Tax Expert Question

Republicaninmass · #1 12-15-2023, 03:24 PM

Quote:

Originally Posted by Kco

So the reality is how up front you want to be about it, if you collected cash or a form of payment like Venmo, PayPal Friends & Family or personal check you can likely avoid even touching this on taxes.

Worst advice I've seen on the topic.

Congrats

bnorth · #2 12-15-2023, 03:27 PM

Quote:

Originally Posted by Republicaninmass

Worst advice I've seen on the topic.

Congrats

It is by far the most honest.

To the OP. Go to a real licensed tax preparer in your area. Any other advice is really pointless as you need someone who knows the rules in the specific location you live.

Kco · #3 12-18-2023, 09:54 AM

Quote:

Originally Posted by bnorth

It is by far the most honest.

To the OP. Go to a real licensed tax preparer in your area. Any other advice is really pointless as you need someone who knows the rules in the specific location you live.

It's 1,000% honest. Why anyone would hand the government a single dollar they don't absolutely have too is beyond me. And this is coming from my Tax preparer. Been audited before, never a single issue. It's wild how people feel a moral obligation to hand over their money.

GrayGhost · #4 12-15-2023, 03:33 PM

File a schedule c as a business. If not, the sale of collectibles at a profit is capital gains

ALR-bishop · #5 12-15-2023, 04:07 PM

Calling BobC...

MikeGarcia · #6 12-15-2023, 04:53 PM

Quote:

Originally Posted by ALR-bishop

Calling BobC...

..Calling Diogenes,

.

NiceDocter · #7 12-15-2023, 06:02 PM

Just sell for less than you paid and no tax problems! Im an expert on doing that with stocks LOL

Republicaninmass · #8 12-15-2023, 06:11 PM

Quote:

Originally Posted by MikeGarcia

..Calling Diogenes,

.

Lol!

raulus · #9 12-15-2023, 08:08 PM

Quote:

Originally Posted by GrayGhost

File a schedule c as a business. If not, the sale of collectibles at a profit is capital gains

Not sure that I follow this strategy.

Obviously if you are a dealer, then this would make sense. But Sch C income is ordinary, and taxed at ordinary rates.

GrayGhost · #10 12-15-2023, 11:23 PM

Quote:

Originally Posted by raulus

Not sure that I follow this strategy.

Obviously if you are a dealer, then this would make sense. But Sch C income is ordinary, and taxed at ordinary rates.

Yes, but using cash basis for that year , it would all go in as sales and purchases

A hobbyist shows it as ordinary income and dch as deductions up to income only

Someone who randomly holds an item long term can have a CG or loss. Eg I buy a comic, which I'm not in business of selling pay 500 sell a couple years later for 6000. It is a capital asset producing LTCG. I used to be an acct
0

Kco · #11 12-18-2023, 09:50 AM

Quote:

Originally Posted by Republicaninmass

Worst advice I've seen on the topic.

Congrats

There is a reason I said it depends.

Perhaps you're not following my point, if he is a business that is absolutely different and he should be keeping proper P&L on his business and every single item. He'd also be able to offset any gain with purchases of other items for inventory to replace it or sales of other items at net losses.

As a collector, if he sells an item for cash or equivalent and isn't being issued a tax form as part of the transaction then frankly, he'd be an idiot to pay taxes on his increase as I'd bet he could easily sell any other items at a loss to offset his capital gains.

If you like handing the government free money cause you made a profit on a single item, by all means, they appreciate it...those of us with any semblance of common sense or accounting knowledge will be just fine paying precisely no capital gains tax on a single transaction by being smart and understanding the system.

raulus · #12 12-18-2023, 10:49 AM

Quote:

Originally Posted by Kco

There is a reason I said it depends.

Perhaps you're not following my point, if he is a business that is absolutely different and he should be keeping proper P&L on his business and every single item. He'd also be able to offset any gain with purchases of other items for inventory to replace it or sales of other items at net loss.

The only part of your statement that I�m not following is your assertion that buying inventory is a deductible expense for a dealer.

Inventory is not deductible when a dealer buys it. It�s only deductible as cost of goods sold when the dealer sells it.

Kco · #13 12-19-2023, 09:06 AM

Quote:

Originally Posted by raulus

The only part of your statement that I�m not following is your assertion that buying inventory is a deductible expense for a dealer.

Inventory is not deductible when a dealer buys it. It�s only deductible as cost of goods sold when the dealer sells it.

I was unclear here, I apologize. You can offset any profits with deductible expenses to negate any profit as a business, inclusive of COGS, you wouldn't pay capital gains on a single transaction.

So if he is a business taxes are calculated on profits after allowable expenses, which he doesn't appear to be.

bnorth · #14 12-19-2023, 09:29 AM

Quote:

Originally Posted by Kco

I was unclear here, I apologize. You can offset any profits with deductible expenses to negate any profit as a business, inclusive of COGS, you wouldn't pay capital gains on a single transaction.

So if he is a business taxes are calculated on profits after allowable expenses, which he doesn't appear to be.

LOL, I sure hope a business owner isn't asking for tax advise on a BB card forum. As a long time business owner there is a lot of horrible advice in this thread. If you have ANY tax questions go to a professional. Asking tax advise on a forum is beyond silly and a great way to get in trouble with the state and IRS.

raulus · #15 12-19-2023, 12:46 PM

Quote:

Originally Posted by Kco

I was unclear here, I apologize. You can offset any profits with deductible expenses to negate any profit as a business, inclusive of COGS, you wouldn't pay capital gains on a single transaction.

So if he is a business taxes are calculated on profits after allowable expenses, which he doesn't appear to be.

Your approach makes a lot of sense for a dealer. So when the dealer spends money on traveling to shows, and paying for tables, etc, then all of that is deductible. As long as the dealer is actually making money. For a dealer that only loses money (after deductions), the IRS will often reclassify this as a hobby, and disallow those deductions.

For the average collector/investor, their only costs and expenses are paying auction fees and maybe shipping. Usually those costs can be factored into the calculation of the gain on sale. Even grading costs can be rolled into your basis and used to offset your gain on the sale. So the only downside is for a collector/investor who spends a lot on travel and shows, those costs wouldn’t be deductible. I have attended 1 whole show in my entire life. So definitely not me.

So for most of us, schedule C would probably be a mistake. Unless we are really acting as dealers, with all of the action that comes with it.

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