limitations. At least you used to be able to till they did away with miscellaneous itemized deductions with the 2018 tax law changes under Trump. Luckily for this taxpayer there is a special revenue ruling in effect specifically for whistleblowers that lets them only have to pick up and pay tax on the net amount they got after taking out attorney fees. Saved him around $200K-$300K or so if memory serves.

I'm just imagining the scenario of him not paying on his 8 million and getting reported by a whistleblower who then makes a million, who doesn't pay and gets reported by someone who makes $80,000 who doesn't pay...

A lot of great information. Thanks for the thread!

If voting on the poll my vote is: I would never let the gov't steal even more of my $ if I could avoid it.

I won't sell on Ebay or anywhere else because of the fees, record of sale, potential taxes etc.

Full disclosure...I haven't sold anything in decades as my wife can attest...LOL. When it does come time to sell the deal(s) will be in person cash sales. ;)

One question I do have for the group.... What about a small collector who sets up at a local card show? Most don't have a business license. Are they expected to pay taxes?