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

[Hamlet]

On 1/26/2022 at 9:17 PM, CycleGirl said:

Here are several things that I would suggest. 

1) Sell on sites like Ebay that are sure to send both you and the IRS a 1099. Don't use craigslist, the boards, or private channels. 

2) Get payment on sites like Paypal on Venmo where you are also sure to get a 1099. Don't use person-to-person cryptocurrency or cash. 

Everyone should pay their taxes!

Those two things are not required to pay your taxes.  My two largest sales have been via the boards.  I would never be willing to sell on EBay given the target they put on sellers for scammers.

Regardless, I will pay the taxes I owe come tax time.

[ttfitz]

On 1/26/2022 at 11:07 AM, snitzer said:

VA has had it for a year or two now. It's nonsense and things are rapidly changing in VA for the better 

Yeah, right. 

It bears repeating - the taxing situation hasn't changed with any of this, only the reporting of things by third parties.

[lizards2]

On 1/26/2022 at 8:35 PM, ttfitz said:

Yeah, right. 

It bears repeating - the taxing situation hasn't changed with any of this, only the reporting of things by third parties.

[ttfitz]

On 1/27/2022 at 1:05 AM, lizards2 said:

On 1/26/2022 at 11:35 PM, ttfitz said:

Yeah, right. 

It bears repeating - the taxing situation hasn't changed with any of this, only the reporting of things by third parties.

Yeah, that guy gets it!

[nochips]

On 1/26/2022 at 10:34 AM, rjpb said:

Neither Paypal or ebay have listed 1099Ks for me so far this year, and I had over the 200item/$20K thresh hold for ebay, and thousands in separate g&s payments into paypal. I keep thorough track of sales myself though, and report sales income on my taxes, so I don't actually need them. The three years previous I came up around ten items short of the 200 item trigger for ebay and was never sent 1099 forms. I expect they show up to be downloaded in the next week.

I'm curious as to whether ebay includes sales taxes they collect on the 1099s they generate, as they do when they calculate total sales under the performance tab. The IRS does not consider this as part of your gross sales, and the sales taxes should not be listed as such on schedule C. 

Yes, Taxes are included so you have to right them off your taxes.

[F For Fake]

On 1/26/2022 at 6:02 PM, FlyingDonut said:

Got it today from Paypal. 49 transactions. Your reminder that you are taxed on your net and not your gross.

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.

[jimjum12]

I use Paypal, and I too, like the way they track the sales.... makes book keeping simpler, but I do prefer checks... not for hiding things but simply for the extra 3% I get. That comes off the top and adds up. Let's say you sell for 100K in a year and gross 20K from that. With Paypal, you're kicking back 3000 dollars a year, and with checks, you get to keep that. 3K is a lot of money in my World. To keep up with details I just put the checks in one dedicated account and also make a photocopy of each one before I cash it. If you get audited, there it is. GOD BLESS...

-jimbo(a friend of jesus)

[theCapraAegagrus]

On 1/26/2022 at 10:17 PM, CycleGirl said:

Here are several things that I would suggest. 

1) Sell on sites like Ebay that are sure to send both you and the IRS a 1099. Don't use craigslist, the boards, or private channels. 

2) Get payment on sites like Paypal on Venmo where you are also sure to get a 1099. Don't use person-to-person cryptocurrency or cash. 

Everyone should pay their taxes!

I'm sure all that military hardware they are shipping to eastern Europe right now will help the people just as much as the stuff we gave to the nice people running Afghanistan. Surely none of it will fall into the wrong hands because we can count on our government to make sure that won't happen.

No sarcasm detected, just the cold, hard truth.

[FlyingDonut]

On 1/27/2022 at 8:11 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.

eBay is posting their 1099ks on January 31. The eBay report is pretty easy, all things considered - I think the Paypal csv dump just as hard.

[F For Fake]

On 1/27/2022 at 12:01 PM, FlyingDonut said:

eBay is posting their 1099ks on January 31. The eBay report is pretty easy, all things considered - I think the Paypal csv dump just as hard.

Ha, I guess at the end of the day, CSV is CSV! None of it is pretty!

It's funny, because a couple of days ago, when I logged into my eBay account "Payments" tab, it has a link saying "Your 1099k is ready!" But when you went to the Taxes section, it wasn't there. NOW...that "Your 1099k is ready" blurb is missing. So I'm assuming that was a mistake of some sort. Now to twiddle my fingers until the 31st. I've got my W2's, I've got my Schedule C mostly filled in, just need that 1099k so I can send it to our tax people and hopefully not think about it again. Gotta love tax season!

