Quote:
Originally Posted by swarmee
If you declare as a business, the IRS has some recommendations to consider. It's thoroughly discussed on the 1099-k thread on the Blowout Baseball forum.
But basically, if you are attempting to make money in the endeavor, and would likely turn a profit in 3 out of 5 years, you're probably a business based on the IRS definition. As such, you get to debit quite a bit of your other expenses rather than just item cost. I think the IRS would be accepting of it if you do it consistently in the future, not flip-flop every year based on whichever way is most preferential to you every year.
You will have to keep or find a lot more paperwork, I'd bet, and you'd probably want someone to help you prepare your taxes, at least the first year.
Some of this is also happening, I'm sure, with the bitcoin kids, since the IRS instructions state that if you're buying in with the intent to sell for a profit, they can be taxed like any other investment.
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Yeah, paperwork can be daunting (my daughter, who's a freelance artist keeps trying to get me to use Quickbooks). I generate lb's of files and receipts every year, and I'd be considered a very small business. I've got tubs of paperwork going back years in storage.........just in case.
I used an accountant for several years, just to finalize my return, before realizing it was just simple math and plugging in numbers into the Turbo-Tax software.
It can be stressful pulling all the numbers together during tax-time, but it's really not that complicated, especially if you are at least halfway organized about it.