New IRS reporting for 2021? 8 8

[ttfitz]

3 hours ago, jcjames said:

5 hours ago, ttfitz said:

Well, I'm guessing that (a) the difference in tax between the sales price or the sales price minus the buck or two (too lazy to look up the cover price) is enough to worry about, and (2) the IRS is going to accept the printed on the cover price as the original cost, particularly, once again, when it's only a buck or two.

Collectibles capital gains tax? 

I'm not entirely sure of what your question is, or how it relates to what I was talking about, so let me try this again. The post I was referring to talked about someone buying a comic years ago from the rack at 7-11 or something, and needing a receipt for that purpose after this goes into effect. My response was that if he sold that comic for, let's say, $1000, the difference between paying taxes on the whole $1000 or $998 was so small that it wouldn't be worth worrying about not having a receipt; further that if you DID claim $998 as profit and the IRS came calling about it, I would guess that showing them the comic and saying, "See? It cost 2 bucks back 30 years ago when I bought it, there's the price right there [pointing to cover price]" would be sufficient proof of the COGS.

[jcjames]

34 minutes ago, ttfitz said:

I'm not entirely sure of what your question is, or how it relates to what I was talking about, so let me try this again. The post I was referring to talked about someone buying a comic years ago from the rack at 7-11 or something, and needing a receipt for that purpose after this goes into effect. My response was that if he sold that comic for, let's say, $1000, the difference between paying taxes on the whole $1000 or $998 was so small that it wouldn't be worth worrying about not having a receipt; further that if you DID claim $998 as profit and the IRS came calling about it, I would guess that showing them the comic and saying, "See? It cost 2 bucks back 30 years ago when I bought it, there's the price right there [pointing to cover price]" would be sufficient proof of the COGS.

That makes sense. I was commenting more on what actual tax would be incurred, whether it would be income tax or collectible capital gains tax and how it would be viewed by the IRS. That's a real question that folks tend to ignore, though following the law is darn near impossible with collectibles capital gains on comics because it's so arbitrary, convoluted and quite not fair.

[ttfitz]

1 hour ago, jcjames said:

That makes sense. I was commenting more on what actual tax would be incurred, whether it would be income tax or collectible capital gains tax and how it would be viewed by the IRS. That's a real question that folks tend to ignore, though following the law is darn near impossible with collectibles capital gains on comics because it's so arbitrary, convoluted and quite not fair.

Ah, I gotcha. Yeah, I have no idea. 

Which is to say, I don't have reason to know right now, as it doesn't apply to me at the moment, and I have enough trouble keeping up with the tax stuff I DO have to worry about.

[MyNameIsLegion]

1 hour ago, jcjames said:

That makes sense. I was commenting more on what actual tax would be incurred, whether it would be income tax or collectible capital gains tax and how it would be viewed by the IRS. That's a real question that folks tend to ignore, though following the law is darn near impossible with collectibles capital gains on comics because it's so arbitrary, convoluted and quite not fair.

so, let's say you buy a slab, crack and press and resubmit:  Say it was a $1000 9.4, cost to ship, insure press and resub cost? I dunno $100.  That's $1100 COGs. You flip it for $1600. after auction fees etc maybe you clear $1360.  Subtract your $1100 COGs, you net. $260. That's 24% ROI.  People have done more work for less. Now the IRS takes 28% of that at the higher collectibles tax rate, so now you only made $213. So your ROI is now 19%. Was it worth the hassle and paperwork and time? Scale back that example to books with a $100 COGs with similar ROI. Your talking about netting under $20.  Under $10 on a $50 items.  I think that will dissuade many casual sellers on they realize their effort is mostly to break even.   Maybe this takes out a lot of the flippers, which slows down the market. this may be eBay's last great year.  But a lot of the sellers that are fully disclosing all their sales and track all their expenses, this may not impact you directly, but indirectly, you're sales in 2022 may take a hit once the casual hobbyist discovers that the liquidity and maximal profit potential has been harmed by these new reporting rules. These taxes were never factored into their purchases when collecting or speculating. No more flipping that 1st Carnage appearance you bought 5 of and figured you could flip for 2x or 3x down the road for quick cash free and clear. Maybe it's a boon for dealers in the sense that now collectors will want to sell to dealers directly, cash under the table, so you won't be competing with the a frothy auction market or BIN on eBay.  My prediction is this will finally slow the market down, that everyone had been predicting for years but never came. The party's over. Many will find the idea of paying 28% in taxes as egregious. it's a disincentive to conduct business. 

