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

[fastballspecial]

On 12/29/2022 at 2:22 PM, Buzzetta said:

I am even more infuriated than I was an hour ago.

I put in my zip code to see that a few local businesses around here that were THRIVING during the pandemic and I mean THRIVING received hundreds of thousands of dollars. 

The mom and pop drug store?  Cuomo declared that essential businesses could remain open.  The drug store qualified. The Landscaping company?  I can assure that they were up and running and operational throughout the pandemic.  The funeral home received $155,000?  The only reason that they shut down was because the owner died.  So they said that they needed assistance and got it.  

The pizza place got $340,000.  Let that sink in.  $340,000.  The pizza place was THRIVING during this.  

With everything else that goes on in this town, nothing surprises me. 

 

One of my local comic shops got 13.5K.

 

[fastballspecial]

On 12/31/2022 at 11:17 AM, Dr. Balls said:

According to what I have read, you still pay taxes on the $200 profit, but you can't deduct for the loss to even them out - which would be disasterous to practically everyone. It reads as if you can't claim an expense because it's not a capital asset if it's a loss, only if it's a profit. But, that just might be me missing something.

It seems that if it does work that way, that sets a incredibly dangerous precedent at such a low priced threshold. You can't claim a loss on selling your car or boat, but those have established depreciation. Establishing depreciation on comic books, art, records, baseball cards and whatever else seems like it's opening a very scary, convoluted door. Or perhaps they are just saying that *everything* you buy as a non-business entity can only be used as a tax liability, not a deduction. And if that is the case, when does some bunny-brained politician start floating this at businesses - or worse, at small businesses? It's a slippery slope in my view.

I'm trying to get a little more educated, as this is my primary question to the accountant when we talk with them in the next few months.

I think you have it right. At least thats how I would file it. I would pay taxes on the $200 in profit.

There are options including an LLC where you can write that off as well. Of course there is also deducting expenses that help.

The potential problems you create when you view differently are really not worth the headaches is might cause the filer. Or you
better have a great CPA filing for you.

 

 

 

Edited January 1, 2023 by fastballspecial

[fastballspecial]

On 12/31/2022 at 12:05 PM, Dr. Balls said:

Yeah, you're probably right that I am overthinking it - and that was my initial thought - as simple bookwork for what you sell year-round works that way, but this quote from a CNBC article made me wonder about it:

"It’s possible you’ll receive Form 1099-K for transactions you don’t expect, such as reselling Taylor Swift tickets at a profit, for example, warned Justin Miller, national director of wealth planning at Evercore Wealth Management in San Francisco.

But selling items at a loss, such as used furniture, may be less clear.

“Obviously, if you sell a $2,000 couch for $1,000, there’s not taxable transaction there,” Markowitz said. “You don’t get a capital loss for it, and you don’t have a gain.”  

This is the problem area for me. Let's say I sold this couch on Ebay. I'm going to get a 1099-K regardless of whether I made a profit or loss, and it will have to be filed as such. This guy's statement makes it sound that because there's no 'taxable transaction' I can simply ignore the 1099? I highly doubt that. If I get a 1099 for $1000, I'm going to have to show to the IRS that I paid $2000 for the couch, thereby establishing a capital loss.

It might be as you said - I keep records and show my profit/loss as one aggregate number, but the statements I'm reading are opposite of that way of thinking. And perhaps it's just the media being simplistic because everyone's tax situation is different.

This is why you pay accountants for. Simplier stuff you can use Turbo Tax.

[Buzzetta]

On 1/1/2023 at 4:04 PM, fastballspecial said:

One of my local comic shops got 13.5K.

 

Comic stores were closed as they were not considered "essential services".  

The pizza places around here saw an increase in business as many restaurants were closed, and pizza was quick and easy to order from if you wanted to get away from cooking for a day. 

They were making money hand over fist. 

[mtracy64]

My favorite pizza joint went out of business a few months after the pandemic hit. 

