New IRS reporting for 2021? 8 8

[1Cool]

43 minutes ago, jimjum12 said:

I got that this year too ... a $150 penalty for not doing it.... but using the money generates more profit than the penalty costs. This year was my highest tax tab ever ... but I added some of my own money back into the business and it showed up as profit rather than investment ... I will need to talk with my accountant and figure out why that happened. Still, taxes are a part of doing business in the best country in the world. GOD BLESS...

-jimbo(a friend of jesus)

Wow - I never would have guessed you were Swedish!

Edited April 15, 2021 by 1Cool

[fastballspecial]

1 hour ago, 1Cool said:

I'm also being told that I've got to pay quarterly to avoid fees for having to pay so much taxes at the end of the year.  Let's see if I remember to do it  

It is tough to be 100% certain of prices paid for each book when you are buying whole collections with many long boxes of books.  What I currently do is look at the total amount I spent buying books for the year (not an easy task in itself when you buy in so many venues).  If at the end of the year I think 2/3s have sold that year then I claim the 2/3 as my cost of purchasing product (the remaining 1/3 gets carried over to next year).  Things get a tad muddled when books sit for multiple years but I do my best to keep good records and fair estimates.  The total money coming in is a lot easier since E-Bay let's me print out quarterly totals which include how much I paid in fees and shipping charges (which are subtracted from my totals).

I use to take a 200 book collection and divide the total cost by 200 and put each book into a spreadsheet with that cost and then update the spreadsheet with the sold price of each book.  The spreadsheet was quite extensive in my third year of selling and it got to be a part time job keeping it up to date after books sold and came in.  The last few years have been more estimations and less spreadsheets.

I may PM you later on this. Its something I might need some more info on because I don't do this yet,  I cherry pick maybe 50 to 100 books at a time say flea markets, shows or stores.

Man that's a lot of work to do each book. I can see why you stopped.
You cant just divide the number of books by how much you paid and put that
down for each book as the purchasing cost? I mean, it also hurts you though because it makes your taxable profit 
higher as well. 

 

 

[vodou]

On 3/16/2021 at 9:53 AM, the blob said:

I'm just annoyed, for a solid 5 or so years I paid $200-300 a month for a storage room, but that was almost 15 years ago. Realistically, every book i kept in storage then should have those costs attached to their cost basis. documenting this is a whole other issue. and that's the problem with all of this.

Note: I file Schedule C, so maybe only applicable if you do too but: No. Those expenses would be deductible in the tax year they occurred, not when you "sell" many years later and realize that profit. I doubt (but do not know) that you can apply such expenses to cost basis as carry-forward.

Catching up here on a month of posts, but so far what strikes me more than anything regarding loss of Schedule D deductions (per 2018 changes, didn't affect me on Schedule C) is - do you "make" a lot or a little from you "hobby activities"? If your eBay 1099-K is going to show even just a few thousand...probably just pay the tax and move on? Anything around there or less applied an example 28% bracket is just $280/per thousand of 1099-K "income". Now if your eBay action gets up to where that $280 becomes more like $1,000 (so you're grossing $3-4k annually on 1099-K) and higher, then it's worth the time to hang onto receipts and trouble to pay someone else or educate yourself and do it right on a Schedule C.

Schedule C...you can legitimately make a lot of "income" disappear there

[the blob]

On 3/16/2021 at 5:35 PM, Darkwing7869 said:

eBay purchase records only date back a couple years at best. Paypal I believe is 3 years. Everything prior to that is not recoverable as far I as know. 

it used to go back further, but you're right, and I cleaned up my e-mails, so i don't have those anymore

[the blob]

4 hours ago, MyNameIsLegion said:

 

I use to do 50 - 60 transactions a month and even that seemed tedious to keep track of each book that came in and how much it sold for.  Now that I've been doing 150 transactions a month for most of the year I just can't imagine finding the time to itemize each purchase via a spreadsheet.  I pretty much only sell on E-Bay now so I get a total in sales for the year and then subtract out the cost of the books that sold.  I estimate the remaining inventory at the end of the year since that goes into the equation.  In general - the tax man sucks.

@1Cool & @fastballspecial didn't we just spend the last page discussing that you only deduct inventory as an expense when the item sold? How does remaining inventory factor into the equation?  Deducting the expenses of the other comics you bought with the money from sales that didn't sell to offset profits is not correct. You don't realize the gains, or declare the loss until that item sells.  So if you sell $10k, Profit $5K, spend 3K of that profit on more books, your profit is still 5K and that's what you are to be taxed on. Next year if you sell that $3K worth at a loss of $1K, and sell an additional $8K at a profit of $4K, you can deduct that $1K loss, for a next profit of $3K.  that seems like pretty simple math to me but the tracking of what rate it's taxed at if the asset was held less than a year seems like a giant PIA. Is that the part you are referring to in factoring in the equation? You may be doing it all right, but many people are using the straight up purchase of books for their collections as "expenses" to basically fund their hobby as a zero profit pursuit.

But isn't that exactly how a store would be doing their taxes? Sales - expenses/cost. They're not looking at is book by book.

[the blob]

3 hours ago, Wolverinex said:

Pretty sure Facebook is destroying our society with misinformation.

I got a new phone. i have decided not to have facebook on my phone. i don't know my password, so i can't look at it on my phone. it cuts the amount of time wasted by a lot.

[WolverineX]

6 minutes ago, the blob said:

I got a new phone. i have decided not to have facebook on my phone. i don't know my password, so i can't look at it on my phone. it cuts the amount of time wasted by a lot.

Excellent it is excrement 

[the blob]

14 minutes ago, Wolverinex said:

Excellent it is excrement 

I still have it on my laptop. It is the primary means of communications of too many 40omething i know.

[WolverineX]

15 minutes ago, the blob said:

I still have it on my laptop. It is the primary means of communications of too many 40omething i know.

https://www.newsweek.com/victim-facebook-data-breach-shares-viral-video-fb-following-him-all-over-internet-1582955

[the blob]

1 hour ago, vodou said:

Note: I file Schedule C, so maybe only applicable if you do too but: No. Those expenses would be deductible in the tax year they occurred, not when you "sell" many years later and realize that profit. I doubt (but do not know) that you can apply such expenses to cost basis as carry-forward.

Catching up here on a month of posts, but so far what strikes me more than anything regarding loss of Schedule D deductions (per 2018 changes, didn't affect me on Schedule C) is - do you "make" a lot or a little from you "hobby activities"? If your eBay 1099-K is going to show even just a few thousand...probably just pay the tax and move on? Anything around there or less applied an example 28% bracket is just $280/per thousand of 1099-K "income". Now if your eBay action gets up to where that $280 becomes more like $1,000 (so you're grossing $3-4k annually on 1099-K) and higher, then it's worth the time to hang onto receipts and trouble to pay someone else or educate yourself and do it right on a Schedule C.

Schedule C...you can legitimately make a lot of "income" disappear there

why are those expenses different than spending money to slab a book in 2005 you bought in 2004 and selling in 2021?

https://www.cpajournal.com/2017/11/13/planning-tax-considerations-collectibles/

For investors, the costs of appraisals and other items such as insurance, storage, subscriptions, and travel in connection with purchases would be deductible as miscellaneous deductions or, depending upon the nature of the expenditure, possibly added to the basis of the property. --- True, does not state what year certain things are deductable

https://andersen.com/publications/newsletter/march-2014/tax-tips-for-collectors-investors-and-dealers

I actually think the information here might be wrong: https://www.bnymellonwealth.com/articles/strategy/can-you-deduct-expenses-related-to-purchasing-or-selling-artwork.jsp

It is a tricky line between dealer and investor and I suspect if you ask 10 different CPAs how to classify a $1,000-$1,500 a month ebay enterprise involving 30-60 sales a month you may get a variety of answers. 

 

[shadroch]

1 hour ago, vodou said:

Note: I file Schedule C, so maybe only applicable if you do too but: No. Those expenses would be deductible in the tax year they occurred, not when you "sell" many years later and realize that profit. I doubt (but do not know) that you can apply such expenses to cost basis as carry-forward.

Catching up here on a month of posts, but so far what strikes me more than anything regarding loss of Schedule D deductions (per 2018 changes, didn't affect me on Schedule C) is - do you "make" a lot or a little from you "hobby activities"? If your eBay 1099-K is going to show even just a few thousand...probably just pay the tax and move on? Anything around there or less applied an example 28% bracket is just $280/per thousand of 1099-K "income". Now if your eBay action gets up to where that $280 becomes more like $1,000 (so you're grossing $3-4k annually on 1099-K) and higher, then it's worth the time to hang onto receipts and trouble to pay someone else or educate yourself and do it right on a Schedule C.

Schedule C...you can legitimately make a lot of "income" disappear there

The tax codes skew in favor or business and even the smallest of the small should take full advantage of them.

Embrace the tax code. Think of it as a musical instrument.  It sounds horrible at first but put the time and effort into learning it and it can bring you joy.

With the rise of prices draws more attention, you can be sure the IRS will want its share and sales tax people will be fishing around. 

 

 

[the blob]

35 minutes ago, shadroch said:

The tax codes skew in favor or business and even the smallest of the small should take full advantage of them.

Embrace the tax code. Think of it as a musical instrument.  It sounds horrible at first but put the time and effort into learning it and it can bring you joy.

With the rise of prices draws more attention, you can be sure the IRS will want its share and sales tax people will be fishing around. 

 

 

given the amount of money I spent storing a bunch of books that cost me $1-2 each, it is probably legitimate to give them a $4 cost basis if we have to go that route. My solo book sales on ebay would subject me to a lot of gains that way, unfortunately, as i tend to be selling stuff $20+ nowadays. But I'll be losing money on the lots i plan to list just because i need to clear out some space anyway, i can't move around anymore. There's no reason I can't have all my Captain Americas in one long box. So I need to get rid of about a short box of books. Multiply that by about 20 titles...

 

[vodou]

1 hour ago, the blob said:

It is a tricky line between dealer and investor and I suspect if you ask 10 different CPAs how to classify a $1,000-$1,500 a month ebay enterprise involving 30-60 sales a month you may get a variety of answers. 

