ebay authenticity guarantee limits now 250/750

[Lorewalker]

Originally Posted by BobC

Yes, but there is no specific, black and white list or measure to definitively say you are in business or are not. It is a grey area, to be determined by facts and circumstances in each unique situation. As I was saying, getting a 1099 can initially give the impression that you are operating a business on Ebay, and if you get one but fail to include the info from it on your tax return, when the IRS comes calling, do you think they'll view the income you may have earned from selling a card as a long term capital gain automatically? I don't think so. LOL That 1099 doesn't tell the IRS what you were selling. For all they know, you were selling widgets. So they generally assume the worst case scenario for taxpayers (and the most tax being owed to them), figuring that will get a response and explanations and answers back from the taxpayer.

The IRS actually follows a list of nine different factors they will look at to help determine if you are operating as a business, or if you are really in a hobby. The additional idea of being an investor for tax purposes is fairly new, and hasn't really been formally addressed by the IRS, yet, as sports cards being considered as true investments, like stocks and bonds. The following article lists the nine factors the IRS and their agents follow, which as you'll quickly see, are not yes or no, or black and white, questions or measures.

https://www.thebalancesmb.com/is-thi...a-hobby-397675

These factors are really more for situations where someone in a hobby is trying to be able to deduct the costs and expenses of it against their other income. With the way card prices, especially vintage, have gone up in recent years, most people with vintage collections they've had for years will not be worried about selling at losses. However, look at a modern collector who spent a ton of money on a modern rookie, that ended up being a bust. He ends up dumping it for a big loss, and tries to use that loss to offset his other income on his tax return. Here's where those nine factors can come into play.

And I read ya loud and clear. There is no place on the tax forms to supply answers to those questions and it likely would not be until an audit that most people would even think about the 9 factors. I understand the implication of the 1099 and how it would make most people feel getting one.

[BobC]

Originally Posted by Lorewalker

And I read ya loud and clear. There is no place on the tax forms to supply answers to those questions and it likely would not be until an audit that most people would even think about the 9 factors. I understand the implication of the 1099 and how it would make most people feel getting one.

And exactly why I keep saying that when you have questions or are in doubt, talk to a qualified tax professional. Even if it is just asking me something here on the forum!

I do not have all the definitive tax answers to every question and situation that can come up. Nobody does, not even the IRS. And even when everyone finally thinks they've got certain tax laws and situations nailed down, they'll change those tax laws, technology, or something else affecting those specific situations, to radically alter them. Never fails. LOL

[Exhibitman]

I really think people are overthinking this. If I am selling an investment and I have documented the cost basis for the item and the net I receive from the sale, characterizing it is my choice on my tax return (investment or business). As long as I accurately report my profit, in whatever form, there should be no problem in the end. I get a 1099 from Vanguard and Schwab for my investment income. That doesn't mean I am a stock brokerage, even if I trade every damn day.

Now, I could see the states getting pissed if there was no sales tax remittance from frequent selling 'investors', but eBay collects the sales tax for the sellers, so that isn't an issue either.

I just don't see how a 1099 in and of itself makes you run away from the platform unless you are a tax scofflaw.

And don't think for a minute that this won't eventually get to auction houses. The big internet selling platforms were the first, but a multi-billion-dollar business is certainly going to attract the attention of the revenue agencies.

if you want to cheat the tax man, you have to go with cash and that cash can never, ever formally enter the financial system. And that is when you visit the cross-bar hotel if you get caught. Just pay your taxes. It's easier.

[perezfan]

What if you cannot recall what you paid for items 25 years ago (decades before they taxed these things?)

Guesstimate the amount you paid, or take it up the a$$?

[BobC]

Originally Posted by perezfan

What if you cannot recall what you paid for items 25 years ago (decades before they taxed these things?)

Guesstimate the amount you paid, or take it up the a$$?

Go with the former, and document as much other info as you can. Believe it or not, the IRS does not disallow reasonable estimates in cases where the exact info may not always be found.

For example, when deducting business mileage from use of one's auto, the best thing to do is keep a written log. So how does an IRS agent know you didn't just stay up the night before to create a log for your audit today, they don't. But the fact that you have a written log, for which there really is no other reasonable way to definitively document your business mileage, will generally satisfy the IRS agent.

[Snapolit1]

Seems like half the threads now end up as a discussion of not so recent changes in tax law. Getting a little stale.

No offense intended to Bob and the other tax professionals on the board. Who are all trying to offer valuable input. But how many times do we need to rehash the same basic points?

[BobC]

Originally Posted by Snapolit1

Seems like half the threads now end up as a discussion of not so recent changes in tax law. Getting a little stale.

