TAX question - sale of high dollar books at auction house/ebay 0

[Brian48]

Silly question, but I wasn't able to get a definitive answer.  When you co-sign high dollar books/art to places like Heritage, CLink, or even an established eBay seller, and they sell for say $100k or so, what do you do as far as taxes go?  It's not exactly the same as selling property or your home.  I've sold books through CLink before, I guess the amounts were insignificant because I've never had to report the sale or anything.  Thx.

[1Cool]

Any time you make a profit on a book you should report it to the IRS.  I'd say most people do not for lower dollar amounts but for a 100k sale I'd definitely talk to a tax preparer especially if you have had it for awhile and maybe paid 30k for the book - that is 70k in profits you have to claim somewhere.  Things get a bit trickier when you sell books as a part time business but no matter what the tax man always wants its share of any profits you make by selling books.

[Brian48]

God, I'm cringing already.  OK. I'll have to talk to a tax guy then.

[Max Carnage]

9 minutes ago, 1Cool said:

Any time you make a profit on a book you should report it to the IRS.  I'd say most people do not for lower dollar amounts but for a 100k sale I'd definitely talk to a tax preparer especially if you have had it for awhile and maybe paid 30k for the book - that is 70k in profits you have to claim somewhere.  Things get a bit trickier when you sell books as a part time business but no matter what the tax man always wants its share of any profits you make by selling books.

Do you therefore also have to report to the IRS when you lose money on a book ?  If they make money from your profit, shouldn't they lose money from your losses ?  I'm just asking as I'm curious.

[NoMan]

6 minutes ago, Brian48 said:

God, I'm cringing already.  OK. I'll have to talk to a tax guy then.

But I believe you can write off items to offset capital gains taxes. Insurance, travel, Bank Safe Deposit Box. 

Ask a professional. 

I think if you lose money on a book, that’s tough. 

Edited January 24, 2018 by NoMan

[AndyFish]

As long as you have documentation you can claim losses to offset gains.  I use a Tax Attorney rather than an accountant but any tax professional should be able to give you some direction.

[W16227]

8 minutes ago, Max Carnage said:

Do you therefore also have to report to the IRS when you lose money on a book ?  If they make money from your profit, shouldn't they lose money from your losses ?  I'm just asking as I'm curious.

 

 

always consult a pro ( especially when dealing with high dollar) ---

If you are an individual --- losses can offset gains, but you do not get any write off. If you are filing as a business - you can claim a loss-  though this is not recommended to do year after year as the IRS might require you to reclassify as a hobbyist ( where you do not get various benefits).

 

 

[Brian48]

Another concern is that this would probably bump me into another tax bracket (at least for this year) and I'll get penalized yet again. 

[1950's war comics]

4 minutes ago, Brian48 said:

Another concern is that this would probably bump me into another tax bracket (at least for this year) and I'll get penalized yet again. 

not sure if there are any options to avoid taxes when selling hi dollar books 

[Badger]

58 minutes ago, NoMan said:

But I believe you can write off items to offset capital gains taxes. Insurance, travel, Bank Safe Deposit Box. 

Ask a professional. 

I think if you lose money on a book, that’s tough. 

I think the rule is that you can claim a loss for 2 out of 5 years if you can prove you had a profit motive for all 5 years.

[Lucky Baru]

58 minutes ago, AndyFish said:

As long as you have documentation you can claim losses to offset gains.  I use a Tax Attorney rather than an accountant but any tax professional should be able to give you some direction.

[Ottobord]

Ralph Kramden: Penalty for failing to report income: All persons are required under this title to pay an estimated tax, or tax. All are required by this title or by regulations made under authority thereof to make a return other than a return required under authority of section 6015 or section 6016, keep any records or supply any information and who willfully fails to pay such estimated tax, or tax, make such returns, keep such records, or supply such information.

Ed Norton: Boy, Ralph, it sounds like you are in trouble.

Ralph Kramden: Trouble? I don't even know what I'm talking about!

