Would this court case set a precedance for comics as well?

[uclapeterg]

Just out of curiousity,how would one handle the tax ramifications of giving back such a large refund?

Suppose a dealer sells a book for $200,000.

Being the typical law-abiding credit to society, he cheerfully reports this on his taxes and pays the proper tributes to all involved. Two years later,he loses a case and is ordered to give a full refund. He has now paid income tax on what is no longer income. What is his remedy?

 

He'd deduct the $200,000 from his income in the year in which he gave the refund. So, unless he's making a hefty profit that year, he wouldn't have to pay income taxes because he wouldn't show any income.

 

I personally would take a more aggresive position and file an amended return for the year of sale, but Jeff is probably more correct.

[uclapeterg]

Just out of curiousity,how would one handle the tax ramifications of giving back such a large refund?

Suppose a dealer sells a book for $200,000.

Being the typical law-abiding credit to society,he cheerfully reports this on his taxes and pays the proper tributes to all involved. Two years later,he loses a case and is ordered to give a full refund. He has now paid income tax on what is no longer income. What is his remedy?

 

 

 

[Jeffreykli]

Just out of curiousity,how would one handle the tax ramifications of giving back such a large refund?

Suppose a dealer sells a book for $200,000.

Being the typical law-abiding credit to society, he cheerfully reports this on his taxes and pays the proper tributes to all involved. Two years later,he loses a case and is ordered to give a full refund. He has now paid income tax on what is no longer income. What is his remedy?

 

 

He'd deduct the $200,000 from his income in the year in which he gave the refund. So, unless he's making a hefty profit that year, he wouldn't have to pay income taxes because he wouldn't show any income.

 

I personally would take a more aggresive position and file an amended return for the year of sale, but Jeff is probably more correct.

 

That's why the first response if you're audited by the IRS is...My accountant told me to do it.

[FFB]

Just out of curiousity,how would one handle the tax ramifications of giving back such a large refund?

Suppose a dealer sells a book for $200,000.

Being the typical law-abiding credit to society, he cheerfully reports this on his taxes and pays the proper tributes to all involved. Two years later,he loses a case and is ordered to give a full refund. He has now paid income tax on what is no longer income. What is his remedy?

 

 

He'd deduct the $200,000 from his income in the year in which he gave the refund. So, unless he's making a hefty profit that year, he wouldn't have to pay income taxes because he wouldn't show any income.

 

I personally would take a more aggresive position and file an amended return for the year of sale, but Jeff is probably more correct.

 

That's why the first response if you're audited by the IRS is...My accountant told me to do it.

 

Ain't that the truth! It's what I'd say!

[FlyingDonut]

The refund is treated as an expense out, so Mr. Bloe would have his income reduced by the amount of the refund. So said Mr. Donut's accountant, who is a real whiz in these matters. He also said that no greater red flag for an audit is an "amended return" on a small business.

[uclapeterg]

That's true. Can you ask for interest back?

[PovertyRow]

...But there will always be a factual inquiry into whether the buyer exercised appropriate diligence, and each state's laws concerning whether the buyer needs to conduct an investigation may vary.

 

Actually mI was wondering about the "diligence" aspect in another way. I would be very curious to know what diligence was exercised in determinging, after two years, if this were actually the same card sold to the buyer and if it was in the same condition the buyer received it.

 

Am I doubting the buyer? No - I am truly curious about how such determinations would be made. Scott, be I wrong in assuming such questions would be relevant?

[tth2]

...But there will always be a factual inquiry into whether the buyer exercised appropriate diligence, and each state's laws concerning whether the buyer needs to conduct an investigation may vary.

 

Actually mI was wondering about the "diligence" aspect in another way. I would be very curious to know what diligence was exercised in determinging, after two years, if this were actually the same card sold to the buyer and if it was in the same condition the buyer received it.

 

Am I doubting the buyer? No - I am truly curious about how such determinations would be made. Scott, be I wrong in assuming such questions would be relevant?

 

I would certainly think that would be one of the first issues raised by the defense. Another defense would be that the buyer went and did the work after the purchase.

[FFB]

...But there will always be a factual inquiry into whether the buyer exercised appropriate diligence, and each state's laws concerning whether the buyer needs to conduct an investigation may vary.

 

Actually mI was wondering about the "diligence" aspect in another way. I would be very curious to know what diligence was exercised in determinging, after two years, if this were actually the same card sold to the buyer and if it was in the same condition the buyer received it.

 

Am I doubting the buyer? No - I am truly curious about how such determinations would be made. Scott, be I wrong in assuming such questions would be relevant?

 

I would certainly think that would be one of the first issues raised by the defense. Another defense would be that the buyer went and did the work after the purchase.

 

Right. If the defense raises it, it's relevant and it's a he said/she said thing unless the buyer has scans saved or other proof that it's the same card (such as a third-party witness who saw the card as sold, or perhaps before it was sold, i.e., someone who saw the work done to the card and passed on it before the buyer finally bought it). If the defense does not raise it, then it's not "relevant."