Bill, I agree with you with respect to Schedule C being appropriate if the $5,000 profit is from one's sports card business.
However, I disagree with your response if the profit is from one's hobby. It is my understanding from reading IRS Publication 17 (pages 108 and 118 in particular) that a profit from the sale of a collectible is considered by the IRS to be a capital gain. Capital gains are either long-term or short-term, and both are reported on Schedule D; and most likely, one would need to report the details of the collectible gain(s) on Form 8949, which is used to support Schedule D. And, if one's collectible gain is long-term, this necessitates completing the 28% Rate Gain Worksheet to arrive at the figure to put on Line 18 of Schedule D. And, finally, one will need to use the Schedule D Tax Worksheet to calculate the amount of tax on one's taxable income.
FYI, I do not claim to have income tax expertise. The reason I say this is earlier today I finished my federal income tax return, and in so doing, I researched the IRS pubs to determine how I should report the profit I made on a card I sold last year. If you believe my contention is incorrect, kindly provide me with IRS references for your contention.
Val
|