Possible new tax law?

[mmier118]

Originally Posted by birdman42

No, collectibles are taxed *at most* at 28% (if you've had the item for more than a year). Anything you hold for less than a year is taxed at ordinary income rates. Whatever your marginal bracket is, that's the tax rate on the gain.

Collectibles have their own special treatment. Ordinary capital gains get taxed at 0, 15, or 20% depending on the rest of your tax situation. Gains on collectibles are taxed as ordinary income, with a cap of 28%. So if your total situation leaves you in the 12% tax bracket, your tax on the gain is 12%. If you're in the 32% marginal bracket or higher, then your tax is 28%.

Pre-1987 the max rate on all capital gains was 28%. The Taxpayer Relief Act of 1997 reduced the max rate on most capital gains to 20%, but left the top rate on collectibles at 28%.

Another way in which collectible gains are different is that typically you can't net your gains against your losses. (You usually can if you're actively buying and selling.) You sell two blocks of stock, one with a gain of $500 and one with a loss of $500, you net the two and no tax is due. But if you sell a card for a $500 gain and another for a $500 loss, you still owe tax on the $500 gain.

Disclaimer--I don't see many collectible sales in my tax work. But I am a total tax nerd, and I enjoy wandering off into the weeds of the tax code.

Bill

Can I deduct the cost of goods sold, eBay fees, sales tax collected, shipping etc. if I just take the standard deduction and don’t itemize? To me it seems like eBay will send me a 1099 with all those included and I will owe income tax on the whole amount since I am a hobbyist not a business. Is that correct?