Question about Taxes when selling 2 2

[sfcityduck]

5 minutes ago, Bookery said:

We're getting too far off topic.  I'm not looking to argue this... was merely trying to explain it.  Don't take my word for it.  Here's the official statement from the Tax Foundation, and I'll leave it at that --

"The justification for a lower tax rate on capital gains relative to ordinary income is threefold: it is not indexed for inflation, it is a double tax, and it encourages present consumption over future consumption.

The capital gains tax is merely part of a long line of federal taxation of the same dollar of income. Wages are first taxed by payroll and personal income taxes, then again by the corporate income tax if one chooses to invest in corporate equities, and then again when those investments pay off in the form of dividends and capital gains. This puts corporations at a disadvantage relative to pass through business entities, whose owners pay personal income tax on distributed profits, instead of taxes on corporate income, capital gains, and dividends."

 

None of that applies to comics.  You better watch out because you are definitely getting political.

[the blob]

27 minutes ago, wilbil said:

were the funds in the form of a loan with interest?

are you really paying taxes on "all" of the  income? before or after deductions?

huh? I paid back loans with interest. none of which I was able to deduct. and i paid some upfront (but not much). i'm not complaining, it is what it is, and i certainly expect to pay taxes on the additional income those degrees allowed me to earn. i'm not giddy about it or anything. so, like everything else, the guvment wants to tax your profits on comics, whatever. would it be nice for the guvment to give you some amount they're not going to bother you over, $5K, $10K, whatever, just to avoid paperwork headaches. i just don't see a logical argument for treating different kinds of income differently ... why does a hedge fund manager pay at a lower rate than a brain surgeon? 

 

 

 

Edited November 20, 2020 by the blob

[wilbil]

1 minute ago, the blob said:

huh? I paid back loans with interest. none of which I was able to deduct. and i paid some upfront (but not much). i'm not complaining, it is what it is, and i certainly expect to pay taxes on the additional income those degrees allowed me to earn. i'm not giddy about it or anything.

no "huh" necessary. i was genuinely curious. sheesh.

if you were not able to deduct the interest, then it is double taxation. that is why i was curious. and actually triple, because you were already taxed on the funds you used to pay for the education loan, and the interest.

i had argued just that, and still lost the deduction. not because i was wrong about the double and triple taxation, but because the tax code did not have a deduction for it at the time. curiosity. 

[Bookery]

9 minutes ago, the blob said:

would it be nice for the guvment to give you some amount they're not going to bother you over, $5K, $10K, whatever, just to avoid paperwork headaches.

Things are always changing, so I tried to look this up to be sure.  It appears ALL profit income is technically taxable.  The reason many people cite garage sales as being non-taxable is because one is nearly always selling their used item at a loss (that $400 lawnmower sells for only $50 at the yard sale).  However, these losses cannot be deducted from income.  But if you buy a comic for $5 and later sell it for $10, in theory you owe taxes on it.  If this is a one time thing, it can fall under hobby income (but you still owe).  If you sell comics (say online) as a regular thing, you are a business and will need to set up accordingly.  

9 minutes ago, the blob said:

i just don't see a logical argument for treating different kinds of income differently ... why does a hedge fund manager pay at a lower rate than a brain surgeon? 

The "logical argument" I already posted above from the Tax Institute (though the same thing will be found from any source).  One can agree or disagree with it (but not here, as advocacy veers into politics).  But the reasoning behind it has been provided.

[Bookery]

By the way... there is a simple solution to all of this.  Clearly, collecting comics is a horrific mind-bending ordeal, likely to lead to years of imprisonment and/or cumulative back taxes.  I hate to see anyone have to go through this.  As a business, I already have to keep track of all of this anyway -- so as a public service I will purchase any (quality) collections you may have so as to alleviate these situations.  It's better to be safe than sorry, I always say.  I know, I know... I'm a softy... but I just like to help out...

