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%.

[philliesfan]

Raulus - Thanks for your reply. Everything you said makes sense. Wow, 42%....ugh.
However, I mentioned if this was for something without a receipt which is a lot of what I have. That is why I am keeping receipts for everything now!
I wonder how it is in Wisconsin. We are planning to move there in 2 years when I retire.
Thanks,
Bob

[G1911]

It's almost just not worth selling cards at all unless they are big ones. Sales have always been taxed (in theory, at least), but with the 1099 that assumes profit absolutely changes everything. I don't have receipts for this now duplicate I bought at a show when I was 17. I have never seen a single table issuing reciepts. I don't remember what the heck I paid for a lot of my stuff; many thousands of transactions over my entire lifespan. How do I even know my cost if I did? I bought a big lot for $1,500, I kept some cards, traded some cards, sell a couple dupes. A whole lot of very arbitrary accounting to divide up that $1,500. It's just too much work to bother with when I have to give a high percentage to the state and don't have paperwork to defend my accounting like 99.9% of long-time hobbyists, the platform fees, etc. There's just so little profit in it, and risk in doing so if the state decides they don't like how I accounted my cost basis from many year ago after the fact. 28% + 10.3% state income tax plus possibly 3.8% would be almost half; and if I don't remember my cost to be safe I need to pay that on the whole sum. My dupes mostly just sit here in boxes, many given away for free if they aren't anything special (I'm sure someone can come up with a way I need to payoff the state to do that ). It just ain't worth getting into it over a few hundred dollars in cards with an IRS doubling in size.

eBay has definitely suffered for this, and I suspect will face a further decline as casuals find out the hard way the state is coming after them for selling a few cards on eBay. Nothing eBay can do about the state needing to squeeze more cash out of the population to pay for whoever it is being redistributed to next. I notice the supporters of high taxes and 1099's sure do like to be paid in ways that avoid or obfuscate such reporting when I buy a card from them

[bnorth]

Originally Posted by G1911

It's almost just not worth selling cards at all unless they are big ones. Sales have always been taxed (in theory, at least), but with the 1099 that assumes profit absolutely changes everything. I don't have receipts for this now duplicate I bought at a show when I was 17. I have never seen a single table issuing reciepts. I don't remember what the heck I paid for a lot of my stuff; many thousands of transactions over my entire lifespan. How do I even know my cost if I did? I bought a big lot for $1,500, I kept some cards, traded some cards, sell a couple dupes. A whole lot of very arbitrary accounting to divide up that $1,500. It's just too much work to bother with when I have to give a high percentage to the state and don't have paperwork to defend my accounting like 99.9% of long-time hobbyists, the platform fees, etc. There's just so little profit in it, and risk in doing so if the state decides they don't like how I accounted my cost basis from many year ago after the fact. 28% + 10.3% state income tax plus possibly 3.8% would be almost half; and if I don't remember my cost to be safe I need to pay that on the whole sum. My dupes mostly just sit here in boxes, many given away for free if they aren't anything special (I'm sure someone can come up with a way I need to payoff the state to do that ). It just ain't worth getting into it over a few hundred dollars in cards with an IRS doubling in size.

eBay has definitely suffered for this, and I suspect will face a further decline as casuals find out the hard way the state is coming after them for selling a few cards on eBay. Nothing eBay can do about the state needing to squeeze more cash out of the population to pay for whoever it is being redistributed to next. I notice the supporters of high taxes and 1099's sure do like to be paid in ways that avoid or obfuscate such reporting when I buy a card from them

Just to the part I made bold. It is not because of people selling a few cards. It is because of a lot of people running what is basically a full blown business without paying any taxes. As a former tax paying business owner I absolutely love that people are getting 1099s now.

[CardPadre]

Originally Posted by bnorth

It is not because of people selling a few cards. It is because of a lot of people running what is basically a full blown business without paying any taxes.

I feel like those people were already getting 1099s from hitting the 200 transactions and $20K combo threshold. Anything close to resembling a full-blown business would at least do that probably.

We should all pay our taxes, but this puts a lot of extra accounting burden on the shoulders of relatively low-earners in a lot of cases.

[bnorth]

Originally Posted by CardPadre

I feel like those people were already getting 1099s from hitting the 200 transactions and $20K combo threshold. Anything close to resembling a full-blown business would at least do that probably.

We should all pay our taxes, but this puts a lot of extra accounting burden on the shoulders of relatively low-earners in a lot of cases.

I know several ebayers that when it was 200/20K just used multiple accounts to stay under that threshold.

[Peter_Spaeth]

Why do people think you only owe tax if you get a 1099?

[toppcat]

Originally Posted by bnorth

I know several ebayers that when it was 200/20K just used multiple accounts to stay under that threshold.

So structuring....

[G1911]

Originally Posted by bnorth

Just to the part I made bold. It is not because of people selling a few cards. It is because of a lot of people running what is basically a full blown business without paying any taxes. As a former tax paying business owner I absolutely love that people are getting 1099s now.

The threshold is $600. It is not restricted to people "running what is basically a full blown business without paying taxes". They are caught up in it too if they were doing this, but this is nowhere even close to the actual barrier drawn.