No offense intended to Bob and the other tax professionals on the board. Who are all trying to offer valuable input. But how many times do we need to rehash the same basic points?

Sorry Steve, I just never know who may, or may not, have seen some of mine, or other people's, prior posts. Put yourself in their shoes for a second. You come on the forum and have a tax related issue/question, but haven't seen all the prior tax threads and posts. Nor do you realize to go looking for them. I see it and try to answer, based on the specific facts and circumstances you have, so as to give the most accurate advice/answer I can. Hell, I don't remember all the posts I've made on all the different tax topics. So rather than my trying to go back and find and link them, I figure it is easier to just answer them right then and there. And invariably we get a couple people posting some additional things that aren't exactly accurate or pertinent, so I have to expound on that to make sure you, and possibly anyone else reading the posts with similar questions, doesn't then take and use/follow the not so accurate or pertinent information. And to my credit, I have actually explained to one poster with tax questions how to do a search of all my posts, which I then advised him to go back and just start reading. LOL (That probably kept him busy for a while, huh?)

I've stated on here before when others have questioned some of my long, detailed posts, that I would gladly stop posting then to help out with tax questions and issues. Others then posted in response, and also reached out to me privately, to not stop doing so, as they find the information extremely helpful and thanked me for offering to help.

if there were some easy way to accumulate all my tax related posts in regards to our hobby, and then put them in one place so a newbie asking tax questions could be simply pointed to that resource, I'm all for it. If you can tell me how to do it, great. Otherwise, I'm stuck answering questions as they're asked, or I can just quit providing info and answering tax questions all together. I'm really easy to work with, and honestly just trying to help people.

[tschock]

Originally Posted by Exhibitman

I just don't see how a 1099 in and of itself makes you run away from the platform unless you are a tax scofflaw.

I think it's because you view selling on ebay as a business for most people. And for most sellers, it is not. Now they will get a 1099 indicating sales income where many of them have no real proof of what they paid for a cost basis. So if/when the IRS comes calling, how do they prove what they claim when they have no records/proof because they didn't intend selling what they bought in the first place? I know a couple people who I doubt are "tax scofflaws" who are leaving because they don't want the hassle of now keeping records and retro-actively assessing what they paid for items. Since they were never "in business" as it was a hobby for them, they don't have records (ie proof) of what they paid.

Your assumption that everyone who leaves ebay is a tax scofflaw because they are now issued 1099 is unfounded if not downright silly.

[perezfan]

And can you offset your net losses against net gains?

[ullmandds]

Originally Posted by perezfan

And can you offset your net losses against net gains?

if you are an investor...yes...collector...no! That's f'ed up isnt it!

[perezfan]

Originally Posted by ullmandds

if you are an investor...yes...collector...no! That's f'ed up isnt it!

Not just f’ed up… it’s criminal. They even let you deduct gambling losses (or at least they used to).

So if you sell 10 items… lose a combined total of $5K on nine of them, but net a profit of $1K on one of them…. You’re on the hook for $1K in taxable income? Even though you’re down $4K for the total sale? I can see why people want to avoid reporting, if the system is really that rigged against you!

[Lorewalker]

Originally Posted by ullmandds

if you are an investor...yes...collector...no! That's f'ed up isnt it!

I don't think this is accurate...I understand that one can deduct hobby expenses to the extent of their hobby income. Bob would know MUCH better but if the sales are hobby related, cards sold at a loss can be offset against the gains on the sales of other cards. It just cannot result in an overall loss. I would think that a loss on a sale would be construed as an expense???

[BobC]

Originally Posted by ullmandds

if you are an investor...yes...collector...no! That's f'ed up isnt it!

No, not really f'ed up. See post #96.

[BobC]

Originally Posted by perezfan

And can you offset your net losses against net gains?

Depends on whether or not you are treating your sales, and resulting losses, as a Dealer, Collector/Hobbyist, or possibly as an Investor.

If a Dealer in business, you can fully offset all your loss sales against your gain sales, in determining your resulting net income or loss from the business as a whole. Any resulting net loss is then fully deductible against all your other taxable income for that year.

If a Collector/Hobbyist, your loss sales are not supposed to be deductible against your gains from any other sales, or any other taxable income, ever. Specifically read the paragraph titled "Losses realized on disposition of collectible assets", from the attached Tax Advisor article link provided.

https://www.thetaxadviser.com/issues...lectibles.html

If an Investor, you can offset the losses from sales of your collectible investment assets against gains from other sales, and potentially have overall net losses be deductible against other income as well.

