fantastic_four Posted May 8, 2021 Share Posted May 8, 2021 1 minute ago, Buzzetta said: I grant you that it is almost always at a loss. The surprise is when they actually receive a 1099 in the mail. I can see it being a rude awakening to most, and I'm sure most people won't know what to do. They probably also won't know which sales in PayPal match up to which items, although some may type a note tying the sale to an item. If they didn't, and they don't even remember what they sold...sucks to be them! Although the odds of an audit for a few dozen transactions from a garage sale is pretty low, and for those who actively try to avoid that any accountant should be able to help them figure it out without much work. The fundamental idea is easy as pie--if you make money, you owe taxes. There are very few exceptions to that idea. All of the cries of tyranny are bizarre given that this is how it has been for virtually everyone alive today aside from a shrinking handful of centenarians. jimjum12 1 Link to comment Share on other sites More sharing options...
Nazirite Posted May 8, 2021 Share Posted May 8, 2021 So basically 2023 might be a buyers market? Or no? Link to comment Share on other sites More sharing options...
ADAMANTIUM Posted May 8, 2021 Share Posted May 8, 2021 1 hour ago, fantastic_four said: Most garage sales are selling EVERYTHING at a loss, i.e. less than they paid for it. Very little in those would even qualify for taxes. And for the things that do sell for more than was originally paid--well, if people don't realize the government taxes all income then I don't know what to tell them aside from ignorance of the law is no excuse. At a typical garage sale so many of the things sold are at a loss that they eclipse anything sold that appreciates so aside from collectibles it's uncommon that garage sales would end up even requiring taxes. To be honest, it doesn't matter if they sell at a loss! If people are paying with PayPal, the garage sale is still going to have to file the paperwork with the taxes, to prove they sold it at a loss. Nobody is really trying to dodge, but it's being reported vastly as there is profit, unless the filer proves otherwise, which seems needless in most cases Link to comment Share on other sites More sharing options...
jcjames Posted May 8, 2021 Share Posted May 8, 2021 14 hours ago, Buzzetta said: As was said, it starts January 1st 2022. Which means the threshold is lowered to $600 for sales starting in 2022 on Feebay for them to send you a 1099 in 2023. That needs clarification as well. Link to comment Share on other sites More sharing options...
Professor K Posted May 8, 2021 Share Posted May 8, 2021 2 hours ago, Buzzetta said: I grant you that it is almost always at a loss. The surprise is when they actually receive a 1099 in the mail. Garage sales using paypal. They deserve to get screwed. Link to comment Share on other sites More sharing options...
Professor K Posted May 8, 2021 Share Posted May 8, 2021 2 hours ago, Nazirite said: So basically 2023 might be a buyers market? Or no? I don't think so. It think it means the buy it now prices on e bay will be even higher than the already high prices most people are already asking. I don't see it affecting auction prices. Nazirite and Dark Knight 1 1 Link to comment Share on other sites More sharing options...
shadroch Posted May 8, 2021 Share Posted May 8, 2021 On 4/21/2021 at 5:26 PM, MyNameIsLegion said: But if you inherit that Action 1, you get a step up in basis, and when YOU sell it, you can declare it's sale price against current market value, not 10 cents. HUGE difference. That may no longer be the case. Link to comment Share on other sites More sharing options...
jimjum12 Posted May 9, 2021 Share Posted May 9, 2021 14 hours ago, ADAMANTIUM said: To be honest, it doesn't matter if they sell at a loss! If people are paying with PayPal, the garage sale is still going to have to file the paperwork with the taxes, to prove they sold it at a loss. Nobody is really trying to dodge, but it's being reported vastly as there is profit, unless the filer proves otherwise, which seems needless in most cases Like the IRS once told fight promoter Don King, " You have to write it on before you can write it off..." GOD BLESS... -jimbo(a friend of jesus) ADAMANTIUM 1 Link to comment Share on other sites More sharing options...
WoWitHurts Posted May 10, 2021 Share Posted May 10, 2021 On 5/8/2021 at 3:04 PM, shadroch said: That may no longer be the case. It is for now. Link to comment Share on other sites More sharing options...
fantastic_four Posted May 10, 2021 Share Posted May 10, 2021 (edited) On 5/8/2021 at 4:04 PM, shadroch said: On 4/21/2021 at 8:26 PM, MyNameIsLegion said: But if you inherit that Action 1, you get a step up in basis, and when YOU sell it, you can declare it's sale price against current market value, not 10 cents. HUGE difference. That may no longer be the case. Is that speculation or have you heard something specific? I had never heard this before. Seems like it would be a very common issue, so I'm surprised if it's a loophole in tax code. I know my dad has a bunch of baseball cards he bought as a kid in the 1950s including several of the greats from that era, so it's something I may have to learn the specifics of when I eventually get those. I also wonder if it is a loophole is it only one for collectibles or is it a loophole for anything of value? I can't imagine they overlooked this for stocks. Edited May 10, 2021 by fantastic_four Link to comment Share on other sites More sharing options...