[ft88]

It really should be the net.  If you got a 1099 or any other reporting form from the auction house, that means it was reported to the IRS and you will need to account for that as revenue.

Then it's up to you to aggregate all the expenses related to the item.  Specifically what you paid.  You should only have to pay on the difference.

As far as "bumping you up to a new tax bracket."  While true it only applies to the marginal increase.

Too lazy to look up rates and brackets but if you made $30,000 from your job and pay 10% in taxes for income from $0-$40,000.  And then profited $50,000 on a comic with rates at 20%; taxes on $40,001 and up.  It ise set up so the 20% is only on the portion above the $40,000.  Its not as if they come back down and charge the higher rate on the lower tier revenue . 

Really all you have to do is write it off.

[revat]

2 hours ago, Brian48 said:

Another concern is that this would probably bump me into another tax bracket (at least for this year) and I'll get penalized yet again. 

well there's new brackets this year from the tax reform, and 'less' of them than before, so maybe it won't bump you into the next bracket? 

 

 

Also, the fear of higher tax brackets is generally** somewhat overblown.  Its only the amount OVER the bracket threshold that is taxed at the higher rate.  So the marginal amount you pay generally isn't THAT much more.

 

Assumptions:

20% tax for $100K or less income

25% tax for income OVER $100K

 

Example 1:   you make $100K, you obviously pay $20K in tax.

Example 2:  you make $110K.  On the FIRST $100K, you pay 20% in tax, which equals $20K.  But on the next $10K, you pay 25%, which is $2,500.  So your total tax bill is $22,500.  So essentially you paid 500/22000 = 2.2% more tax than if you didn't hit the next tier.

YOU DO NOT PAY 25% of $110K, which would be $27,500, which is 25% more tax. 

 

Its not fun to go to the next tax tier, but its generally not anything to be deathly afraid of.  As always, please consult with your own tax professional.

 

** There are situations where a higher income may result in the phasing out of certain credits or deductions, so yah, that might make it suck worse.

[Shrevvy]

4 hours ago, Max Carnage said:

Do you therefore also have to report to the IRS when you lose money on a book ?  If they make money from your profit, shouldn't they lose money from your losses ?  I'm just asking as I'm curious.

.

Edited January 25, 2018 by Shrevvy

[blazingbob]

Comic profit as a "collector" is based on it being a short term or long term capital gain which is taxed at a lower tax bracket.

Smart idea to speak to a accountant.

 

 

[Buzzetta]

Step 1: Get passport from another nation that does not have an extradition treaty with the United States... 

[Semicentennial]

7 minutes ago, Buzzetta said:

Step 1: Get passport from another nation that does not have an extradition treaty with the United States... 

[robocard]

The capital gains tax for collectibles is 28%. There are many nuances to tax laws with differences between a collector selling a book and a dealer/store owner. I am fairly certain that a collector cannot deduct a net loss on sales of books in any year. The IRS has literature on collectibles, but basically, if there is a gain, you pay taxes. If there is a net loss, than the IRS considers that a hobby and no losses can be taken to offset other types of income I don't recall the specifics; however, something to the effect of claiming losses in 2 or 3 out of 5 years makes it a hobby.

As noted, talk to a tax expert, someone that is very knowledgeable regarding collectibles, not just general tax knowledge.

[robocard]

Just now, robocard said:

The capital gains tax for collectibles is 28%. There are many nuances to tax laws with differences between a collector selling a book and a dealer/store owner. I am fairly certain that a collector cannot deduct a net loss on sales of books in any year. The IRS has literature on collectibles, but basically, if there is a gain, you pay taxes. If there is a net loss, than the IRS considers that a hobby and no losses can be taken to offset other types of income I don't recall the specifics; however, something to the effect of claiming losses in 2 or 3 out of 5 years makes it a hobby.

As noted, talk to a tax expert, someone that is very knowledgeable regarding collectibles, not just general tax knowledge.

I didn't realize that was my 1000th post. Not sure it it was or helpful but it is a meaningless milestone, nevertheless.