Edited March 12, 2021 by MyNameIsLegion

[ttfitz]

7 minutes ago, MyNameIsLegion said:

I'm not apposed to the idea of paying taxes per se, but 28% is egregious. it's a disincentive to conduct business. 

I'm not sure where you are getting 28% from? I'm only seeing a 24% bracket and a 32%, and the max capital gains rate is 20%. And you only hit the 24% bracket for taxable income over $86k single, $172k married; 32% for $165k single and $329k married.

[MyNameIsLegion]

22 minutes ago, ttfitz said:

I'm not sure where you are getting 28% from? I'm only seeing a 24% bracket and a 32%, and the max capital gains rate is 20%. And you only hit the 24% bracket for taxable income over $86k single, $172k married; 32% for $165k single and $329k married.

https://www.thetaxadviser.com/issues/2019/nov/taxation-collectibles.html

https://www.gtreilly.com/blog/article/selling-that-original-warhol-prepare-for-tax-bite-on-your-collectible

"By law, the maximum tax rate on the sales of collectibles (after netting of any losses) is 28% or the rate at which the gain would be taxed if it were ordinary income, if lower. When taxpayers have ordinary income, collectible gains, unrecaptured Sec. 1250 gains and other long-term capital gains, the order in which each category of income is applied matters. Ordinary income is taxed first, followed by gains subject to the 25% rate, followed by gains subject to the 28% rate, and then gains subject to the 0%/15%/20% rates.

In some cases, the marginal tax rate on collectible gains can exceed 28% due to the alternative minimum tax (AMT) or the Sec. 199a qualified business income (QBI) deduction."

 

I don't pretend to understand all of this, but it appears to me that portion of your income would be taxed differently depending on the source or that income. If that income is from collectibles, they can be taxed at $28%.

[Dick Pontoon]

Don't get me wrong, this topic is good fodder for a thread for sure, but I have a real nutty suggestion, fellas. Rather than rely on conjecture on a comic forum chat board about tax regulations, talking to a tax professional might be the best course of action. We've been using an accountant for years. Unless you're an EZ form filer, the fees involved have paid for themselves many times over just from saving the time and effort we'd invest otherwise.

[jharvey]

5 hours ago, MyNameIsLegion said:

Many will find the idea of paying 28% in taxes as egregious. it's a disincentive to conduct business. 

You are overlooking the fact that you pay the lesser of the 28% collectibles rate, or your ordinary income tax bracket rate. In order to actually pay the full 28% in tax, on a Married Filing Joint tax return, you would need to make over $326,601 in taxable income to put you in a high enough tax bracket to trigger the 28% collectibles rate. A large majority of people would in fact pay FAR less than 28%. For example, on a Married Filing Joint tax return, as long as you make less than $80,250 in taxable income, you are in a 12% tax bracket and would pay 12% on your collectible gains, not 28%.

Edited March 12, 2021 by jharvey

[jharvey]

4 hours ago, ttfitz said:

I'm not sure where you are getting 28% from? I'm only seeing a 24% bracket and a 32%, and the max capital gains rate is 20%. And you only hit the 24% bracket for taxable income over $86k single, $172k married; 32% for $165k single and $329k married.

Collectibles have a special capital gain rate of 28%, but it is the LESSER of 28% or your ordinary income tax bracket rate. So you are correct that most people would not pay the 28% rate.

[MyNameIsLegion]

2 minutes ago, jharvey said:

You are overlooking the fact that you pay the lesser of the 28% collectibles rate, or your ordinary income tax bracket rate. In order to actually pay the full 28% in tax, on a Married Filing Joint tax return, you would need to make over $326,601 in taxable income to put you in a high enough tax bracket to trigger the 28% collectibles rate. A large majority of people would in fact pay FAR less than 28%. For example, on a Married Filing Joint tax return, as long as you make less than $80,250 in taxable income, you are in a 12% tax bracket and would pay 12% on your collectible gains, not 28%.

 we need a relief emoji.

[1Cool]

20 minutes ago, jharvey said:

You are overlooking the fact that you pay the lesser of the 28% collectibles rate, or your ordinary income tax bracket rate. In order to actually pay the full 28% in tax, on a Married Filing Joint tax return, you would need to make over $326,601 in taxable income to put you in a high enough tax bracket to trigger the 28% collectibles rate. A large majority of people would in fact pay FAR less than 28%. For example, on a Married Filing Joint tax return, as long as you make less than $80,250 in taxable income, you are in a 12% tax bracket and would pay 12% on your collectible gains, not 28%.

Less then $80k per couple - yea right.  Nobody makes that little so it's all a moot point.

[jharvey]

9 minutes ago, 1Cool said:

Less then $80k per couple - yea right.  Nobody makes that little so it's all a moot point.

Ok, and on a Married Filing Joint return, if you make less than $171,050, you are in a 22% tax bracket which is still less than 28%.

Also keep in mind this is $171,050 of taxable income. Your income first gets reduced by many other things like business expenses, standard/itemized deduction, 20% qualified business income deduction, adjustments to income, etc. You could easily make way more than $171,050, but still have a taxable income that is below that amount after deductions.

Edited March 12, 2021 by jharvey

[ygogolak]

10 hours ago, the authority said:

Ledgers

There's your answer!

[rsouxlja7]

8 hours ago, jcjames said:

That makes sense. I was commenting more on what actual tax would be incurred, whether it would be income tax or collectible capital gains tax and how it would be viewed by the IRS. That's a real question that folks tend to ignore, though following the law is darn near impossible with collectibles capital gains on comics because it's so arbitrary, convoluted and quite not fair.

If you have owned the comic for one year - long term capital gains tax at 28% collectibles rate

If you have owned the comic less than one year - it goes on schedule C and taxed as ordinary income plus self employment tax

If you're in the business of selling comics and you have owned it more than one year - still goes on Sch C

Edited March 12, 2021 by rsouxlja7

[NewWorldOrder]

On 3/8/2021 at 10:55 AM, Wolverinex said:

agreed.  I barely use ebay anymore regardless..

Funny all my auctions run on eBay and new GPA records are consistently being set.  I start all my auctions at .99c and let the market be the market just as C-Link and Heritage.  So for me eBay is still KING.

Edited March 12, 2021 by NewWorldOrder

[NewWorldOrder]

I don't understand the point of this thread.  If you make a profit, USA gov't wants their cut.  Even in years past if you sold 10k worth of comics it doesnt matter if eBay sent you a 1099 or not.  You are supposed report profits on all amounts you made regardless of eBay.

Edited March 12, 2021 by NewWorldOrder

[shadroch]

12 hours ago, ttfitz said:

I'm not entirely sure of what your question is, or how it relates to what I was talking about, so let me try this again. The post I was referring to talked about someone buying a comic years ago from the rack at 7-11 or something, and needing a receipt for that purpose after this goes into effect. My response was that if he sold that comic for, let's say, $1000, the difference between paying taxes on the whole $1000 or $998 was so small that it wouldn't be worth worrying about not having a receipt; further that if you DID claim $998 as profit and the IRS came calling about it, I would guess that showing them the comic and saying, "See? It cost 2 bucks back 30 years ago when I bought it, there's the price right there [pointing to cover price]" would be sufficient proof of the COGS.

You do realize that you won't be filing taxes on each book, right?  And that you've had expenses storing the book for the last thirty years.

Edited March 12, 2021 by shadroch

[Mike Bray]

I remember the old days when I would save up my eBay checks and money orders for a couple of weeks and then deposit them -- ahhh ... the late 90`s .... 

[jcjames]

2 hours ago, NewWorldOrder said:

I don't understand the point of this thread.  If you make a profit, USA gov't wants their cut.  Even in years past if you sold 10k worth of comics it doesnt matter if eBay sent you a 1099 or not.  You are supposed report profits on all amounts you made regardless of eBay.

