Quote:
Originally Posted by Kco
I was unclear here, I apologize. You can offset any profits with deductible expenses to negate any profit as a business, inclusive of COGS, you wouldn't pay capital gains on a single transaction.
So if he is a business taxes are calculated on profits after allowable expenses, which he doesn't appear to be.
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Your approach makes a lot of sense for a dealer. So when the dealer spends money on traveling to shows, and paying for tables, etc, then all of that is deductible. As long as the dealer is actually making money. For a dealer that only loses money (after deductions), the IRS will often reclassify this as a hobby, and disallow those deductions.
For the average collector/investor, their only costs and expenses are paying auction fees and maybe shipping. Usually those costs can be factored into the calculation of the gain on sale. Even grading costs can be rolled into your basis and used to offset your gain on the sale. So the only downside is for a collector/investor who spends a lot on travel and shows, those costs wouldn’t be deductible. I have attended 1 whole show in my entire life. So definitely not me.
So for most of us, schedule C would probably be a mistake. Unless we are really acting as dealers, with all of the action that comes with it.