[WEBHEAD]

Let me understand one issue you are a young man (not me) and you go to your local comic shop and you were lucky to buy 4 Ultimate Fallout #4 which cost you $3.99 a piece and until the movie and speculation started and people started paying stupid money now you get lucky and sell it for $2000 to up pay capital gains on $1996  perhaps you threw out the reciept what's up?   Thanks  ( I sold mine 2 years ago) this is for the speculators ( now if yo buy it at your LCShop  you will be paying the 2K w    then you can sell it for a loss/

[Buzzetta]

On 1/1/2023 at 7:22 PM, WEBHEAD said:

Let me understand one issue you are a young man (not me) and you go to your local comic shop and you were lucky to buy 4 Ultimate Fallout #4 which cost you $3.99 a piece and until the movie and speculation started and people started paying stupid money now you get lucky and sell it for $2000 to up pay capital gains on $1996  perhaps you threw out the reciept what's up?   Thanks  ( I sold mine 2 years ago) this is for the speculators ( now if yo buy it at your LCShop  you will be paying the 2K w    then you can sell it for a loss/

I still have a block of ten that I got for $20 a piece when no one cared about Miles Morales. 

(It was $20 for all ten btw) 

 

Edited January 3, 2023 by Buzzetta

[lizards2]

On 1/1/2023 at 7:05 PM, Buzzetta said:

I still have a block of ten that I got for $20 a piece when no one cared about Miles Morales. 

 

I still don't care about Miles Morales.  

[FlyingDonut]

On 12/31/2022 at 1:05 PM, Dr. Balls said:

Yeah, you're probably right that I am overthinking it - and that was my initial thought - as simple bookwork for what you sell year-round works that way, but this quote from a CNBC article made me wonder about it:

"It’s possible you’ll receive Form 1099-K for transactions you don’t expect, such as reselling Taylor Swift tickets at a profit, for example, warned Justin Miller, national director of wealth planning at Evercore Wealth Management in San Francisco.

But selling items at a loss, such as used furniture, may be less clear.

“Obviously, if you sell a $2,000 couch for $1,000, there’s not taxable transaction there,” Markowitz said. “You don’t get a capital loss for it, and you don’t have a gain.”  

This is the problem area for me. Let's say I sold this couch on Ebay. I'm going to get a 1099-K regardless of whether I made a profit or loss, and it will have to be filed as such. This guy's statement makes it sound that because there's no 'taxable transaction' I can simply ignore the 1099? I highly doubt that. If I get a 1099 for $1000, I'm going to have to show to the IRS that I paid $2000 for the couch, thereby establishing a capital loss.

It might be as you said - I keep records and show my profit/loss as one aggregate number, but the statements I'm reading are opposite of that way of thinking. And perhaps it's just the media being simplistic because everyone's tax situation is different.

You are vastly overthinking it. I've been doing this and filing my taxes on it for a long time and have an expensive accountant do it (agh) and you file taxes on a basic number. You bought things for X dollars and you sold them for Y dollars. You pay taxes on the total aggregate number of Y minus X. Also note that all of your costs that go into that are deducted off as well.

EVERYONE is overthinking this. It isn't that hard, outside of having to know what you paid for something. That may be a hassle but it is not a huge problem.

[ttfitz]

On 12/29/2022 at 5:55 AM, skypinkblu said:

Very little was done in any kind of efficient manner if the directions came from Albany. I can't imagine the Feds are any different....I seem to remember huge amounts paid for hammers, etc.

So many decisions were made based on what companies supported the people in charge or what party was in charge and whose list you had to hire from. No private business could possibly survive that way, just constant waste.  

I've always tried to be practical...that was never a concern in the Governor's office.

I doubt Shad's point is that the government shouldn't be efficient, merely that being "run like a business" isn't the answer. Businesses and governments are in, well, different businesses, and have different priorities.

Between my wife and I, we have worked for the US Army, a small business, a Fortune 5 (not 500, 5) for-profit company, a think tank, one of the biggest non-profit companies, a midsized contractor company and then later for the major defense contractor who bought that company, as well as each of us having a period of being self-employed consultants. So, pretty much everything you can think of, and I can tell you, every one on those entities had practices that were stupid and inefficient, just in different ways.

[mtlevy1]

So we all need to sell our expensive vintage couches at a loss to offset our hobby gains...

Edited January 2, 2023 by mtlevy1

[lizards2]

On 1/1/2023 at 9:45 PM, FlyingDonut said:

You are vastly overthinking it. I've been doing this and filing my taxes on it for a long time and have an expensive accountant do it (agh) and you file taxes on a basic number. You bought things for X dollars and you sold them for Y dollars. You pay taxes on the total aggregate number of Y minus X. Also note that all of your costs that go into that are deducted off as well.

EVERYONE is overthinking this. It isn't that hard, outside of having to know what you paid for something. That may be a hassle but it is not a huge problem.

I am not sure everyone is overthinking, but talking past each other. They are confusing/mixing the rules for a business with that of a private hobbyist, or vice-versa. Which position are you speaking from?

