Quote:
Originally Posted by GrayGhost
I do a schedule C, tho its very small and most of my stuff is a cash business. I am an accountant by trade, so if anyone wants advice on how to handle things, you can message me. Also, constant "losses" on Schedule C, whether real or "padded" are a flag for the IRS.
BTW, if you just buy and sell as a hobby, you are supposed to list the sales on the other income line of your return, not subject to SS tax and can only deduct expenses up to the amt of sales, and on Schedule A, as a misc itemized deduction. , which is subject to AGI limits.
also, a "Random sale" of a large item, not in the business, could be considered a collectible capital gain, taxed at 28 pct
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Excellent thoughts Scott and dead on with regard to the different ways that can or should be used to report income.
I come from a background as an IRS audit specialist. This is really where I got my idea from. It is amazing how ill prepared most people are for an audit from the IRS. While some audits are very casual and easy to fend off, others are downright intense and intrusive. In both cases, however, the best defense against the IRS is a clean set of books.
There is always the chance that someone never does get audited. If so, that is wonderful. But why take the risk? To me, it is like saying it is ok to live an unhealthy lifestyle because there is a chance that you won't get sick. While true, it may not be the best idea.
Anyway, thank you for the input Scott. Hope you don't mind if I bounce a few questions off you every once in a while.
Tom C