Reporting sales of large $$ items

[Fred]

What is the "right" way to report sales of large $$ items and what is the obligation for paying taxes on those sales?

Intuitively, I would think that if a sale is made, then for simplicity, let's just call it PRICE SOLD - PRICE PAID = PROFIT.

Is there a difference between a "collector/hobbyist" and "dealer" when it comes to paying taxes on PROFIT?

My guess is that most of the "collector/hobbyist" types pretty much ignore paying a "capital gains" tax on the profit because the profit was minimal and the hassle of filing is just that, a hassle.

What happens in today's market when cards that may have been purchased for a few hundred dollars are now being sold for thousands of dollars? For example, a decade ago you could easily buy T206 Cobbs for under a grand. Let's say you bought about 20 of them a decade or more ago and are now liquidating because it's a good time to sell them. You could easily be looking at $40K of pure PROFIT. How is that supposed to be reported?

How many people ("collectors/hobbyist) on this board will actually, or already have, paid taxes on these PROFITS?

What are the ramifications of NOT paying these taxes? I would think that it would be impossible for the government to go after everyone because there have got to be a lot of people out there making unreported sales. I'm going to go out on a limb and guess that the number of people ("collectors/hobbyist") buying/selling/trading that are actually paying taxes on these gains, is minimal.

Perhaps I should have started a poll with the following selections:

1 - I pay taxes on PROFITS (begrudgingly or willingly)
2 - No way Jose - I'm not paying a dime
3 - I pay taxes but my PROFITS are slightly understated
4 - I pay taxes but my PROFITS are grossly understated

Do auction houses report the amount of money that they pay out to consignors? I'm guessing they log all of this and that at some point, if the government asked for these records, then they would be obligated to provide that data.