Tax Question

[TanksAndSpartans]

Calling purchases inventory doesn't feel right to me. Let's take a hypothetical example to exaggerate things. Imagine I added $10,000.05 worth of items to my collection and I sold a card for 5 cents to a kid on my street. I doubt I could claim a 10K loss on my taxes.

[egbeachley]

Originally Posted by DezHood

Calling purchases inventory doesn't feel right to me. Let's take a hypothetical example to exaggerate things. Imagine I added $10,000.05 worth of items to my collection and I sold a card for 5 cents to a kid on my street. Would I be able to claim a 10K loss on my taxes?

Yes. If you sold the $10K card by accident and kept the 5 cent card. When buying lots you have to properly allocate based on fair value.

[TanksAndSpartans]

Originally Posted by egbeachley

Yes. If you sold the $10K card by accident and kept the 5 cent card. When buying lots you have to properly allocate based on fair value.

Right, I understand that part. I was trying to get at something different. A lot of us are collectors who occasionally sell a card. But it wouldn't seem like I could then take purchases minus sales and call it a loss because I bought more than I sold. Granted the OP seems to by buying with the intention to sell, but that's why I exaggerated the example.

[begsu1013]

i would also suggest talking w/ your accountant in terms of the items sold and whether they are "collectibles" or "investments". about a 9% difference in your tax rate there depending on how it's defined on your k1.