WoWitHurts Posted May 10, 2021 Share Posted May 10, 2021 1 hour ago, fantastic_four said: Is that speculation or have you heard something specific? I had never heard this before. Seems like it would be a very common issue, so I'm surprised if it's a loophole in tax code. I know my dad has a bunch of baseball cards he bought as a kid in the 1950s including several of the greats from that era, so it's something I may have to learn the specifics of when I eventually get those. I also wonder if it is a loophole is it only one for collectibles or is it a loophole for anything of value? I can't imagine they overlooked this for stocks. It is not a loop hole but rather a way for family owned business (farmers) too pass them on without having to carve it up. The current admin is talking doing away with it. Link to comment Share on other sites More sharing options...
fantastic_four Posted May 10, 2021 Share Posted May 10, 2021 (edited) 21 minutes ago, WoWitHurts said: It is not a loop hole but rather a way for family owned business (farmers) too pass them on without having to carve it up. The current admin is talking doing away with it. I thought that was already accounted for by the estate/gift tax exemptions. Here's a link to the historical limits through 2014: https://taxfoundation.org/federal-estate-and-gift-tax-rates-exemptions-and-exclusions-1916-2014/ My understanding is also that in 2016 that was boosted from around $5 million to around $11 million. I'm also unclear on why the increase in value of a business over time and the point of time you start from would matter before it's sold to someone else, i.e. until you actually do choose to carve it up. The loophole remains the same--if someone dies today and their heir sells the business tomorrow, do they really owe no tax on the sale since presumably they're worth about the same over a short time period, whereas had their benefactor sold the business the day before they died they'd owe a lot? Edited May 10, 2021 by fantastic_four Link to comment Share on other sites More sharing options...
csaag Posted May 10, 2021 Share Posted May 10, 2021 3 hours ago, fantastic_four said: Is that speculation or have you heard something specific? I had never heard this before. Seems like it would be a very common issue, so I'm surprised if it's a loophole in tax code. I know my dad has a bunch of baseball cards he bought as a kid in the 1950s including several of the greats from that era, so it's something I may have to learn the specifics of when I eventually get those. I also wonder if it is a loophole is it only one for collectibles or is it a loophole for anything of value? I can't imagine they overlooked this for stocks. I thought the proposed law had a $1 or 2 million exemption for step up basis https://www.forbes.com/advisor/investing/stepped-up-basis-biden-tax-plan/ Link to comment Share on other sites More sharing options...
ttfitz Posted May 10, 2021 Share Posted May 10, 2021 6 hours ago, fantastic_four said: The loophole remains the same--if someone dies today and their heir sells the business tomorrow, do they really owe no tax on the sale since presumably they're worth about the same over a short time period, whereas had their benefactor sold the business the day before they died they'd owe a lot? Yes. https://www.investopedia.com/terms/s/stepupinbasis.asp Link to comment Share on other sites More sharing options...
ttfitz Posted May 10, 2021 Share Posted May 10, 2021 On 5/7/2021 at 7:06 PM, Professor Chaos said: Yes, but it also says not these States. So if you don't live in any of these I think youre good in 2021. Too bad I do. And this is actually even more bs to me. Why should some states get a pass and others not. No question there, just an observation. Arkansas - $2,500 in gross payments with no threshold on the number of transactions District of Columbia - $600 in gross payments with no threshold on the number of transactions Illinois - $1,000 in gross payments and a minimum of 4 transactions Maryland - $600 in gross payments with no threshold on the number of transactions Massachusetts - $600 in gross payments with no threshold on the number of transactions Mississippi - $600 in gross payments with no threshold on the number of transactions New Jersey - $1,000 in gross payments with no threshold on the number of transactions Virginia - $600 in gross payments with no threshold on the number of transactions Vermont - $600 in gross payments with no threshold on the number of transactions I know you said "no question there" but I'll answer anyway - the states in question passed their own laws setting limits different than the federal one. Professor K 1 Link to comment Share on other sites More sharing options...
fantastic_four Posted May 11, 2021 Share Posted May 11, 2021 15 hours ago, ttfitz said: 22 hours ago, fantastic_four said: The loophole remains the same--if someone dies today and their heir sells the business tomorrow, do they really owe no tax on the sale since presumably they're worth about the same over a short time period, whereas had their benefactor sold the business the day before they died they'd owe a lot? Yes. https://www.investopedia.com/terms/s/stepupinbasis.asp Cool, thanks for the info! I was particularly wondering if stepping up in basis only worked for inheritance as opposed to gifts. The untaxed lifetime dollar limit on both inheritance and gifts is shared, so it would make sense if stepping up in basis applied to both--but the answer I found is that you can only step up in basis when inheriting, not when someone gives you something. ttfitz 1 Link to comment Share on other sites More sharing options...
