eBay 1099 issues

[raulus]

Originally Posted by philliesfan

The ebay fees and the IRS wanting 20% is a killer. I am not a economic major or have a lot of business knowledge so I could be off with this stuff but.....
If you paid $50.00 for something several years ago and do not have a receipt and you want fair market value of $100.00. So you sell it on ebay for $100.00, lose about 13.3% to fees ($15.44). Then the 1099 to the IRS and they want their 20% ($20.00). So after the Sale of $100.00 and less fees and taxes, you net $64.56. Not much of a profit (14.56) if you ask me. I know the sample I gave is peanuts to most everyone but it is a lot to me. But this is the way it goes so I will continue with ebay.

Some sellers may be inflating their prices to compensate for this.

Two observations for you here:

1) You should still be able to recover your basis, assuming you have some documentation about your original cost. At $50, I would probably even be comfortable with a recollection of about when and about how much you spent. So based on your example, your gain net of your selling costs would be $35. If your tax rate is 20%, then your tax is $7 (i.e. 20% of your gain of $35, with your gain calculated net of your selling costs of $15).

2) The federal tax rate is actually 28% for collectibles. And sometimes you get to pay an extra 3.8% for the net investment income tax, if your income exceeds certain thresholds. Plus extra for the state, unless you live in a state with zero income tax. So an extra 10% for me here in Oregon, for a total tax rate on my collectibles gains of ~42%.