The linked tax article goes over many of the things I've been posting about all along. It also reiterates how confusing and complex these issues and questions can be, and how thinking and planning ahead can be very helpful.

[Lorewalker]

Originally Posted by BobC

Depends on whether or not you are treating your sales, and resulting losses, as a Dealer, Collector/Hobbyist, or possibly as an Investor.

If a Dealer in business, you can fully offset all your loss sales against your gain sales, in determining your resulting net income or loss from the business as a whole. Any resulting net loss is then fully deductible against all your other taxable income for that year.

If a Collector/Hobbyist, your loss sales are not supposed to be deductible against your gains from any other sales, or any other taxable income, ever. Specifically read the paragraph titled "Losses realized on disposition of collectible assets", from the attached Tax Advisor article link provided.

https://www.thetaxadviser.com/issues...lectibles.html

If an Investor, you can offset the losses from sales of your collectible investment assets against gains from other sales, and potentially have overall net losses be deductible against other income as well.

The linked tax article goes over many of the things I've been posting about all along. It also reiterates how confusing and complex these issues and questions can be, and how thinking and planning ahead can be very helpful.

Thanks, as always, Bob. Certainly is a gray area on the investor vs collector front, no? While most of us buy cards because we love them. We also know history has proven it is a safe place to park money. When we buy something we might not start thinking about the exit but selling is always a distinct possibility either to fund another card purchase or to pay for a kid's college education, etc etc. I doubt many of us buy thinking we will never sell anything we have acquired but maybe some here have made that commitment. I think it would be nearly impossible for the IRS to classify any of us as absolute collectors.

[BobC]

Originally Posted by perezfan

And can you offset your net losses against net gains?

See post #96.

[G1911]

Originally Posted by tschock

I think it's because you view selling on ebay as a business for most people. And for most sellers, it is not. Now they will get a 1099 indicating sales income where many of them have no real proof of what they paid for a cost basis. So if/when the IRS comes calling, how do they prove what they claim when they have no records/proof because they didn't intend selling what they bought in the first place?

This is the boat I am in. Is it realistic to expect me to have kept documentation of what I paid for a card 18 years ago at a show when I was 13? Was it $100, or $125? Maybe it was $200. I don't know, and if I do know (I can't recall what I had for breakfast last Monday but I do recall what a lot of my cards cost exactly for some reason), I sure as hell can't provide any evidence. The burden of proof has largely shifted with this change.

If I can't recall what I paid or can't document it at all, I can risk the IRS coming after me or just pay full income taxes for what the 1099 states even though my cost surely wasn't $0. Which for me is almost 50% (9.3-10.3% state + 35% federal= 44.3-45.3% total) income tax (plus 10% sales tax on whatever I paid originally) on the full sale price if I don't know the exact figure I paid for it.

Even the most honest tax-payer realistically has to make guesstimates sometimes. I highly doubt anyone here has gotten receipts for every single item they've ever purchased. It's simply not practical, or realistic. Try asking a dealer at your local show for an itemized receipt of all 100 cards you just bought from him for your tax records if you sell a dupe in 20 years, and let us know what they say.

I don't think one has to be a scofflaw to question or not enjoy this shifting of the burden of proof and not being a fan of half their money going to the state every year as income tax, sales tax, property tax, and a dozen more.

[perezfan]

Originally Posted by G1911

This is the boat I am in. Is it realistic to expect me to have kept documentation of what I paid for a card 18 years ago at a show when I was 13? Was it $100, or $125? Maybe it was $200. I don't know, and if I do know (I can't recall what I had for breakfast last Monday but I do recall what a lot of my cards cost exactly for some reason), I sure as hell can't provide any evidence. The burden of proof has largely shifted with this change.

If I can't recall what I paid or can't document it at all, I can risk the IRS coming after me or just pay full income taxes for what the 1099 states even though my cost surely wasn't $0. Which for me is almost 50% (9.3-10.3% state + 35% federal= 44.3-45.3% total) income tax (plus 10% sales tax on whatever I paid originally) on the full sale price if I don't know the exact figure I paid for it.

Even the most honest tax-payer realistically has to make guesstimates sometimes. I highly doubt anyone here has gotten receipts for every single item they've ever purchased. It's simply not practical, or realistic. Try asking a dealer at your local show for an itemized receipt of all 100 cards you just bought from him for your tax records if you sell a dupe in 20 years, and let us know what they say.

I don't think one has to be a scofflaw to question or not enjoy this shifting of the burden of proof and not being a fan of half their money going to the state every year as income tax, sales tax, property tax, and a dozen more.

Excellent “real world” perspective. I would bet most collectors are in the same exact boat!