You are fighting the wrong battle here, "trying" to avoid being a dealer. A few of us keep writing the same thing over and over: do everything you can to be a dealer. This assumes you're doing enough volume over a period of time for this to be worth the investment of time. Now...if you're dumping one long box this year and that's that, nothing next year...really...who cares? Just pay the freight or try to fudge the numbers in your favor. I'm not advising that, but the resistance level feels to me like I'm dealing with someone who is just going to do that anyway. You want to call it $4/book? Okay. What do I care? I'm not going to bother you. Neither will the IRS, probably, but if they do - you can either prove your math or you can't, the burden is on you to show that reported number is not all (or even any) net income. You can either do that to their satisfaction or you can't, and owe, possibly with penalties and interest accruing all along too. Nobody at the IRS is interested in your mental gymnastics though, you either have receipts for acceptable expenses or you don't. Best of luck!

[OuterBanks]

On 3/8/2021 at 3:25 PM, Wolverinex said:

A big question is selling comics that you've held over a year.. are you charged at a long term capital gains tax rate and how does ebay know?  

 

28% cap gains on collectibles (gold, comics, coins, stamps, art).  You can’t claim losses with your hobby unless you declare it a business (1099, s-corp etc.).  Still stuck with 28% cap gains though.

[vodou]

9 hours ago, VikramK said:

 

28% cap gains on collectibles (gold, comics, coins, stamps, art).  You can’t claim losses with your hobby unless you declare it a business (1099, s-corp etc.).  Still stuck with 28% cap gains though.

Again: Schedule C solves this noise. It's not collectibles anymore then, it's Product. As such the IRS doesn't care "what", just that your report it. That's why if you're a hooker escort you report the income and the IRS isn't going to care that you earn it on your back. Stripper? Performer/Entertainer? Whatever. Just report the income.

It's up to each of you to figure out what it takes in your jurisdiction to get on a Federal Schedule C.

In the Live Free or Die state, for an at home sole proprietor...it's as simple as completing the Schedule C, the state does not care.  

[fantastic_four]

10 hours ago, VikramK said:

You can’t claim losses with your hobby unless you declare it a business (1099, s-corp etc.). 

I posted this a few weeks ago--HR Block disagrees with this.  When you enter collectibles losses from the past year into their software it deducts it from your overall income.  If anyone has Turbo Tax I'd be interested to hear if their software does it as well if anyone wants to enter a sample loss in and see if it deducts it from your overall income.

Edited April 16, 2021 by fantastic_four

[manetteska]

As @fastballspecial said, unless you are doing it wrong, at the simplest level, you are making money/profit selling comics. Those comics from a collection you sold for $0.10 may be a loss, but the rest you sold for a profit make up for that loss and then some.

Once you have your "profit" (which I'll dumb down to Sold Price - Purchase Price), it's all about the deductions. Depending on the state, filings, etc. this can be a myriad of things and can include (but also may not include): comic boxes, bags and boards, shipping supplies, convention admission, food at the convention, and on and on.

On top of that, you have the human factor. Person A can take a "profit" of $1000 and deduct that into $500 profit. Person B can take a "profit" of $1000 and deduct that into $5 profit. For some, this is due to smart accounting and tracking of expenses; for others, this is less of that and more of not owing.

[vodou]

1 hour ago, fantastic_four said:

I posted this a few weeks ago--HR Block disagrees with this.  When you enter collectibles losses from the past year into their software it deducts it from your overall income.  If anyone has Turbo Tax I'd be interested to hear if their software does it as well if anyone wants to enter a sample loss in and see if it deducts it from your overall income.

FWIW...Schedule C net loss has unlimited deductibility against ordinary income. It's even true that you can actually be so negative on Schedule C that you can even go negative on your entire joint return (wiping out two incomes). It's magic! and legal!! (as long as your numbers are real and can survive an audit)

Another #win for Schedule C.

Edited April 16, 2021 by vodou

[OuterBanks]

4 hours ago, fantastic_four said:

I posted this a few weeks ago--HR Block disagrees with this.  When you enter collectibles losses from the past year into their software it deducts it from your overall income.  If anyone has Turbo Tax I'd be interested to hear if their software does it as well if anyone wants to enter a sample loss in and see if it deducts it from your overall income.

I need to switch to HR Block Thanks - I hope I’m wrong.  I have been selling off comics this year and am frustrated with the whole tax thing.

[OuterBanks]

By the way - this is why my CPA was saying expenses can’t be counted unless I go the 1099/corp route:

 

https://kb.drakesoftware.com/Site/Browse/15800/1040-Hobby-Expenses

The Tax Cuts and Jobs Act implementations beginning tax year 2018 disallow expenses incurred by hobbies. Income must still be reported. Per the Schedule C instructions, "...a sporadic activity or a hobby does not qualify as a business. To report income from a non-business activity, see the instructions for Schedule 1 (Form 1040), line 8, or Form 1040-NR, line 21." This is Schedule 1, line 21 in Drake18.