[CycleGirl]

On 1/27/2022 at 8:35 AM, theCapraAegagrus said:

No sarcasm detected, just the cold, hard truth.

  

No indeed. Don't worry about where the money goes and pay your fair share. Even Superman should pay his taxes!!

There you go! That is how the government sees it. "Revenuers" (ala Snuffy Smith, gotta keep this comic-related) are only interested in interpreting the code so that you will pay the maximum in taxes. Do you really believe that the code will result in you paying your fair share? It's a game, and the winners are those who know the rules best. 

The taxman does have a point. The federal government did build a lot of roads and schools in Afghanistan, especially schools for girls that we could all feel good about it. Wait... don't think about that.

Superman should have set up a non-profit just like pretty much everyone in D.C. does. Foreign governments and corporations can then donate as much as they want to NGOs run by the families of those in power in a way that no tax is paid. Wait... don't think about that either. Our leaders are all paying their fair share, you should too.

The only way to pay anything close to your "fair share" is to set up a comic business and somehow avoid the grossly unfair restrictions of hobby classification. Do you think, Bill Gates runs into hobby restrictions when he writes off his private jet flight to a climate conference in Scotland? Why should you for attending Comic Con when later in the year you sell some keys? Knowledge and connections matter just as much to us as they do to the wealthy. Anyway, I don't want to get into politics here. I'm just saying that the tax code will be used AGAINST you. You need to use it in your favor where you can. 

Unless you plan to file a Schedule C, I would avoid getting form 1099 as much as I could. Unless you are able to document all of your comic related expenses, you'll pay a lot more than your fair share. That's where smaller sellers that haven't been tracking things as a business are likely to get caught up in all this. By default, the IRS will ask for them to pay income taxes on gross sales and that's the problem.

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). 

Edited January 27, 2022 by CycleGirl

[WolverineX]

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

  

No indeed. Don't worry about where the money goes and pay your fair share. Even Superman should pay his taxes!!

There you go! That is how the government sees it. "Revenuers" (ala Snuffy Smith, gotta keep this comic-related) are only interested in interpreting the code so that you will pay the maximum in taxes. Do you really believe that the code will result in you paying your fair share? It's a game, and the winners are those who know the rules best. 

The taxman does have a point. The federal government did build a lot of roads and schools in Afghanistan, especially schools for girls that we could all feel good about it. Wait... don't think about that.

 

Trillions of dollars spent...Now where did all that money go....

Anyway nice post.  Setting up a LLC is probably the right way to go if you plan to liquidate.  

 

[Tony S]

Superman - during this era in comic books - could squeeze lumps of coal into diamonds and visit metorites/asteroids in space, drag them to earth and  mine them for gold. He'll have no problem paying the tax bill. Just saying 

Edited January 28, 2022 by Tony S

[70s80sTimeMachine]

On 1/27/2022 at 12:01 PM, FlyingDonut said:

eBay is posting their 1099ks on January 31. The eBay report is pretty easy, all things considered - I think the Paypal csv dump just as hard.

@F For Fake  @ttfitz  @batman_fan  @snitzer  @october

This question is not necessarily for anyone specific but rather curious to see what folks in general are doing on this one.

For Paypal fees, UPS/USPS services etc. shipping costs, packing supplies, and eBay fees; is it better or preferred to just lump these all together into line item 10 on the Schedule C or do you explicitly label these individually in Part V and then that aggregate total gets carried over to line 27a.

For someone perhaps in the middle i.e. comics is not an actual business as you get a W2 from your career job but due to higher $$$ transactions and/or 1099-Ks, your comic transactions land you on the Schedule C anyways, does it make sense that with your collection, if you knew a couple years down the road you will sell a specific run or groups of slabs, is there any benefit to carrying these as "inventory" in Part III (Cost of Goods Sold?) 

Put a different way; you are not running a comic empire business. You are really just a collector but because of 1099K issuance, you have to fill out Schedule C. Is it acceptable to have $0 value for beginning inventory and ending inventory each year since you can't predict the future with respect to when/if you might sell a bunch of slabs. 

[F For Fake]

On 2/1/2022 at 9:39 AM, 70s80sTimeMachine said:

@F For Fake  @ttfitz  @batman_fan  @snitzer  @october

This question is not necessarily for anyone specific but rather curious to see what folks in general are doing on this one.

For Paypal fees, UPS/USPS services etc. shipping costs, packing supplies, and eBay fees; is it better or preferred to just lump these all together into line item 10 on the Schedule C or do you explicitly label these individually in Part V and then that aggregate total gets carried over to line 27a.

