Overpriced cards on ebay -- Are they part of a tax scam?

[batsballsbases]

Chris,
Dont get me started on certain sellers .The gods of high prices. As I dont buy many cards but I do buy pins.a certain seller sells graded pins at 3-5x the value of what they are worth. And god for bid if you question a certain seller about his prices he puts you right away on his blocked bidder list! I believe the certain seller doesnt sell much because anyone who is anyone is on his blocked bidder list! The certain seller is a real gem

[Runscott]

I think you guys are missing out on a tremendous opportunity (if you are seriously interested in any of the cards in question.)

I regularly make offers and get them accepted. I simply offer fair market value. Sometimes I get rejected - so what?

There are at least two sellers I can think of who you guys complain about all the time - you used to complain about the high prices on their websites, before they were heavy into the internet. I used to contact those guys all the time and get great discounts on their cards. I'm not giving names out, as I still do it.

I once contacted one of these sellers you describe on ebay, and asked him what his strategy was, since he had a caramel Cobb priced at 2X VCP price. He sent me a link to one that had recently sold for 2X VCP price, so that pretty much shut me up. These sellers may be idiots, but there are buyers out there who are just as idiotic.

[pgellis]

First of all, inventory is not your only expense when figuring out your business expenses. You may have rent, office supplies, postage, electricity, telephone, etc., etc. It is not so simple as deducting purchases from sales. You also pay a large percentage on inventory.

I know. I own my own business and you would be shocked at what you have to pay on your year end inventory.....that is why you see so many "inventory reduction sales" at the end of each year.

People need to understand what it's like to run a business of their own before they make assumptions.......

[ValKehl]

Paul - The purchase of inventory for resale is not a business expense; in other words, purchsing inventory for resale does not create an income tax deduction. Rather, a business expense/tax deduction occurs when an inventory item is sold. If the item is sold for more than it cost, the resulting gross profit would be taxable, unless it is offset by other business expenses (such as selling costs).
Val

[egbeachley]

Originally Posted by ValKehl

Paul - The purchase of inventory for resale is not a business expense; in other words, purchsing inventory for resale does not create an income tax deduction. Rather, a business expense/tax deduction occurs when an inventory item is sold. If the item is sold for more than it cost, the resulting gross profit would be taxable, unless it is offset by other business expenses (such as selling costs).
Val

True. This also includes "personal collection" buying. The only tax event is when an item is sold and you pay taxes if you had a profit, and you don't if you had a loss (simple example ignoring rent and other overhead).

As for why sellers do this, it's simple. You can sell 20 items every day at 5% profit and you won't do better than selling 1 item a day for 100% profit. Plus preparing 1 package instead of 20 is a lot easier. The problem is that occasionally someone bites and pays the high price. They are keeping the prices unreasonable.

[paul]

Val,

Thanks for clearing that up. I didn't realize expenses were deducted only on an item by item basis when the item is sold. I guess egbeachley's explanation is as good as any. Maybe people really do occasionally pay the ridiculously high prices.

Paul

[pgellis]

Again, a little Business 101...............

I used to work at a Liquor Store at night when I was starting my own business......people would come in all the time and say, "I can't believe the owner is getting $20 for a 30 pack of Miller Lite, he is getting $20 every time someone buys a 30 pack, and $15 for a bottle of Merlot, etc., etc."

Well that is just plain wrong. People forget that the owner has to pay for that 30 pack....it is not free. He has to pay for that bottle of wine. It is not free. He also has to pay for me to sell it to his customers (as a cashier), he has to pay rent, electicity, insurance, etc., etc. The owner is a close friend of mine and told me that he "might" make $1.00 after everything is paid for on that 30 pack of beer.............

I own my own business and people will say such dumb things as "can't you do better on that price? I mean you are going to make $15 on that item?"

No, I'm not going to make $15 on that item.......I first have to pay for it, then you have to pay for shipping (which is very expensive today), then pay for my rent, insurance, telephone, advertising, yellow pages, internet, office supplies, and time to customize it........and then maybe I make a buck or two........

Please try to understand what your small, local businesses are up against!

[paul]

Phil,

I don't think any of us are slamming small businesses. I certainly wasn't. I was just trying to figure out why some people offer the same cards on ebay month after month at many times full retail price, without ever selling them. Just seems wierd. I know they have lots of expenses, but that's all the more reason why they should be conducting legitimate auctions rather than having starting bids that are much higher than full retail price.

Paul

[HRBAKER]

They don't have ALL of the same type of expenses your typical "brick and mortar" small businesses they are talking about here have. Ebay enables them by keeping the listing fees low.

[pgellis]

Paul,

No harm. I know you aren't slamming "most" small businesses. I am just a bit touchy when it comes to running a legitimate small business. Most people just don't get how difficult it is............

As for eBay, I really don't see a tax angle, but then again, I sleep well at night knowing that I pay my "FAIR SHARE" of taxes with my business.

I don't know why some sellers don't come down on prices......my personal guess is that they aren't really sellers, but collectors and will sell their cards if they get a crazy price. I love my cards....would I sell them? NO.....but if you give me 3X - 5X what I paid for them, then..................Maybe?

Phil