Question about Taxes when selling 2 2

[Lightning55]

You might have a couple of long boxes of comics that you paid cover price for (maybe $2k total) that are worth zero.  Sell those as a lot for $1, and take the loss.  You can use the loss against your $2k gain.  No net income, no tax due.  Fixed that for you.

[the blob]

On 10/7/2020 at 12:49 AM, Turnando said:

If you have a job and that job isn't selling comics, if comics are your hobby, then I don't think it makes any sense to report the comics.  You have a real job and that income dwarfs your ebay account, you are doing your part by paying income taxes on your job. 

Your comic habit is not a profit center if you are most people.  You sell a few you buy a few more.

Alas, the guvment does not feel that way. If you got a second job and made $5K off that, the guvment wants its share, just like if you made $5K in profit off some comic sales.

And it does not seem you can keep collectibles in your IRA or 401(k), which would allow you to avoid paying taxes on sales that you are just reinvesting into other collectible investments.

Although if you create an LLP owned by your IRA you might be able to get around this, although the LLP may have to pay taxes itself...not sure. https://finance.zacks.com/can-put-collectibles-ira-6486.html#:~:text=While you can't put,organizations that have such holdings.&text=You can't put antiques,in antiques into your account.

[theCapraAegagrus]

8 hours ago, Xenosmilus said:

This thread makes me sad... REALLY 28%!?!. So my ASM 300 that I bought for $1.50 and is now worth around 2K if I sold it I'd have to pay the IRS $560... LAME!

Don't sell it, then. Lose it in a boating accident.

[the blob]

9 hours ago, Xenosmilus said:

This thread makes me sad... REALLY 28%!?!. So my ASM 300 that I bought for $1.50 and is now worth around 2K if I sold it I'd have to pay the IRS $560... LAME!

as opposed to putting in a 40-70 hour week and making the same $1998.50 and possibly getting taxed even more (overall) depending on your various rates?

[the blob]

9 hours ago, Xenosmilus said:

This thread makes me sad... REALLY 28%!?!. So my ASM 300 that I bought for $1.50 and is now worth around 2K if I sold it I'd have to pay the IRS $560... LAME!

realistically, if that's your only sale in a year the IRS is not going to care. it only becomes an issue if you are audited for 27 other things you did.

[Motor City Rob]

There is ALWAYS the possibility the IRS will come after you. Talk with a reputable CPA if you have questions. In the end, if you want to play it safe, just report your sales. 

[the blob]

BY the way, I was not advising anyone to set up an LLP to live inside their IRA so that they could invest in collectibles in this manner, just throwing out the possibility that this might be a way to avoid taxes, at least until you actually start drawing cash out of the IRA... not sure though, it seems really complicated. then again, I got a B- in accounting.

 

[the blob]

Or maybe set up a Family Office to manage that long box of comics. 

 

[lizards2]

11 hours ago, the blob said:

realistically, if that's your only sale in a year the IRS is not going to care. it only becomes an issue if you are audited for 27 other things you did.

My older brother's related theory, which I've tried to live by most of my life, because it really makes sense: "Don't do more than one illegal thing at any given time, as doing two or more simultaneously increase the odds of getting caught exponentially."  

Sage advice to live by.

[Xenosmilus]

1 hour ago, lizards2 said:

My older brother's related theory, which I've tried to live by most of my life, because it really makes sense: "Don't do more than one illegal thing at any given time, as doing two or more simultaneously increase the odds of getting caught exponentially."  

Sage advice to live by.

 

[dupont2005]

On 11/17/2020 at 7:05 PM, Xenosmilus said:

This thread makes me sad... REALLY 28%!?!. So my ASM 300 that I bought for $1.50 and is now worth around 2K if I sold it I'd have to pay the IRS $560... LAME!

Jesus. I hate having sold off all my 90’s super hero comics years ago 

[dupont2005]

Is there a statute of limitations on things like tax avoidance and hiding income?

[Xenosmilus]

1 minute ago, dupont2005 said:

Is there a statute of limitations on things like tax avoidance and hiding income?

I mean, I don’t collect as an investment but as a hobby and just started collecting again a few years back. I never really considered having to pay taxes on anything I’d sell if I quit the hobby again. 

[dupont2005]

1 minute ago, Xenosmilus said:

I mean, I don’t collect as an investment but as a hobby and just started collecting again a few years back. I never really considered having to pay taxes on anything I’d sell if I quit the hobby again. 

You most likely won’t have to

[theCapraAegagrus]

8 hours ago, dupont2005 said:

Is there a statute of limitations on things like tax avoidance and hiding income?

Yes.

[wilbil]

10 hours ago, dupont2005 said:

Is there a statute of limitations on things like tax avoidance and hiding income?

of course. death.

[tvindy]

15 hours ago, lizards2 said:

My older brother's related theory, which I've tried to live by most of my life, because it really makes sense: "Don't do more than one illegal thing at any given time, as doing two or more simultaneously increase the odds of getting caught exponentially."  

Sage advice to live by.

And also, if you do get prosecuted, being able to point to multiple legal infractions gives the prosecution an exponentially greater chance of winning a guilty verdict.

[lizards2]

12 minutes ago, tvindy said:

And also, if you do get prosecuted, being able to point to multiple legal infractions gives the prosecution an exponentially greater chance of winning a guilty verdict.

Of course - they love to overcharge - that's why you get three indictments for one act 

I've been on grand jury for the county three times, and prosecuters are sometime quite nuts.

[Bookery]

On 10/8/2020 at 5:50 PM, sfcityduck said:

In America, we give tax breaks to folks who make money on a passive investment, and tax folks more who earn their money by working hard.  Go figure.  But, keeping that in mind should take the sting off of paying your fair share from selling a passive investment.  After all, paying taxes is how the vast vast vast majority of us actually patriotically support our country.

Actually, this is a common misconception.  At least part of the reason that capital gains on stocks are lower than income, is that it's already been taxed once before.  Corporations pay income tax, which come off profits before any dividends or share distributions.  As a shareholder, you own part of the company, and therefore have already paid an income tax on your share of it, whether you know it or not.  When you sell the stock at a profit, you are then taxed again (at 28%).  So technically, shareholders pay twice on their income, and working income is only taxed once.  This is a simplified version, of course.  

[october]

24 minutes ago, Bookery said:

Actually, this is a common misconception.  At least part of the reason that capital gains on stocks are lower than income, is that it's already been taxed once before.  Corporations pay income tax, which come off profits before any dividends or share distributions.  As a shareholder, you own part of the company, and therefore have already paid an income tax on your share of it, whether you know it or not.  When you sell the stock at a profit, you are then taxed again (at 28%).  So technically, shareholders pay twice on their income, and working income is only taxed once.  This is a simplified version, of course.  

In theory, except large corporations enjoy hosts of exemptions, incentives and deductions that often reduce their income tax well below the statutory 21%...sometimes all the way to zero or beyond. 

As always, nothing related to US taxes is simple, straighforward or easily discenable to anyone who doesn't have a lifetime of involvement in its grotesquely byzantine structures. Smart and well capitalized individuals and entities are able to take advantage of this complexity to great effect.

Edited November 19, 2020 by october