I think the ideal solution here is simply to have ebay take out a portion of the final sale price to offset the tax that we'd ultimately have to pay and let ebay pay the government.
If I sell an item for $50, and ebay takes their 13% in fees, then takes 10% in what I'd typically have to pay as a gains tax, then at least I know that when I sell something, I get 77% of the hammer price, and thats my money and I don't have to worry about being taxed on it later. Then I can figure out what my minimum sale price should be.
What I am curious about is how auction houses handle the taxes now. I've never sold through Heritage or Mile High or Goldin. If you consign with them, do you get a 1099 form? Or do they pay the tax to the government? It seems like they have moved toward direct depositing the proceeds into bank accounts, so since there is no paypal in the middle, how does that work? I've heard that is how Probstein does it too. So if you send Probstein a bunch of stuff and they list it on ebay and it sells for $1000, they take out their cut and you get the rest, but do you get a 1099 in that case? I can't imagine how that would work.
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