New Tax Reporting ($600 Threshold per year) and Consignments 21 21

[Shrevvy]

On 2/1/2022 at 12:05 PM, 70s80sTimeMachine said:

Say you land on the Schedule C with multiple income related streams (not just because of comics/1099K or anything comic related)  If you had another income source that had to be denoted in the Schedule C as well and you were carrying comic book inventory annually i.e. denoting your comic book purchases as costs of goods sold in Schedule C Part III or Part V; would this not then effectively reduce your total income tax liability for that particular year by at least delaying well it into the future until you sold said comic book inventory?

 

 

If I understand what you are asking, the answer is "no." Inventory is not a cost to offset revenue. Inventory is an asset. Buying inventory is not cost of goods sold until the product is actually sold. 

 

[70s80sTimeMachine]

On 2/1/2022 at 4:12 PM, Shrevvy said:

If I understand what you are asking, the answer is "no." Inventory is not a cost to offset revenue. Inventory is an asset. Buying inventory is not cost of goods sold until the product is actually sold. 

 

Thanks for pointing this out. I didn't provide the proper full scenario; this was under the context of the first/initial year you acquired the (new comics) inventory; would it not also fall under line 36 in the Part III for Cost of Goods sold section?  

[70s80sTimeMachine]

BTW line 36 in Part 3 is: Purchases less cost of items withdrawn for personal use.

So inventory is logically an asset but initially upon being purchased/acquired would it not be entered here? In this regard then it is having a reduction effect on gross sales / taxable income. 

[Aman619]

On 1/27/2022 at 5:33 PM, CycleGirl said:

 

I'm trying to decide that if and when I sell my keys (rather than leaving them to my heirs who will get a step-up in basis) if I'll set up an LLC and really try to run it as a business to take advantage of all of the tax breaks such as the Section 199A deduction (worth looking up). 

As it was explained to me, even this solution has issues to plan for.  Right now YOU own the assets.  The LLC must BUY the assets from you;  or you GIFT them to the LLC. Either way the transaction whereby there is a transfer of ownership pf the assets from to the new LLC is a tax event to you personally.  And I forget what happens to the cost bases once in the LLC.

of course with Estate tax exclusion currently 11.8 million for each married spouse, very few of us would exceed out litfetime Gift exclusion anyway. So fi the accountant okays the transfer, do to.  Another similar solution is a Family Limited Partnership. But comic books aren't a good fit for it, its used for real estate and mom and pop businesses.

[greggy]

On 2/1/2022 at 1:17 PM, 70s80sTimeMachine said:

Thanks for pointing this out. I didn't provide the proper full scenario; this was under the context of the first/initial year you acquired the (new comics) inventory; would it not also fall under line 36 in the Part III for Cost of Goods sold section?  

Basic cost of goods sold is:

Beginning inventory plus purchases throughout the year less ending inventory.

xoxo

greggy

[rsouxlja7]

On 2/1/2022 at 5:10 PM, Aman619 said:

As it was explained to me, even this solution has issues to plan for.  Right now YOU own the assets.  The LLC must BUY the assets from you;  or you GIFT them to the LLC. Either way the transaction whereby there is a transfer of ownership pf the assets from to the new LLC is a tax event to you personally.  And I forget what happens to the cost bases once in the LLC.

of course with Estate tax exclusion currently 11.8 million for each married spouse, very few of us would exceed out litfetime Gift exclusion anyway. So fi the accountant okays the transfer, do to.  Another similar solution is a Family Limited Partnership. But comic books aren't a good fit for it, its used for real estate and mom and pop businesses.

There is no reason to set up an LLC in this scenario anyway. 

[fastballspecial]

On 1/27/2022 at 7:11 AM, F For Fake said:

Yeah, my eBay 1099k still isn't showing up. I didn't have any Paypal transactions last year. Since eBay moved to managed payments, all of my business was through them. I guess if I don't have it by the 31st I'll call them. I'm sure that will be a barrel of laughs. Nothing more fun than calling eBay...

I wish I was still using Paypal through eBay. Their reporting is so much cleaner and it was much easier to track my transactions through the year. eBay's report is just a big nasty csv dump, and I have to put all of my own formulas and stuff in to figure up what I'm actually going to owe. Oh well, it is what it is.

Break them apart by months its easier that way. And if your numbers dont match you can find numbers easier by month.

