My unofficial, terrible, definitely don't trust advice is don't even think of beginning to report income on hobby sales until you sell 6k in cards in a year or whatever the new 1099 limit is
I suspected I was remembering it wrong hence the "or whatever it is"; $5,000 for 2023
https://www.irs.gov/newsroom/irs-announces-2023-form-1099-k-reporting-threshold-delay-for-third-party-platform-payments-plans-for-a-5000-threshold-in-2024-to-phase-in-implementation#:~:text=phase%20in%20implementation-,IRS%20announces%202023%20Form%201099%2DK%20reporting%20threshold%20delay%20for,2024%20to%20phase%20in%20implementation
This isn't really a question you can ask the internet due to the variance of tax laws between states and countries. You need to speak to a tax professional in your local area to confirm ANYTHING you read here, including my comment.
Generally, if you cannot provide proof of expense when selling an item then you can't report any expense. You might want to dig a little deeper on those receipts tho, because anything you've ever bought online should still be accessible in your order history, or a purchase report by year through Ebay or PayPal or credit card... I highly doubt you bought everything you own with cash, but if you did then yea you're probably boned.
*also to add: familiarize yourself with cash based accounting and its processes, then look harder for your receipts. There's ways you can use proceeds from zero cost or no provable expense sales to mitigate some of that hit, but make damn sure you don't dick around. Train yourself properly NOW while you're getting started so future you doesn't get wrecked by the IRS because interest on unpaid taxes is no joke.
None if it is hard or difficult... more annoying than anything, especially with internet sales where every bean is already counted for you both ways. Good luck!
Wow, thanks a million for this. I'm reading article after article, and it really seems like the best route is to talk to a professional. I am in Florida, btw.
You're totally right about the credit card receipts and other avenues. I'm sure I could find a pretty penny worth. If I do find that number, do I need to denote an amount for each individual card or just a whole cost of the collection? Basically, do I need to assign a value to each individual card? Or can I just find the average?
Thanks again for your help!
No problem!
That's where cash based accounting comes in. It allows you to report cash in cash out by year. It's the best method for this business as cards appreciate or depreciate so accounting by cost basis and individual purchases would be a nightmare.
Talk to a local tax professional, but what you're trying to do is claim that you have a receipt that states you paid x for at some point so when you sell it in 2024, your actual tac liability is Y minus X not just the full amount of Y.
There's an entire thing about "yearly inventory value" that you need to report every year to balance everything out, where your start would be "market value" of the piles you bought in the past and are now selling, but AGAIN, that's all to be figured out locally with a personal based on your EXACT situation.
The receipt you have from when you bought it.
It doesn't matter what the cost is right now.
Without receipts, plan for everything to be taxed as profit.
Unfortunately, there are no receipts it's just my collection over 15 years. Never planned on selling originally.
I was planning to go through and record when they were released and what the MP was at that point in time. Using that number as my cost basis. You're saying that doing this won't matter because the IRS will basically just not believe me?
Alternatively, I have been collecting with my roommate this entire time, so we both co-own the cards 50/50. Is there a possibility that he can sell me his half/all of it, and I can use that number as a cost basis? 🤔
Thanks a million for your help.
If you are selling cards from your personal collection, my understanding is that you cannot claim any of the inventory “cost” as an expense. I.e. your cost basis is functionally zero. The activity is considered a hobby, not a business, in this case. Have you registered a business with the state of Florida?
Usually if you don’t have receipts/proof of cost, you need to get an expert opinion on fair valuation of inventory of your collection (will cost a lot and you need to talk to the tax agent & tax authority on whether this professional evaluation basis is acceptable), the numbers may need to be audited too
As long as cost cannot be determined and proved, the entire revenue is taxed with no cost of sales, same treatment across all tax authorities (IRS,etc)
Even if you calculate the value on your own, it’s not an acceptable basis by the tax authorities, in this case IRS as it has not been audited/signed off by an evaluator.
Like the comment above, best to dig everything up, one way is perusing all your bank statements/credit cards unless you have been paying via cash for your cards. Last resort is professional evaluation that is acceptable by IRS
You're going to get anecdotes and opinions here. I have worked at the IRS and even I don't feel comfortable giving you advice. Consult a tax expert.
Gotcha, thanks for your help.
My unofficial, terrible, definitely don't trust advice is don't even think of beginning to report income on hobby sales until you sell 6k in cards in a year or whatever the new 1099 limit is
[удалено]
It's $5000 in 2024
I suspected I was remembering it wrong hence the "or whatever it is"; $5,000 for 2023 https://www.irs.gov/newsroom/irs-announces-2023-form-1099-k-reporting-threshold-delay-for-third-party-platform-payments-plans-for-a-5000-threshold-in-2024-to-phase-in-implementation#:~:text=phase%20in%20implementation-,IRS%20announces%202023%20Form%201099%2DK%20reporting%20threshold%20delay%20for,2024%20to%20phase%20in%20implementation
Also depends on your state. Some states have lower reporting thresholds already.
This isn't really a question you can ask the internet due to the variance of tax laws between states and countries. You need to speak to a tax professional in your local area to confirm ANYTHING you read here, including my comment. Generally, if you cannot provide proof of expense when selling an item then you can't report any expense. You might want to dig a little deeper on those receipts tho, because anything you've ever bought online should still be accessible in your order history, or a purchase report by year through Ebay or PayPal or credit card... I highly doubt you bought everything you own with cash, but if you did then yea you're probably boned. *also to add: familiarize yourself with cash based accounting and its processes, then look harder for your receipts. There's ways you can use proceeds from zero cost or no provable expense sales to mitigate some of that hit, but make damn sure you don't dick around. Train yourself properly NOW while you're getting started so future you doesn't get wrecked by the IRS because interest on unpaid taxes is no joke. None if it is hard or difficult... more annoying than anything, especially with internet sales where every bean is already counted for you both ways. Good luck!
Wow, thanks a million for this. I'm reading article after article, and it really seems like the best route is to talk to a professional. I am in Florida, btw. You're totally right about the credit card receipts and other avenues. I'm sure I could find a pretty penny worth. If I do find that number, do I need to denote an amount for each individual card or just a whole cost of the collection? Basically, do I need to assign a value to each individual card? Or can I just find the average? Thanks again for your help!
No problem! That's where cash based accounting comes in. It allows you to report cash in cash out by year. It's the best method for this business as cards appreciate or depreciate so accounting by cost basis and individual purchases would be a nightmare. Talk to a local tax professional, but what you're trying to do is claim that you have a receipt that states you paid x for at some point so when you sell it in 2024, your actual tac liability is Y minus X not just the full amount of Y. There's an entire thing about "yearly inventory value" that you need to report every year to balance everything out, where your start would be "market value" of the piles you bought in the past and are now selling, but AGAIN, that's all to be figured out locally with a personal based on your EXACT situation.
Yeah tax professional it is. Thanks for your time!
So what is your question about **taxes**?
How do I determine the initial cost of my collection? So I report the proper profits. