Tax question regarding selling my entire collection

[SouthSideSluggers]

If you intended it to be a hobby and not a business then you really don't have to worry about claiming the sales amounts on your taxes. Now if you wanted to start your own business and wanted to deduct all of the necessary items needed to make the sales (internet costs, shipping costs, supplies, boxes etc) then you would have to file a 1040 C ( Sole Proprioter business owner) and you can deduct your losses, and even your listing fees, depreciation etc for your items...Since its most likely a hobby that results in some additional sales ( that you already paid taxes on when purchased) you will be fine. Also don't forget that if you donate cards to charity or hospitals these can be tax deductions when filing. Hope this makes sense and helps

 

[tommyfro21]

If you intended it to be a hobby and not a business then you really don't have to worry about claiming the sales amounts on your taxes. Now if you wanted to start your own business and wanted to deduct all of the necessary items needed to make the sales (internet costs, shipping costs, supplies, boxes etc) then you would have to file a 1040 C ( Sole Proprioter business owner) and you can deduct your losses, and even your listing fees, depreciation etc for your items...Since its most likely a hobby that results in some additional sales ( that you already paid taxes on when purchased) you will be fine. Also don't forget that if you donate cards to charity or hospitals these can be tax deductions when filing. Hope this makes sense and helps

I bought most of my cards off of eBay or here. Tax has not technically been charged on those purchases.

I plan on talking to a tax person at some point just to make sure I am doing everything legally, but I find this all to be interesting because everyone has a different view as what is the proper thing to do. Not saying this negative toward you at all, just making an observation of the overall thread.

Whenever I look at tax articles and such online, they basically say if you make money, then you have to claim it. If someone made handbags out of placemats and you made a profit, even though the person mainly did it for fun, they would still have to pay taxes on profit. Wouldn't that apply here? Even if I was collecting for fun, I made profit.

Granted over the last couple years, I will probably break even after selling everything, why would I not need to pay taxes if I made $5-6K this year from selling my collection? That would seem like a sizable amount the IRS would want to know about...

 

[Roy Birchler]

The IRS is trying to force Ebay to report sellers who sell over a certain amount. Ebay has been fighting it, not sure where they stand right now.

 

[JoshHamilton]

You'd be taxed on capital gains, for collectibles I believe the rate is 28% or 31%

 

[tommyfro21]

You'd be taxed on capital gains, for collectibles I believe the rate is 28% or 31%

Based on whatever profit I made, after deducting what I paid for it originally, correct, no matter how long ago?

 

[JoshHamilton]

You'd be taxed on capital gains, for collectibles I believe the rate is 28% or 31%

Based on whatever profit I made, after deducting what I paid for it originally, correct, no matter how long ago?

Yup

 

[pujolsthomefan33]

As I understand it right now, you are really only required to charge sales tax as a business with "in State" Purchases for ebay. Unless it is your full time job and you have kept a complete record of all your purchases, receipts, sales, etc, there is no need to file what you buy/sell on ebay, especially since recently, you were really doing it as a hobby.

As far as selling off baseball card collections and filing taxes......think of it this way.....do you plan on paying taxes for money you make at a garage sale????

Basically the same thing. Above statements are correct that you would have to show 3 years worth of bookeeping etc. More than likely you are talking about a very minimum amount that you may owe on taxes. You probably spend thousands over the last few years building up your collection, and you are saying you could get close to 8K, even if you made $2K in profit, you are talking about $200 max in taxes.....I think even if you take the moral high ground, you are safe in not having to pay taxes.....

 

[tonsofcommons]

I have claimed cards and ebay sales as a business for the last 5 years and I have yet to show a profit.

There are so many deductions that are available if you just look.

For the OP, it is too late for many of those expenses from previous years.

The problem is the fact that you have never claimed it as a business before, so you will have to bring in a beginning inventory number for 2009 and you should talk to a CPA to figure out what your beginning inventory was at 1/1/09.

At the end of 2009, you will theoretically have 0 inventory.

So, you will take your inventory at 1/1/09, add any purchase for 2009, and subtract your ending inventory. This will be your cost of goods sold.

To find your Net profit, you will take your sales, minus your costs of goods sold.

Then, you take into account all of your expenses: internet, computer (Capital asset), mileage (this is a big one), supplies, ebay fees, paypal fees, etc.

Mileage is my big expense every year. Every trip to walmart you buy cards, keep track of the mileage; every card show you go to, keep track of the mileage; every trip to the post office, keep track of the mileage.

You subtract this from your Net profit to get your gross profit, which then goes to the front page of your tax return.

If you show a profit, you will pay self employment taxes on that amount, which you definately don't want to do. This will amount to alot more than you would think (15.3% of the Gross profit from any Schedule C Business)

Again, this is just some "stranger on a message board" but you will definately want to talk to a CPA about what you should do.

Whatever you do, good luck.

PS- Many of you are confusing Sales tax and Income tax. Though you may not charge sales tax on anything you sell on ebay, you should be claiming those sales on Income taxes.

And if you set up a garage sale frequent enough, and the government finds out, they will tax it. It has happened before.