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#1
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Tax question
Posted By: Bob S
As I was wrapping up the taxes last weekend, a thought occured to me, which I've casually thought about several times before, but never followed up on.....some of you know the "procrastinator's routine. |
#2
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Tax question
Posted By: JudgeDred(Fred)
I suppose if you were completely forthright with the tax people then you'd claim the income. I would venture to guess that most people that do this as a hobby don't bother with reporting "gains". Now if you happen to cut loose of a T206 Wagner or something of great value then you might want to consider the consequences of cutting out the tax man. |
#3
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Tax question
Posted By: Frank Wakefield
I think you will find the answer is a "yes", not on net for the year, but on it all. And it is taxed as ordinary income. |
#4
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Tax question
Posted By: dstudeba
The answer is most definitely yes. I don't have the Schedule name off the top of my head, but it is ordinary income and therefore taxed at your ordinary income tax rate (ie higher than your capital gains tax rate) |
#5
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Tax question
Posted By: T206Collector
...people "love" Mr. Mint -- he always pays in cash. |
#6
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Tax question
Posted By: James Gallo
When people deal in numbers under $10,000 that is because that is the amount when the IRS wants to knwoa bout it. It you go to the bank and cash a check for $10K they will make you fill out forms for the IRS. |
#7
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Tax question
Posted By: Tom Boblitt
a number of times and never had to fill out any paperwork for IRS. Not that it shouldn't be reported. Maybe it's different if you cash the check but who wants to walk around with more than $10K in cash on them (other than Leon....) |
#8
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Tax question
Posted By: Bob
I have paid capital gains taxes on my card selling each and every year for the last 7 years. I know most don't, but as a criminal lawyer who has visited some of these places, I have an aversion to federal pens. |
#9
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Tax question
Posted By: dstudeba
Cash transactions of over 10K must be reported to the IRS, HOWEVER a bank can report cash transactions smaller than that if they believe the client is trying to avoid IRS scrutiny. Therefore it wouldn't be surprising for them to report a $9990 transaction. |
#10
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Tax question
Posted By: warshawlaw
Publication 550 (2005), Investment Income and Expenses |
#11
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Tax question
Posted By: Mark
For non-dealers, collectibles (including cards) are capital assets, however, there is a special collectibles capital gains rate of 28%. IRC sec. 1(h)(4)(A)(i). Thus, cards do not qualify for the 15% capital gains rates that apply to normal capital assets (stocks, bonds, etc.) held more than 12 months, nor are they taxed at one's marginal ordinary income tax rate. |
#12
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Tax question
Posted By: dstudeba
You are correct, I was wrong. I knew they were more expensive than the 15% Capital Gains, but I forgot that it was a fixed 28%. |
#13
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Tax question
Posted By: Bill Stone
People love Mr. Mint because he pays cash --then the idiots agree to be photographed with him holding the cash--they deserve to be busted by the IRS!!!!!!!!! |
#14
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Tax question
Posted By: Bob S
I appreciate all the great replies. |
#15
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Tax question
Posted By: Bob S
I went back and read my original post in this thread, and I apologize for the poor writing....it was nearly unintelligible. I edited it, in case anyone in the future wants to reference this topic in the archives. |
#16
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Tax question
Posted By: Gilbert Maines
I think that for many, the cheating on your taxes, is one more in a series of desperate moves to assure that you stay one step ahead of the guy under the highway with the new refrigerator box. Not an unpatriotic "badge of honor". I hear that there are people walking around (maybe you have spoken with some, without even knowing it) who do not earn even $1000/wk, before taxes! |
#17
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Tax question
Posted By: Bob
You can take the total gross income and subtract what you paid for the cards plus shipping, handling, ebay fees, paypal fees, cardholders, etc. from the total to get your net profit and pay capital gains taxes on that amount. |
#18
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Tax question
Posted By: warshawlaw
You could start a business and do a Schedule C or C-EZ with your tax return. You could then deduct all of your expenses including show attendance, inventory acquisition, etc., and take the net profit (loss) as income from a business. You also could start a business entity and flush the activity through there. |
#19