[the blob]

9 minutes ago, wilbil said:

no "huh" necessary. i was genuinely curious. sheesh.

if you were not able to deduct the interest, then it is double taxation. that is why i was curious. and actually triple, because you were already taxed on the funds you used to pay for the education loan, and the interest.

i had argued just that, and still lost the deduction. not because i was wrong about the double and triple taxation, but because the tax code did not have a deduction for it at the time. curiosity. 

even if i had been able to deduct the interest, i wouldn't be able to deduct the principal, which i guess was around $80K between my BA and JD (so, basically, one year at a fancy private school nowadays!!)

[wilbil]

yikes. 

[the blob]

It is funny how most of us accept the tax man taking 25, 30, 35% or more of our paychecks we slave over 40, 50, 70 hours a week to earn (ok, "accept" that it is just a fact of life), but when he comes for comic book profits earned by sticking a book in a box and waiting a while, we get outraged!

 

[Xenosmilus]

Can I subtract out storage of the comics for 30 years as an expense? Actually I’m sort of serious…

[Lightning55]

On 11/21/2021 at 11:26 PM, Xenosmilus said:

Can I subtract out storage of the comics for 30 years as an expense? Actually I’m sort of serious…

You would have to ask a tax advisor to get a qualified answer to that. 

It gets a bit complicated - Is it a hobby? Are you an investor? Is it a business? Are you filing a Schedule C with your Form 1040?  Did you sell one expensive comic out of thousands but want to deduct the entire multi-year storage rent, and attribute that amount to the sold comic only?  Sounds ambitious.

You should be able to deduct what you paid for it (your basis), and other costs specific to the sale (grading fees, shipping, sales fees like eBay, etc.)

Profits on collectibles can be taxed as ordinary income or capital gains, depending on your circumstances.  Collectibles can be taxed as high as 28% as capital gains (or the same level of your ordinary income, whichever is lower), while most other forms of capital gains do not reach that level: https://www.hallkistler.com/do-you-know-the-tax-impact-of-your-collectibles/

Here is a general article on hobby tax consequences : https://www.mizecpas.com/tax/tax-consequences-of-investing-in-collectibles/

 

[shadroch]

On 11/21/2021 at 9:26 PM, Xenosmilus said:

Can I subtract out storage of the comics for 30 years as an expense? Actually I’m sort of serious…

You can subtract this years. Maybe even last years but beyond that I think youd have to refile adjusted returns to try and claim past expenses and I'm sure it would not be worth it. Perhaps your tax advisor knows of a loophole, but otherwise I don't think so.

[fastballspecial]

Facebook is littered with threads about this now as the panic is now getting real. 
I get more requests for F&F when I buy now which I refuse because I don't do it as a 
seller. Then someone accounts gets locked and they cry for days on facebook about
it when many times its F&F that got them locked on Paypal or a Waffle. They then run
to Venmo or Cashapp, but its got to be stressful to continue to try to hid income like that.

I myself will dread this year as my comic selling income probably almost doubled from last year.
This will be the first years it will really affect the amount of my filings. I am already quarterly 
paying now as it is.

 

Edited November 23, 2021 by fastballspecial

[snitzer]

On 11/22/2021 at 9:05 PM, fastballspecial said:

Facebook is littered with threads about this now as the panic is now getting real. 
I get more requests for F&F when I buy now which I refuse because I don't do it as a 
seller. Then someone accounts gets locked and they cry for days on facebook about
it when many times its F&F that got them locked on Paypal or a Waffle. They then run
to Venmo or Cashapp, but its got to be stressful to continue to try to hid income like that.

I myself will dread this year as my comic selling income probably almost doubled from last year.
This will be the first years it will really affect the amount of my filings. I am already quarterly 
paying now as it is.

 

Going to be a very rude awakening for many.  