For someone perhaps in the middle i.e. comics is not an actual business as you get a W2 from your career job but due to higher $$$ transactions and/or 1099-Ks, your comic transactions land you on the Schedule C anyways, does it make sense that with your collection, if you knew a couple years down the road you will sell a specific run or groups of slabs, is there any benefit to carrying these as "inventory" in Part III (Cost of Goods Sold?) 

Put a different way; you are not running a comic empire business. You are really just a collector but because of 1099K issuance, you have to fill out Schedule C. Is it acceptable to have $0 value for beginning inventory and ending inventory each year since you can't predict the future with respect to when/if you might sell a bunch of slabs. 

Since I am in exactly that boat (I am a collector who buys and sells a lot for the purposes of his collection, and don't really carry "inventory" the way a store does) our tax guy said to go with the $0 starting inventory. As I explained to him, I don't know something is "inventory" until I decide to sell it, you know? Until then, it's just part of the collection. He said it was "fine" to go with the zero on the starting inventory. My wife works for a financial planning company, so they do all of their employees' taxes for free. 

BTW, my 1099k DID magically appear last night, after eBay teased me with its non/availability last week. So now I'm going to go through my spreadsheet one more time and see if there's anything else I can squeeze out of it, then off to tax boy it goes. 

[jimjum12]

On 2/1/2022 at 9:39 AM, 70s80sTimeMachine said:

is there any benefit to carrying these as "inventory" in Part III (Cost of Goods Sold?) 

You'll need a Business License, but you can avoid paying Sales Tax, which will save you as much as 10% or more. GOD BLESS...

-jimbo(a friend of jesus)

[Key Largo Comics]

So is it safe to assume if there is no 1099k posted in ebay this morning there will not be one for 2021? Same with PayPal?

[FlyingDonut]

On 2/1/2022 at 9:39 AM, 70s80sTimeMachine said:

@F For Fake  @ttfitz  @batman_fan  @snitzer  @october

This question is not necessarily for anyone specific but rather curious to see what folks in general are doing on this one.

For Paypal fees, UPS/USPS services etc. shipping costs, packing supplies, and eBay fees; is it better or preferred to just lump these all together into line item 10 on the Schedule C or do you explicitly label these individually in Part V and then that aggregate total gets carried over to line 27a.

For someone perhaps in the middle i.e. comics is not an actual business as you get a W2 from your career job but due to higher $$$ transactions and/or 1099-Ks, your comic transactions land you on the Schedule C anyways, does it make sense that with your collection, if you knew a couple years down the road you will sell a specific run or groups of slabs, is there any benefit to carrying these as "inventory" in Part III (Cost of Goods Sold?) 

Put a different way; you are not running a comic empire business. You are really just a collector but because of 1099K issuance, you have to fill out Schedule C. Is it acceptable to have $0 value for beginning inventory and ending inventory each year since you can't predict the future with respect to when/if you might sell a bunch of slabs. 

*NOTE THAT I AM NOT A TAX PROFESSIONAL SO PLEASE LISTEN TO YOUR GUY"

I carry inventory from year to year per my tax guy. That number is essentially a best guesstimate but it does have some basis in reality. On my Schedule C I split out things - further inventory buys, shipping costs, consignment payments, subscriptions (GPA, GoCollect, KeyCollector), grading/pressing fees, supplies (a stunningly large amount for 2021), and my website. Those are explicitly labeled in Part V as you show above.

[70s80sTimeMachine]

On 2/1/2022 at 11:29 AM, FlyingDonut said:

*NOTE THAT I AM NOT A TAX PROFESSIONAL SO PLEASE LISTEN TO YOUR GUY"

I carry inventory from year to year per my tax guy. That number is essentially a best guesstimate but it does have some basis in reality. On my Schedule C I split out things - further inventory buys, shipping costs, consignment payments, subscriptions (GPA, GoCollect, KeyCollector), grading/pressing fees, supplies (a stunningly large amount for 2021), and my website. Those are explicitly labeled in Part V as you show above.

Thanks. So that anyone is comfortable providing input on this; I want to preface that no one should ever take advice off the internet in a thread like this. We are all accountable for our own due diligence and decisions. This is merely an exchange of ideas or thinking out loud if you will.

The reason I was specifically asking about logistics on the inventory is that I can see some potential big upside to that, separate from the sales tax matter that @jimjum12 astutely mentioned.

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?

 

 

[F For Fake]

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.