Bubbles Bursting 8 8

[Professor K]

On 1/31/2022 at 9:32 PM, fifties said:

Correct, and this is why a tax accountant would know what would satisfy the government, and at the least taxable amount, regarding acquisition cost when one doesn't have proof of it.

I would hope. But I have a feeling that a lot of them are as for lack of a better word clueless as we are. And with respect I don't think there is a lot of mis info going on. We're just trying to figure it out. As far as what would satisfy them.......Anything less than claiming 50% profit without proof and we're pushing our luck. But yeah an accountant is the way to go from now on.

[Monsters-n-heroes]

On 1/30/2022 at 10:28 PM, Aman619 said:

Profits on the sales of comicbooks are taxed as at the higher capital gains rate: 28%. Plus the 3.8 surcharge related to the AFA.  Doesn’t matter if short term or long term gains.   Only the gains, profits, is taxable.  Therefore you state what your cost basis was and use it to calculate your profit, for each item sold. Certain expenses can also be added to your costs, like shipping.  But storage and storage materials would be allowable only as a fraction of the number of items in your collection.  Meaning if you bought 100 mylars, you could add the cost of one mylar and backing board.  Similarly you can add the slabbing and pressing fees.  Plus shipping, also on a fractional basis: FedEx it 25 slabs for $38 means you’d get to add 38/12 to your cost basis too.  You don’t have to prove what you paid… but as was the case here, if the IRS questions you, you’ll have to show a receipt.  If you can’t, they will say you paid nothing, unless your accountant is skilled at negotiating IRS audits.  

that’s for collectors.  If you are a dealer, operating as a business, the rules are different.  

It is up to 28% max, not 28% ... it's progressive at the regular tax brackets rates up to 28% max and then stops and then the 3.8 possibly.

[Aman619]

On 2/1/2022 at 12:58 AM, Monsters-n-heroes said:

It is up to 28% max, not 28% ... it's progressive at the regular tax brackets rates up to 28% max and then stops and then the 3.8 possibly.

sorry.  thats right... "up to 28%" I was looking at it from the perspective of good earning years, but yes, when your taxable income is low you pay lower capital Gains rates.  and you might also get a break on the 3.8% surcharge as that was aimed at high income individuals.

[fifties]

On 1/31/2022 at 9:44 PM, Professor K said:

I would hope. But I have a feeling that a lot of them are as for lack of a better word clueless as we are. And with respect I don't think there is a lot of mis info going on. We're just trying to figure it out. As far as what would satisfy them.......Anything less than claiming 50% profit without proof and we're pushing our luck. But yeah an accountant is the way to go from now on.

Your supposition of "Anything less than claiming 50% profit without proof and we're pushing our luck." is an example of what I mean by mis-information.  

In my particular case, I buy books to read them.  Now there have been books I've bought, read, and decided I didn't want to keep.  In doing so, disposition -ESP on eBay with their fees- has often as not been at a small loss, and that would be a write off.  In collectibles, every item is going to have a different eventual gain or loss, and a blanket assumption of a 50% gain is simply incorrect. 

My CPA has been doing my taxes for years, and I have a very complicated return.  Last year's was 68 pages.  I would definitely trust his expertise in advising me what I can and cannot get away with in claiming profit and loss in my comic book hobby.  This is what I mean in suggesting to let an expert in taxes figure it out.

[Professor K]

Ok. Well than let someone who sold 20K in comics tell the i r s they actually had a small loss with no proof to show it.

I have been agreeing and saying the best thing is to go to an accountant. I'm going to when the time comes. I hope you understand what I said about the 50% profit for people who have no records to back what they paid for what they sold is my opinion based on my experience with tax people. I'm not telling anyone what to do, only what is a safe thing to do. Because if we get too ambitious with our deductions  and can't back it up they can really affect our lives in a not so pleasant way. Start asking for proof of what we paid and if we don't have it then I guess they choose the numbers. You have an accountant so like you said let them figure it out. That's what everyone should do.

 

[fifties]

On 2/1/2022 at 2:21 AM, Professor K said:

Ok. Well than let someone who sold 20K in comics tell the i r s they actually had a small loss with no proof to show it.

I have been agreeing and saying the best thing is to go to an accountant. I'm going to when the time comes. I hope you understand what I said about the 50% profit for people who have no records to back what they paid for what they sold is my opinion based on my experience with tax people. I'm not telling anyone what to do, only what is a safe thing to do. Because if we get too ambitious with our deductions  and can't back it up they can really affect our lives in a not so pleasant way. Start asking for proof of what we paid and if we don't have it then I guess they choose the numbers. You have an accountant so like you said let them figure it out. That's what everyone should do.

 

A person's accountant will be able to determine what proof is necessary, and it doesn't matter the value, 20K in sales or whatever.  I think however that many sales throughout the year might qualify him as a dealer, and maybe subject to business rules AFA tax liability, which would include write offs.  Again, the purview of the tax accountant.