[fastballspecial]

On 2/1/2022 at 1:19 PM, F For Fake said:

Yes, I'd absolutely echo the sentiment of @FlyingDonut that you should talk to your own tax folks, as everyone's situation is different. I only offer my experiences anecdotally. I have never considered myself a "business" and don't want to deal with business licenses, tax exempt status, or figuring up my "inventory", as I would have no idea where to start. I just track all of my expenses throughout the year, and cost of goods, and turn that information over to the professionals. I guess a lot of people are going to be doing that for the first time after this year. The thing is, it's not a huge chore as long as you stay on top of it. Annoying, sure, but not a huge big deal.

Alot of dreams here. Its fairly simple to do this. Many just try really hard to make it more difficult.

 

[F For Fake]

On 2/1/2022 at 8:51 PM, fastballspecial said:

Break them apart by months its easier that way. And if your numbers dont match you can find numbers easier by month.

The monthly reports are cleaner for sure. Luckily my 1099k finally showed up and my numbers were pretty much spot on with what they're reporting, so it all came together.

[FlyingDonut]

On 2/1/2022 at 2:19 PM, F For Fake said:

Yes, I'd absolutely echo the sentiment of @FlyingDonut that you should talk to your own tax folks, as everyone's situation is different. I only offer my experiences anecdotally. I have never considered myself a "business" and don't want to deal with business licenses, tax exempt status, or figuring up my "inventory", as I would have no idea where to start. I just track all of my expenses throughout the year, and cost of goods, and turn that information over to the professionals. I guess a lot of people are going to be doing that for the first time after this year. The thing is, it's not a huge chore as long as you stay on top of it. Annoying, sure, but not a huge big deal.

BTW I just did mine - you can download both your Paypal and eBay transaction lists for the entire year which will allow you to separate all of your expenses into buckets. Makes it pretty easy, all things considered. Just time.

[snitzer]

PayPal stock getting hammered today. First time maybe ever that growth has stalled. 1099s for everyone! 

[Beastfeast]

Apologies if this was already answered here but do Mycomicshop or Heritage send 1099s from consignments?  Getting conflicting information and their sites are not helpful.  

[snitzer]

On 2/2/2022 at 12:56 PM, Beastfeast said:

Apologies if this was already answered here but do Mycomicshop or Heritage send 1099s from consignments?  Getting conflicting information and their sites are not helpful.  

If they don't, sounds like it's on the seller...

[Beastfeast]

On 2/2/2022 at 2:18 PM, snitzer said:

If they don't, sounds like it's on the seller...

That's what I saw, too.  Anyone who's sold with them in the last year (or previous years) have any insight?  

[jimjum12]

On 2/2/2022 at 4:30 PM, Beastfeast said:

That's what I saw, too.  Anyone who's sold with them in the last year (or previous years) have any insight?  

I've never received one from HA or Clink, and have sold with both. GOD BLESS...

-jimbo(a friend of jesus)

[ttfitz]

On 1/27/2022 at 5:33 PM, CycleGirl said:

Anyway, I don't want to get into politics here.

[PovertyRow]

Since I do nave a tax accountant and have not needed one just a simple question. The "hobby sales" states that expenses cannot be taken through 2025. I hope this question i simple enough for not needing a tax accountant. If I pay $100 for a book and sell it for $150, am I getting taxed on $50 ($150 sale -$100 cost of book) or the whole $150?

Thanks!

[Bird]

On 2/2/2022 at 4:30 PM, Beastfeast said:

That's what I saw, too.  Anyone who's sold with them in the last year (or previous years) have any insight?  

IIRC from past years, HA does report

[jimjum12]

On 2/2/2022 at 7:41 PM, PovertyRow said:

Since I do nave a tax accountant and have not needed one just a simple question. The "hobby sales" states that expenses cannot be taken through 2025. I hope this question i simple enough for not needing a tax accountant. If I pay $100 for a book and sell it for $150, am I getting taxed on $50 ($150 sale -$100 cost of book) or the whole $150?

Thanks!

If you have a record or receipt for your purchase, it would be for the $50 profit only. GOD BLESS...

-jimbo(a friend of jesus)

[Parabellum]

@FlyingDonutsaid it best, “Talk to your tax guy”.  

I am not in the comic business for profit but I am an independent contractor (1099) with an LLC.  I deal with payroll, quarterly taxes, yearly estimated tax, expense reports, etc.  

#1. If you don’t have an accountant I suggest you get one and consult them.  Especially if you plan on selling a significant amount or any high dollar books.  

#2. Document everything, I mean EVERYTHING!  Bags, boards, grading/pressing, insurance, price paid, shipping, etc.  If you haven’t been doing so I suggest you do.  It might take you months to catch up but it will be worth it in the end when you decide to liquidate or sell off that big key.  When dealing with taxes you need to have your “ducks in a row”.  If the IRS comes for you they will attempt to get what they believe is owed to them right, wrong or indifferent.