[BobC]

Originally Posted by G1911

This is the boat I am in. Is it realistic to expect me to have kept documentation of what I paid for a card 18 years ago at a show when I was 13? Was it $100, or $125? Maybe it was $200. I don't know, and if I do know (I can't recall what I had for breakfast last Monday but I do recall what a lot of my cards cost exactly for some reason), I sure as hell can't provide any evidence. The burden of proof has largely shifted with this change.

If I can't recall what I paid or can't document it at all, I can risk the IRS coming after me or just pay full income taxes for what the 1099 states even though my cost surely wasn't $0. Which for me is almost 50% (9.3-10.3% state + 35% federal= 44.3-45.3% total) income tax (plus 10% sales tax on whatever I paid originally) on the full sale price if I don't know the exact figure I paid for it.

Even the most honest tax-payer realistically has to make guesstimates sometimes. I highly doubt anyone here has gotten receipts for every single item they've ever purchased. It's simply not practical, or realistic. Try asking a dealer at your local show for an itemized receipt of all 100 cards you just bought from him for your tax records if you sell a dupe in 20 years, and let us know what they say.

I don't think one has to be a scofflaw to question or not enjoy this shifting of the burden of proof and not being a fan of half their money going to the state every year as income tax, sales tax, property tax, and a dozen more.

Overall accurate statements, pretty much agree about everything you're saying.

Regarding not having complete and accurate records, see what I said in post #94.

Regarding your tax liability though, if you treat your gains from card sales as Investments or personal Hobby Collectibles, instead of filing as a Dealer in business, AND you held on to the cards you sold for a gain for at least 1 year before selling, the gains from those card/collectible sales should only be subject to a maximum federal long term capital gains tax rate of no more then 28%, not the 35% you noted in your post. And if you are filing and paying taxes on your card sales as a Dealer in business, did you remember to factor in the self-employment taxes on your net business taxable income? That could push your federal tax liability even higher.

[BobC]

Originally Posted by Exhibitman

I really think people are overthinking this. If I am selling an investment and I have documented the cost basis for the item and the net I receive from the sale, characterizing it is my choice on my tax return (investment or business). As long as I accurately report my profit, in whatever form, there should be no problem in the end. I get a 1099 from Vanguard and Schwab for my investment income. That doesn't mean I am a stock brokerage, even if I trade every damn day.

Now, I could see the states getting pissed if there was no sales tax remittance from frequent selling 'investors', but eBay collects the sales tax for the sellers, so that isn't an issue either.

I just don't see how a 1099 in and of itself makes you run away from the platform unless you are a tax scofflaw.

And don't think for a minute that this won't eventually get to auction houses. The big internet selling platforms were the first, but a multi-billion-dollar business is certainly going to attract the attention of the revenue agencies.

if you want to cheat the tax man, you have to go with cash and that cash can never, ever formally enter the financial system. And that is when you visit the cross-bar hotel if you get caught. Just pay your taxes. It's easier.

Adam,

I'm not talking solely about just tax cheats, and yes, there are those. There are also people who are deathly afraid of sharing anything with the IRS, and it isn't always because they are tax cheats and/or not paying their taxes. You should see what happens on occasion when asking someone if they want their tax refund check direct deposited into their bank account, rather than having to wait for a paper check in the mail, and the possibility of it being lost, stolen, or whatever. Suddenly having another piece of paper regarding some aspect of their life and/or business now going into the hands of another government agency does not sit well for many more people than you may realize. I have come to respect such people's sentiments over the years and not be quick to judge them. You should try doing the same!

Go talk to your Uncle if you can. Maybe he can better explain the potential nuances to you. Of course, being a tax attorney, as you said he was, doesn't necessarily mean he was always doing personal tax returns for individuals and small businesses, and therefore was maybe talking to you in more general terms and not about specific instances or circumstances that are definite grey areas of the tax law, and subject to different interpretations and treatments. I don't know his exact background and experience, so I can't speak to that.

I obviously know that tax evasion is a crime, but I also know for a fact that tax avoidance is your constitutional (and God given) right! LOL And pretty much all of the tax related comments and statements I make are to point out the potential differences and nuances (and grey areas) that do exist in the tax laws, and to hopefully show other members on this forum many of those potential legal differences and interpretations for which a taxpayer may have to make choices, based on each one's unique set of facts and circumstances. You seem to have your own personal tax situation figured out and settled as to how you want things handled to your satisfaction, which I think is absolutely fantastic. But please remember that what may make sense and be right for you, isn't necessarily always the best, most accurate choice, for others. Have a great evening.