WoWitHurts Posted May 11, 2021 Share Posted May 11, 2021 22 hours ago, fantastic_four said: I thought that was already accounted for by the estate/gift tax exemptions. Here's a link to the historical limits through 2014: https://taxfoundation.org/federal-estate-and-gift-tax-rates-exemptions-and-exclusions-1916-2014/ My understanding is also that in 2016 that was boosted from around $5 million to around $11 million. I'm also unclear on why the increase in value of a business over time and the point of time you start from would matter before it's sold to someone else, i.e. until you actually do choose to carve it up. The loophole remains the same--if someone dies today and their heir sells the business tomorrow, do they really owe no tax on the sale since presumably they're worth about the same over a short time period, whereas had their benefactor sold the business the day before they died they'd owe a lot? If your father bought land 50 years ago for 1 million and when he passes it is worth 11 million. For estate taxes purposes it is valued at 1 million but when it passes to you you would get the step up value of 11 million owing no capital gain taxes on it. If your father sold it for 11 million before his death the step up is gone and he would owe the cap gains of 10 million. I do not consider it a loophole but working as intended. When Ryan O’Neil passes if he leaves the Farrah Facett Andy Warhol painting to one of their sons they will pay nothing in taxes. Otherwise they would have to pay taxes on the value which could be as high as 12 million. They may not be able to come up with the taxes for it and would need to sell thus loosing a family heirloom. Link to comment Share on other sites More sharing options...
fantastic_four Posted May 11, 2021 Share Posted May 11, 2021 2 minutes ago, WoWitHurts said: If your father bought land 50 years ago for 1 million and when he passes it is worth 11 million. For estate taxes purposes it is valued at 1 million but when it passes to you you would get the step up value of 11 million owing no capital gain taxes on it. If your father sold it for 11 million before his death the step up is gone and he would owe the cap gains of 10 million. I do not consider it a loophole but working as intended. When Ryan O’Neil passes if he leaves the Farrah Facett Andy Warhol painting to one of their sons they will pay nothing in taxes. Otherwise they would have to pay taxes on the value which could be as high as 12 million. They may not be able to come up with the taxes for it and would need to sell thus loosing a family heirloom. Any person who outright gives or wills any item or money to any other person that's less than $11.7 million (that's the 2021 limit, more info here) doesn't owe any taxes at all. That's a lifetime limit for any one person giving anything to any other one person. I linked the history of that limit a few posts back going back to 1916. But if I extend your example of the painting going from 1 million to 20 million the example works...sort of. I still don't get why non-liquid assets would be taxed at the time of the gift/inheritance because as you note it would force sale. Why wouldn't that tax only apply at the time it's sold? That way heirs or gift beneficiaries aren't forced to liquidate all of a sudden, yet the taxes are still owed at some point when or if it does happen. Taxing non-liquid assets at the time of receipt DEFINITELY seems terrible and something I don't understand at all if it's true. Link to comment Share on other sites More sharing options...
Popular Post awakeintheashes Posted December 24, 2022 Popular Post Share Posted December 24, 2022 (edited) On 3/21/2021 at 9:35 PM, awakeintheashes said: Putting on my day-job hat for a second, I'm 85% certain this gets fixed (threshold raised, exemptions added, etc.) this year along with a few other non-controversial provisions of the Act that most have acknowledged will have unintended consequences in their current form. IRS announces delay for implementation of $600 reporting threshold for third-party payment platforms’ Forms 1099-K It may have taken a bit, but… Edited December 24, 2022 by awakeintheashes ttfitz, Barth, snitzer and 3 others 2 4 Link to comment Share on other sites More sharing options...
fantastic_four Posted December 25, 2022 Share Posted December 25, 2022 On 12/24/2022 at 2:17 PM, awakeintheashes said: On 3/21/2021 at 9:35 PM, awakeintheashes said: Putting on my day-job hat for a second, I'm 85% certain this gets fixed (threshold raised, exemptions added, etc.) this year along with a few other non-controversial provisions of the Act that most have acknowledged will have unintended consequences in their current form. IRS announces delay for implementation of $600 reporting threshold for third-party payment platforms’ Forms 1099-K It may have taken a bit, but… Not fixed yet, though, just delayed. But maybe this time next year that fix will go in. jimjum12 1 Link to comment Share on other sites More sharing options...