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Originally Posted by Gusturd
Thank you. Yes very helpful. I just want to be sure I understand this last sentence. Are you saying ebay and PayPal fees are deductible for either hobby or business?
What about shipping?
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An expense that is so directly related to the sale that it becomes part of the cost basis is, and always has been, allowed as a deduction for the sale of a collectible even if not considered part of a business. I have been involved with enough IRS audits in my line of work to know this to be true.
Thus the eBay and PayPal fees for the sale of a collectible are part of the cost of sale, as are grading fees for the card.
Now that Taxslayer article is certainly correct, if a bit simplistic, regarding your motivations for selling. If you are selling items year after year, it is likely going to be viewed as a business. If you have 20 cards in your collection and decide to sell them in one year, that will be considered a hobby and thus a gain on the sale of collectibles taxed at either your tax rate or 28% whichever is lower. And if you have these 20 items graded and the sale involves a sellers fee, these are part of the cost of sale for each item and thus will increase basis. This doesn't mean you get to deduct grading fees on other items or any such thing. But a direct cost associated with the sale of a specific item will increase its basis for sale regardless of whether or not the IRS deems the sale to be part of a business enterprise.