ebay authenticity guarantee limits now 250/750

[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!

[BobC]

Originally Posted by perezfan

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!

LOL

See post #96. This is exactly why those who may be getting 1099s for the first time ever for this year (and haven't been reporting such sales on their tax returns in the past) may want to review and think about how best to treat and report their card sales activity, and figure out what they really are (Dealer/Collector/Investor) and what makes the most sense for them if they possibly have a choice in what/how they choose to report everything for tax purposes going forward.

[perezfan]

Thanks Bob, for all the great advice and time you devote to helping us here.

It is much appreciated!
Mark

[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 Lorewalker

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???

See post #96.

[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 Lorewalker

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.

Like I've said various times on here, and as that article I posted the link to points out, a very simplistic way to show a Collector versus an Investor is that a Collector/Hobbyist will have their items displayed and hanging on the walls or shelves in their man cave, while an Investor will likely have their items sitting in a bank safe deposit box or maybe one of these "vaults", like at PWCC or Goldin. In that article, they used artwork for the example, but the same result.

Aside from that easy difference, the lines really blur as to what differentiates a Collector from an Investor. It is really more intent than anything else, but how do you physically demonstrate or otherwise prove intent, aside from if you display or store your items? This is where the lines can blur and get real hazy.

One would expect a true Collector to have very few sales, whereas for an Investor, you might see more sales to take advantage of gains when they occur, or sell off items that are suddenly losing value (this is more of a modern card issue). But if you start having too many sales, then you might be looked upon like you're really a Dealer because of all your ongoing sales activity. And I still say, you can actually be all three (Dealer/Collector/Investor) at the same time. It is just that the different parts of your inventory/collection/portfolio all need to be kept separate from one another, and would require proper accounting and tracking of activities, sales and purchases for each of these separate parts.

How many people who are dealers also happen to have a personal collection, a lot of them, right? So what happens if they decide to retire and sell everything off? Does being a Dealer mean that they'll have to pay ordinary income tax on the profits from sales of their personal collection because it all gets treated as part of their Dealer inventory, instead of profits from their collection sales getting treated as capital gains, and possibly subject to a lower overall capital gains tax rate instead? Not if they keep track of things separately and can have records and such to show how they have a separate business inventory from a collection. And think about it. Say they sell their collection, and it brings in $100K of profit, which isn't that far-fetched for someone who's been collecting for 20-30-40 years and accumulated a lot of great items over those years. If they treat that as ordinary income from selling it as part of their business inventory, that will be subject to an individual federal tax rate of up to 37%, plus whatever they'll also owe on that profit for self-employment tax, which can be anywhere from 2.9% up to 15.3%, but for these purposes we'll use the low end of 2.9% and assume the taxpayer has already reached the max FICA limit for the year. So we'll say the federal tax is at 39.9%. (And I'm ignoring any additional Obamacare Surtaxes that may be owed for this example.) Meanwhile, if that $100K get treated as a gain from the sale of Collectibles, held for over a year so the gain is considered long term, the maximum federal tax rate on that $100K is 28%, and there is no self-employment tax on that. (And again ignoring any potential Obamacare Surtaxes.) So that is a potential federal tax rate difference of 28% versus 39.9% on $100K of profit/gain. You do the math and tell me which way you'd rather have treated your personal collection when selling it then for tax purposes.

And instead of selling everything when you retire, what if you have an accident/illness, and are suddenly gone. Now your surviving spouse/children/heirs have to deal with your business inventory and personal collection, and may really know nothing about either. At least if you keep some records and books showing how you have split and kept separate your business inventory from your collection, your heirs can use that to also take advantage of the lower potential federal LT capital gains tax rate on your collection. See, when you pass on, the attributes of what you leave your heirs go with those items. So the business inventory gets passed on as inventory, and when sold will generate ordinary income or loss. The personal collection will pass through as a hobby collectible/investment, and when sold will generate capital gains or losses. So keeping at least some semblance of records and separation of different parts of your collection and/or inventory, can also make life a lot easier for you family/heirs down the road as well after you're gone.

Hope this helps explain things.

[Exhibitman]

Steve, I agree, these tax whine threads are repetitive and boring. There are some people who bitch about any and all taxes and tax processes, and some people who don't. And there are some people who prattle on at absurd lengths about it on a baseball card chat board. Anyone wanna play with cards?

[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.