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Tax question
Posted By: Judge Dred (Fred)
I don't do a lot of selling so I don't have a lot of reason to worry about capital gains on cards sold in any given year but after reading the responses to this inquiry I was wondering just how many people actually will try to sum and total their gains in a year and then report these gains to the IRS? I can understand if you are dealing in thousands and thousands of dollars but, seriously, how many people are going to report a $300 (or even a $600) capital gain in a years time? |
#20
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Tax question
Posted By: honus3415
For what it's worth....according to my accountant that slept at a Holiday Inn Express last night....you'll have to forgive me because I didn't and can only remember the jest of his technical jargon. |
#21
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Tax question
Posted By: Mark
Bob S.: You can definitely offset your card gains with your card losses. You can carry forward any nondeductible hobby losses until you have hobby profits. Like Dan said, if you haven't reported these losses you would need to amend your returns (assuming the 3-year statute hasn't run). |
#22
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Tax question
Posted By: B.C.Daniels
Kiplinger Tax Letter? |
#23
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Tax question
Posted By: Rick
I don't want to be looking over my shoulder worrying about unreported income, so I keep track of every sale and every expense. I pay sales tax on my sales when applicable,and if I show a profit at the end of the year I pay the taxes on that profit. When I drive to a card show I keep track of mileage, fees, and other expenses to offset some of my income. I deduct my ebay fees, picture hosting fees, paypal fees, and many other items, all of which are legitimate expenses. |
#24
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Tax question
Posted By: Bob S
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#25
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Tax question
Posted By: anthony
i asked my tax accountant the same question last year...for me it boils down to this: if i am going to claim all the ebay fees, paypal fees, shipping fees, mileage to/from post office, losses, etc, etc, etc...then i need to claim a profit once in awhile...the only thing is, you cant claim a loss for a hobby/business for 10-12 years in a row, irs will catch on...just my two cents |
#26
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Tax question
Posted By: Charlie O'Neal
This is how I am looking at the tax question getting out of some of the taxes. I am working on setting up a LLC or S corp for my stock market plays in order to cut down on the capital gains tax from profits. Also I will add my cards into the business as a investment (no hobby or business). When I do decide to liquidate the cards then my taxes will not be as high as if I sold them without being under the corp. title. If for some reason the cards drop dramitically before I get rid of them then (hopefully with stock market gains throughout the year) I can just take the investment loss with the cards and write them off my taxes. I still have to make sure the lawyer says that the plan is alright with him before doing it this way. From my early caculations it will save me about 15% in taxes |
#27
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Tax question
Posted By: dstudeba
I hope Mark weighs in on this one, but I am interested on exactly how your taxes will be less in an LLC? I was always under the impression that for tax purposes an LLC was a pass through entity meaning that the LLC paid no taxes, only the owners, and taxes were paid at the owners' personal tax rates. Unless you somehow save by a loophole turning short term capital gains into long term capital gains, I am ignorant as to how this will save you tax money. |
#28
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Tax question
Posted By: Charlie O'Neal
An S corp is just like an LLC in that the taxes passes right through to your personal income and you are taxed there. from my understanding you can be taxed at a personal rate of up to about 30% for capital gains but if if you through a S corp it is normally around 15% not real sure about the LLC rate. The example was given using Deleware's system for running a company. The laws there are different from other states in regards to building a corp. b/c of the laws and regulations. Since I live in PA it is worth my while to set up in Deleware b/c of the tax differences and then just rent out a P.O. Box in Deleware as my business address. All this information is based on speaking with a couple of friends that have either done this in the past or currently doing it right now. As I stated in the earlier post I would need to speak with a coperate lawyer to make sure that what I am being told is correct and legal. |
#29
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Tax question
Posted By: Mark
Dan: I agree with you that it's not at all helpful from a tax perspective to put investment assets in an LLC, partnership or S Corp - all are pass-through entities and the hobby loss rules apply to each, just as they do to individuals. But my Kiplinger tax letter subscription just ran out so I'm pretty much shooting from the hip. |
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