But if one had not kept track even IF there are any annual profits...? I don't know how much I made, and I don't care. It's like the guy who goes to Vegas once in a while, win or lose I don't care as much as the entertainment I get from doing it (but winning is more fun).

One time I found $50 bill in front of a 7-11. Another time I found a $100 bill in an aisle of a department store. Am I a tax-cheat because I didn't report it as "income" that year? I never kept records of comic flips because it was never an issue with me because I never tracked/recorded gains or losses of anything because it wasn't regarded as "income" to me.

Just like I never kept track of how many $5 bills I hand out to panhandlers. I never kept track of how much stuff I drop off at Goodwill every couple of months. There some years I never even reported contributions to IRAs if it was only thousand or two. I don't care about deductions, it's not worth it to me to track all that.

I make a good living, I live well within my means and I pay my "fair share" of income taxes based on my "income". I don't want to run a business because I don't want the hassle of keeping track of every expense, every purchase, every mile driven, every mailer I send. Any tax-advantage I may or may not get is just not worth my time (compared to how much I make per hour in my real job). I'd much rather spend my time with my family, gardening, running, and enjoying life without keeping a daily ledger of all expenses and $1-for-$10 comic flips. 

If this becomes a forced issue (like feebay starting to send me 1099s that I am forced to report) so be it. I guess I'll have to find ways to more than make up for the extra work they're causing me to do (and I will have to "charge" (via more deductions) a lot for my extra time), and the cost of me adding way more deductions to my tax returns will just have to be made up by the other taxpayers, not from me.

Sucks, but they make the rules of the game utterly incomprehensible by any single reasonable person so that opinions between tax-preparers and the IRS seem to be the rule. Cynical? A bit.

 

 

Edited March 12, 2021 by jcjames

[NewWorldOrder]

13 minutes ago, jcjames said:

But if one had not kept track even IF there are any annual profits...? I don't know how much I made, and I don't care. It's like the guy who goes to Vegas once in a while, win or lose I don't care as much as the entertainment I get from doing it (but winning is more fun).

I never kept records of comic flips because it was never an issue with me because I never tracked/recorded gains or losses of anything because it wasn't regarded as "income" to me.

Just like I never kept track of how many $5 bills I hand out to panhandlers. I never kept track of how much stuff I drop off at Goodwill every couple of months. There some years I never even reported contributions to IRAs if it was only thousand or two. I don't care about deductions, it's not worth it to me to track all that.

I make a good living, I live well within my means and I pay my "fair share" of income taxes based on my "income". I don't want to run a business because I don't want the hassle of keeping track of every expense, every purchase, every mile driven, every mailer I send. Any tax-advantage I may or may not get is just not worth my time (compared to how much I make per hour in my real job). I'd much rather spend my time with my family, gardening, running, and enjoying life without keeping a daily ledger of all expenses and $1-for-$10 comic flips. 

If this becomes a forced issue (like feebay starting to send me 1099s that I am forced to report) so be it. I guess I'll have to find ways to more than make up for the extra work they're causing me to do (and I will have to "charge" (via more deductions) a lot for my extra time), and the cost of me adding way more deductions to my tax returns will just have to be made up by the other taxpayers, not from me.

Sucks, but they make the rules of the game utterly incomprehensible by any single reasonable person so that opinions between tax-preparers and the IRS seem to be the rule. Cynical? A bit.

 

 

Cliff notes answer.   If you sell 5k of books on eBay I highly doubt you will be going to jail nor them bothering you.  I am not saying you shouldn't report profit income, but IRS isnt going after small amount.  If that was the case I still owe them for the $100's of dollars I made cutting my grandma's grass when I was in middle school!  

Remember 100k to you is a lot but .01 to them.

I think generally everyone knows what they have into anything they bought, so come up with a reasonable expense number and deduct from the gross sales and call it a life.  More than likely they wont come bothering you.  Higher probability of them looking at you if you have a 100k of eBay sales and didnt report any of it though.  See what I mean? 

Edited March 12, 2021 by NewWorldOrder