[alexgross.com]

On 11/21/2021 at 8:26 PM, Xenosmilus said:

Can I subtract out storage of the comics for 30 years as an expense? Actually I’m sort of serious…

ask an accountant. anyone who gives advice on this here that is not either an accountant or a tax lawyer is not really qualified. many of us have worked with our accountants on this issue, and have some knowledge of how it should work. but as several people have already outlined, it can depend on how you file, whether you are incorporated or a sole proprietor, etc. so just ask an accountant. 

[WEBHEAD]

Time to sell it all now up to $9,999    then keep it resonable after that

[WEBHEAD]

Personally I wonder if the guy who found the Action 1 in the wall of his house (someone used it as insulation years back) it was slabed and sold I think on Heritage,  Perhaps the poor guy should give it to charity and deduct it

[shadroch]

On 11/23/2021 at 7:32 AM, alexgross.com said:

ask an accountant. anyone who gives advice on this here that is not either an accountant or a tax lawyer is not really qualified. many of us have worked with our accountants on this issue, and have some knowledge of how it should work. but as several people have already outlined, it can depend on how you file, whether you are incorporated or a sole proprietor, etc. so just ask an accountant. 

No matter how you file, you can't deduct expenses for the last thirty years.

[Lightning55]

On 11/23/2021 at 7:23 PM, WEBHEAD said:

Time to sell it all now up to $9,999    then keep it reasonable after that

I see what you're doing there.  You're referring to the $10,000 cash deposit trigger that requires you to fill out bank forms as to where all that cash came from.  That is to prevent money laundering, and is unrelated to the post.  From the very first dollar, money obtained from a sale is taxable, whether deposited or not.

Just because you get cash less than $10k doesn't mean you can deposit it without declaring it as income.  Whatever you deposit, cash or check for any amount, the IRS considers it income until you "explain it away" on a tax form.  Like you deposit your paycheck, it's certainly a sign of income, and your W2 shows how it came your way and that you paid the associated taxes from your withholding.  You deposit $4000 by cash or check from the sale of anything, it's considered income until you explain on the proper form that you paid $3000 for it, and then it becomes $1000 income.  If you are audited, the first thing the IRS does is consider anything you deposited as income.  Then they leave it up to you to explain why it shouldn't be considered income.  If you can't do that, it's income you didn't claim.  If you deposit $4000 from the sale of a comic, and can't prove what you paid for it, the entire $4000 is income.

[Lightning55]

On 11/23/2021 at 7:37 PM, shadroch said:

No matter how you file, you can't deduct expenses for the last thirty years.

It's possible you could.  Say you bought a collection 30 years ago for $10,000 and put it in a storage unit.  You paid fees every year to store it.  You now sell that same collection for $40,000.  Your cost basis is $10k, your sale price is $40k, so you have a profit of $30k as a capital gain.  You can deduct related expenses from your profit.  The storage unit protected the collection for 30 years and contributed to the profit amount.  You list the 30 years of fees as part of your cost, lowering your profit, lowering your tax.

If you sell pieces along the way, or only sell a few valuable pieces now, it may be hard to justify that all the storage fees should be counted.  Technically, if you put 10,000 comics (30-40 long boxes) in storage and it's costing you $1000 per year for storage, that's only 10 cents per year per comic.  So if you sold off just 5 expensive comics after 30 years, you technically can only deduct $15 for the prorated storage of those 5 comics (5 comics x 10 cents per year x 30 years).  The remaining storage fees ride with the comics still being stored.  If you tried to deduct the full storage fees for 30 years against just the 5 comics sold, and that made it through uncontested, you would have zero storage fees to deduct if you sold any more out of that unit.  You wouldn't be able to keep deducting the same fees over and over.

[piper]

On 4/30/2021 at 9:08 AM, the blob said:

It is funny how most of us accept the tax man taking 25, 30, 35% or more of our paychecks we slave over 40, 50, 70 hours a week to earn (ok, "accept" that it is just a fact of life), but when he comes for comic book profits earned by sticking a book in a box and waiting a while, we get outraged!

 

I’m afraid in Canada 🇨🇦, it’s a lot more than 35%. I guess that I don’t have Healthcare premiums! But still…