The 600 dollar threshold didn't begin until this year, BTW, so we all have a year to prepare for it, and make sure we record the cost basis on each book we sell.

 

[Ryan.]

On 2/1/2022 at 3:30 PM, fifties said:

The 600 dollar threshold didn't begin until this year

Not true for every state. 

[MrBedrock]

A much better option than dealing with accountants and taxes is dealing with a reputable comic dealer/collector who will make you a generously fair offer for your potential headaches.

Why endure stress and suffering? Contact Richard at Bedrock City (richard@bedrockcity.com) and offload all of your troubles!

Bedrock City - The comic shop that makes lives better!

[Aman619]

great offer. still doesn't answer the tax liability issues... unless you use bags of Texas Tea left by the side of the road as payment.  The best way to not pay ant taxes is to never sell!

[fifties]

On 2/1/2022 at 12:52 PM, Ryan. said:

Not true for every state. 

I was referring to the federal statute.  Most states usually follow that.

[MrBedrock]

On 2/1/2022 at 4:55 PM, Aman619 said:

great offer. still doesn't answer the tax liability issues... unless you use bags of Texas Tea left by the side of the road as payment.  The best way to not pay ant taxes is to never sell!

There is really no bigger waste of time than concocting a serious response to a stupid post.

[Professor K]

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

According to a learned boardie there were changes made to the tax code in 2018 such that one can no longer deduct any expenses other than the original cost of the comic unless you are filing as a business.  So that means no deducting slabbing costs, insurance, shipping, storage etc. if you are doing this all as a hobbyist.

I’m no expert at all, but given the money involved now it’s probably fairly naive for people to be winging it and not keeping actual receipts and records anymore.  The odds of a random audit are fairly low still but the pain inflicted if it happened to someone who wasn’t prepared could be pretty severe.

Id say if your collection is worth more than you make in a year, you should probably approach a professional for qualified advice.

Hey Hi. About deducting shipping. I believe you can because, well at least on e bay, they include the shipping as part of your gross on the 1099. I've deducted shipping on my return a few times. I put the going rate for a usps medium flat rate box x the number of sales. But trying to deduct grading, storage, bags/boards.......playing with fire there. 

[Aman619]

On 2/1/2022 at 8:12 PM, MrBedrock said:

There is really no bigger waste of time than concocting a serious response to a stupid post.

[MrBedrock]

On 2/1/2022 at 9:38 PM, Aman619 said:

[70s80sTimeMachine]

On 1/28/2022 at 4:50 PM, Beige said:

I'm going to ask a dumb question - so apologies in advance.

How do you 'cash-out' a crypto currency - ie swap coin based funds in your locked wallet for real cash?

It depends on what kind of platform you are using; are you positioned in a project, liquidity pair mining, staking etc. or are you just holding a sole position in say BTC similar as you would Apple stock. If it's in an actual wallet, as you allude to, whether it's hot or cold storage, you are going to have to move that crypto to a broker type entity in order to ultimately land in a USD cash position which can then be routed to your bank.

If you are putting your crypto to work whether your starting point is a wallet or broker account most likely you will have to implement multiple swaps through more than one liquidity provider/swapping source to get to your final destination. Four of the hottest networks right now for projects are Ethereum, Fantom, Polygon, and Avalanche. It's imperative whenever you move your crypto around to specify the proper network protocol. For instance if you send the wrong coin by not specifying or incorrectly specifying ERC20 that would be no bueno for you.

When you want to "cash-out" and if you're talking about something more mainstream i.e. BTC, LTC, ETH and it's just held with an actual broker account, you initiate a closing/selling trade no different than you would for a stock and the resultant would be USD cash.

If your crypto is somewhere else actively doing something then for the most part if you reverse the steps you did in the first place to get there, you should be good-to-go. Typically you can swap into a stable coin such as USDT or USDC if there are allot steps involved or the blockchain has allot of traffic or price volatility etc. then you just convert to out of the stable coin to USD cash and wire/ACH to your bank.  

[70s80sTimeMachine]

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

According to a learned boardie there were changes made to the tax code in 2018 such that one can no longer deduct any expenses other than the original cost of the comic unless you are filing as a business.  So that means no deducting slabbing costs, insurance, shipping, storage etc. if you are doing this all as a hobbyist.

I’m no expert at all, but given the money involved now it’s probably fairly naive for people to be winging it and not keeping actual receipts and records anymore.  The odds of a random audit are fairly low still but the pain inflicted if it happened to someone who wasn’t prepared could be pretty severe.

Id say if your collection is worth more than you make in a year, you should probably approach a professional for qualified advice.

We were just talking about all this in another forum. Anyone who is issued a 1099-K from PayPal, eBay etc. will have to file a Schedule C. Many don't realize it but essentially you have become a default sole proprietor in doing this. There are no special business licenses involved and you don't necessarily have to setup some complex corp structure, LLC, or the like.

As you mentioned above, anything classified as a hobby or filed under Schedule 1 no longer can get all of those deductions; only the Schedule C route gives you that ability. And if you are involved with higher dollar slabs and making some money, most likely you will not meet the burden of hobby criteria anyways. 