[parkplace33]

Originally Posted by G1911

It's almost just not worth selling cards at all unless they are big ones. Sales have always been taxed (in theory, at least), but with the 1099 that assumes profit absolutely changes everything. I don't have receipts for this now duplicate I bought at a show when I was 17. I have never seen a single table issuing reciepts. I don't remember what the heck I paid for a lot of my stuff; many thousands of transactions over my entire lifespan. How do I even know my cost if I did? I bought a big lot for $1,500, I kept some cards, traded some cards, sell a couple dupes. A whole lot of very arbitrary accounting to divide up that $1,500. It's just too much work to bother with when I have to give a high percentage to the state and don't have paperwork to defend my accounting like 99.9% of long-time hobbyists, the platform fees, etc. There's just so little profit in it, and risk in doing so if the state decides they don't like how I accounted my cost basis from many year ago after the fact. 28% + 10.3% state income tax plus possibly 3.8% would be almost half; and if I don't remember my cost to be safe I need to pay that on the whole sum. My dupes mostly just sit here in boxes, many given away for free if they aren't anything special (I'm sure someone can come up with a way I need to payoff the state to do that ). It just ain't worth getting into it over a few hundred dollars in cards with an IRS doubling in size.

eBay has definitely suffered for this, and I suspect will face a further decline as casuals find out the hard way the state is coming after them for selling a few cards on eBay. Nothing eBay can do about the state needing to squeeze more cash out of the population to pay for whoever it is being redistributed to next. I notice the supporters of high taxes and 1099's sure do like to be paid in ways that avoid or obfuscate such reporting when I buy a card from them

I see this all the time on Social Media. "Here is my Ebay store, hit me up to make a deal".

[brunswickreeves]

Who moved my cheese?

There seems to be far fewer independent sellers on eBay who once offered super cool and/or quality vintage pre and post war cards. I recall days when most any card could be found and acquired for 15-30% listed price. This created a velocity of cards and money. Current state is bad for collectors who loved to buy and sell, since they’ve been driven away from the platform and now resort to delays with AH scheduling and a 20% buyers premium, plus fight to be the highest bidder/payer of a card they really demand.

I’ve observed a proliferation of consignment companies selling on eBay, which is good for buyers and sellers alike.

Card Slabs is an alternative, however prices are aspirational at best.

Goldin also, however they’re typically 5+ figures.

AH’s are offering scarce and quality vintage cards for those with the tenacity to acquire them at auction, so helping fill the void on eBay.

eBay is still serving a segment of the market. This tends to be via GM cards or Probstein’s frequent auctions which offer a variety of relatively inexpensive cards one can snag on an auction with an established end time!

There’s also our Net54 BST, which rightfully so, requires a serious level of good will and trust. This is where our hobby really shines, with people working together with similar passion to achieve a common purpose. This is where I’ve seen the best of humanity prevail, collectors with good and decent hearts.

[BobbyStrawberry]

Originally Posted by brunswickreeves

Who moved my cheese?

There seems to be far fewer independent sellers on eBay who once offered super cool and/or quality vintage pre and post war cards. I recall days when most any card could be found and acquired for 15-30% listed price. This created a velocity of cards and money. Current state is bad for collectors who loved to buy and sell, since they’ve been driven away from the platform and now resort to delays with AH scheduling and a 20% buyers premium, plus fight to be the highest bidder/payer of a card they really demand.

I’ve observed a proliferation of consignment companies selling on eBay, which is good for buyers and sellers alike.

Card Slabs is an alternative, however prices are aspirational at best.

Goldin also, however they’re typically 5+ figures.

AH’s are offering scarce and quality vintage cards for those with the tenacity to acquire them at auction, so helping fill the void on eBay.

eBay is still serving a segment of the market. This tends to be via GM cards or Probstein’s frequent auctions which offer a variety of relatively inexpensive cards one can snag on an auction with an established end time!

There’s also our Net54 BST, which rightfully so, requires a serious level of good will and trust. This is where our hobby really shines, with people working together with similar passion to achieve a common purpose. This is where I’ve seen the best of humanity prevail, collectors with good and decent hearts.

All great points. Much of the migration to AHs has made online "hunting" for cards less fun, in my opinion. Perhaps I'm in the minority of members on this but I actually don't find it all that enjoyable to stay up until 3 am on Sunday nights to try and win something.

[parkplace33]

Originally Posted by BobbyStrawberry

All great points. Much of the migration to AHs has made online "hunting" for cards less fun, in my opinion. Perhaps I'm in the minority of members on this but I actually don't find it all that enjoyable to stay up until 3 am on Sunday nights to try and win something.

I don't either, but never underestimate the addictive nature of these auction houses. Many collectors live for these auctions.

[Fred]

Fleabay is not the only auction site charging taxes. Some AHs are now adding tax to the equation. For some, this can add another 8% or more to the final hammer price. The AH is hitting you for about a 20% buyers premium, then add taxes on top of that.

If you find a bargain on fleabay, it's surprising. As mentioned, the way some sellers are pricing cards, it's fantasy land. What's really crappy is collectors having to waste the time getting past all the crap that is just ridiculously priced in the attempt to try and find something reasonably priced.

The cost of collecting pictures of dead guys on cardboard doesn't appear to be getting cheaper.

[ValKehl]

Originally Posted by raulus

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%.

Nicolo, I am not an income tax expert, but I know enough about income taxes to be dangerous, as the expression goes. As I understand it, the 28% federal tax rate you mention is the MAXIMUM tax rate on LONG-TERM gains on collectibles. If the highest tax rate on one's "ordinary" taxable income is less than 28%, then this lower rate also applies to one's L-T collectibles gains. My wife and I are retired and no longer have the income we once did. For 2022, the top rate (or top tax bracket) on our "ordinary" income was 22%, and this is the rate we paid on my L-T baseball card gains.