[october]

On 1/1/2023 at 11:45 PM, FlyingDonut said:

You are vastly overthinking it. I've been doing this and filing my taxes on it for a long time and have an expensive accountant do it (agh) and you file taxes on a basic number. You bought things for X dollars and you sold them for Y dollars. You pay taxes on the total aggregate number of Y minus X. Also note that all of your costs that go into that are deducted off as well.

EVERYONE is overthinking this. It isn't that hard, outside of having to know what you paid for something. That may be a hassle but it is not a huge problem.

The above is true if you are a business filing a Schedule C. The rules are different for people just reporting hobby income. You can offset profit with COGS, but can't deduct expenses, for example.

People are overthinking it because the rules are legitimately confusing and always have been.

Edited January 2, 2023 by october

[buttock]

On 1/2/2023 at 7:45 AM, october said:

The above is true if you are a business filing a Schedule C. The rules are different for people just reporting hobby income. You can offset profit with COGS, but can't deduct expenses, for example.

People are overthinking it because the rules are legitimately confusing and always have been.

And they change every year.  Just within the past 5-6 years they pulled the 1031 exchange, and then the ability to deduct expenses -- in addition to now the new $600 threshold.  

[batman_fan]

On 1/2/2023 at 8:32 AM, buttock said:

And they change every year.  Just within the past 5-6 years they pulled the 1031 exchange, and then the ability to deduct expenses -- in addition to now the new $600 threshold.  

If you own a business, you are always one bad legislation session away from bankruptcy.

[MAR1979]

On 1/2/2023 at 2:06 AM, ttfitz said:

I doubt Shad's point is that the government shouldn't be efficient, merely that being "run like a business" isn't the answer. Businesses and governments are in, well, different businesses, and have different priorities.

Between my wife and I, we have worked for the US Army, a small business, a Fortune 5 (not 500, 5) for-profit company, a think tank, one of the biggest non-profit companies, a midsized contractor company and then later for the major defense contractor who bought that company, as well as each of us having a period of being self-employed consultants. So, pretty much everything you can think of, and I can tell you, every one on those entities had practices that were stupid and inefficient, just in different ways.

I've been employed at Fortune 20 firms the last 26 years, agreed in many ways they operate more arse backwards than the Fed gov! Do whatever you can to boost your next bonus and F the future.

Edited January 3, 2023 by MAR1979

[MAR1979]

On 1/1/2023 at 4:04 PM, fastballspecial said:

One of my local comic shops got 13.5K.

 

My LCS closed for good June 2020. Landlord would not budge and gov payout not enough to cover rent. Bad timing in that his lease expired days before Mar 2020 lockdown

Edited January 3, 2023 by MAR1979

[Mr. Zipper]

On 1/3/2023 at 8:36 AM, MAR1979 said:

My LCS closed for good June 2020. Landlord would not budge and gov payout not enough to cover rent. Bad timing in that his lease expired days before Mar 2020 lockdown

Like most, if not all, government programs, there are those in real need who receive assistance. And regrettably those who abuse the system.

[NewWorldOrder]

On 12/23/2022 at 12:47 PM, Ryan. said:

The outrage isn't about paying taxes on realized gains. It's about starting from a position of being guilty of tax avoidance from the governments perspective and then having to prove your innocence.

 

Grandma sells her couch on Craigslist for $600 and accepts PayPal. She paid $1200 for it in 1972. Now she has to prove she took a loss instead of earning the full $600 in profit.

Come on dude

#1 Grandma aint taking no PayPal, she is only taking cash

#2 That couch ain't worth no $600 bucks  

[NewWorldOrder]

On 12/23/2022 at 11:31 AM, Dr. Balls said:

Without getting specifically political, I think some people might be fed up with the government’s mismanagement of practically everything at this point that affects the middle class - and now this is one more reason for a collective: WTF and that creates a lot of animosity.

I’m not speaking for anyone in particular - everyone has their own reasons, but that could be one of them.

Paying taxes in the United States is just how it works. We all do it, some pay more than others - but when the government decides to nut punch the middle class in every aspect of finance for 3 years running, you’re going to get some complaints, regardless of paying taxes being a truism.

Yes I am well aware.

I am with you when it comes to money and gov't involvement.  IMO Less is more hint hint

My point is no one is going to jail because they sold their video games for $500 bucks and have to prove to cost them $2000 from receipts from 2005.  No one will owe anything.  It's just a section on their tax return they may now have to fill out and/or have their tax accountant verify.  Not a big deal.