Edited February 2, 2022 by 70s80sTimeMachine

[70s80sTimeMachine]

On 1/24/2022 at 12:08 PM, sfcityduck said:

Interesting past week.

Stocks are down and Bitcoin is trending the same as stocks (except much worse).  Why?  Seems mostly due to a fear of inflation and speculator jitters.  So much for Bitcoin being a hedge against inflation! 

Net impact is that the Bitcoin crowd has lost a LOT money at the start of 2022.  Over $130 billion as of yesterday, and the fall continues (down another couple thousand dollars per Bitcoin today and overall down over 50% from highs).  Which sucks if you are a Bitcoin investor planning to cash in to pay taxes for last year's realized gains put into other uses - like comics.

I am super curious to see if this has an impact on the purported "new money" buyers who have come into the comic market the past year.  If these "new money" buyers are speculators, they may need to sell off to right their portfolios.

I remember hearing, and maybe someone here can confirm, that the MH Flash run sell-off bloodbath was initiated due to a downturn in the owner's real estate investments.  

Is the past an indicator of what will happen?  We'll see.  It may have no impact, or maybe there will be less crazy buyers (I'm looking at you $3.3M OA buyer), or maybe we'll see a relatively quick sell walk of shame.

Should be interesting.

 

Other than Bats and Supes, I have frankly not closely monitored the GA market. I am however super attached to BA and in the last 12-14 months several keys have doubled in price and are consistently selling at that high price point even presently with now increased supply getting dumped into the marketplace. Great example is ASM 252 CGC 9.8 still making higher highs.

I can understand say if you had a GA slab show up that perhaps you only get one shot in a year or more at; sure hammer price can go to the moon. But more consistently across the board, have you see this same kind of massive uptick price action in particular just the last 12 months as well?

Kind of reminds me of a blow-off top potential. This past week I bid on nearly 50 CL auctions all within the last ending 5 minutes; many I snipe attempted, across SA and BA and I only won 10. My bids were not terribly aggressive but by no means weak or thrill-seeking. And also I'm seeing quite a bit of 9.6 slabs now fetching what 9.8's were getting only 2-3 years ago. It's as if I'm in the twilight zone. 

 

[lou_fine]

On 2/1/2022 at 2:55 PM, Aman619 said:

The best way to not pay ant taxes is to never sell!

I believe this really depends on what country you are living in. 

Even though it has been mentioned many times before on these boards here, if you live in America, it sounds as though you can pass on to your heirs almost $12M worth of capital gains or pretty much over $23M if you are married once you kick the bucket and go to that big comic shop in the sky.  If true, this sounds like nothing more than a huge huge tax loophole for the regular taxpayers to take advantage of.  

Of course, if you live in that tax burdened frozen wasteland to the North (i.e. Canucklehead land) where all sporting athletes try to avoid, you can't escape the taxes even by dying.  Especially since you are deemed to have disposed of everything at fair market value upon your death and your estate will have to pay the capital gains taxes on absolutely every single little thing you own.  Of course, this is done just so the government can claim to the citizenry that unlike our poor neighbors to the south who are subject to an estate tax upon death, Canada has no estate taxes at all.      

Looks like the real fool proof legal way to pay no capital gains taxes at all is to move to a capital gains tax free country like Switzerland, New Zealand, Hong Kong, Singapore, etc. say upon your retirement.  

[Larryw7]

Stop selling, start trading.

[Shrevvy]

On 2/1/2022 at 11:58 PM, 70s80sTimeMachine said:

 

There is actually allot of benefits to filing Schedule C if you are actively buying and selling higher dollar value books on an annualized basis. The buy-side activity will actually provide gross sales/income reduction at the point of initial acquisition which results in lower tax liability and then going forward said liability is carried as an inventory asset holding. 

 

This is not correct. Buying inventory does not reduce taxable income. Cost of purchases get added to inventory and is charged against revenue once the product is sold. The Schedule C calculation might make it confusing as it looks like inventory is deducted. 

Example. Purchase one book for $100 and sell for $200. No begining inventory. Cost of Goods is $100 and gross profit is $100. Schedule C looks like this (ignoring labor and other costs):

Beg Inventory $0
Purchases +$100
This equates to Line 40 on Scedule C = $100

End Inventory $0 (because you sold the book) Line 41

Subtract Line 41 from Line 40 = $100

Cost of Goods is $100

Now assume you purchase two books each for $100 and sell one for $200. No begining inventory. Cost of Goods is still $100 and gross profit is still $100. Schedule C looks like this (ignoring labor and other costs):

Beg Inventory $0
Purchases +$200
This equates to Line 40 on Scedule C = $200

End Inventory $100 (you now have one book you paid $100) Line 41

Subtract Line 41 from Line 40 = $100

Cost of Goods is $100

Inventory purchases do not change cost of goods. The cost of inventory is only netted against sales once the product is sold.