Cost basis - Warning tax related topic

[jethrod3]

Originally Posted by raulus

I'm not entirely sure why there's such a fascination with small potatoes.

I would suspect that the cost to buy those sets is probably greater than the $75 you sold them for, so no gain.

Even if all $75 was income, you're talking about a tax of at most maybe $30, give or take. If we're fussing over $30, then we're probably doing something wrong. Both because paying $30 shouldn't kill anyone financially, and failing to pay $30 is unlikely to result in a death sentence under federal tax law.

Now, if you were talking about $30,000 or $300,000, then the stakes are a lot higher. But you're probably not ringing up those sorts of sales at a garage sale.

I wouldn't call it a fascination. I think it's more about questions regarding interpretation, questions about where the IRS could or really should draw the line, and questions about where some of us might fit in that are not dealers but maybe just most casual of sellers. We are probably talking about a figure somewhere in between the $75 and $30,000 you mentioned for the casual collector (non-dealer) that sets up occasionally at a card show, and probably much more skewed to the $75 side. Probably the guy that makes between a couple hundred dollar to maybe $1K after factoring in table costs.

So no, not likely to result in a death sentence. But officially, even for such events that parallel what you might make at an average garage sale (though admittedly most are not making money on what is sold at garage sales), I think given the current rules, not declaring what you made even as a non-dealer at a mom-and-pop tiny card show (if you made anything above basis at all) is still a violation of the tax law. It's a complicated mess for folks that buy large lots of stuff at auctions, keep 1 or 2 desired items, but try to sell the rest of the stuff so it doesn't accumulate in one's house. At a minimum, some records must be kept now, even for the most casual of sellers in that situation, because more than likely, you'll also want to sell those one or two items you may have purchased in those auctions, and in the end, you'll have to figure out basis and profit, even if those desired items may not get you more than, say, $100 if sold at a show. All of this makes me want to consider becoming a CPA when I retire from my current day job!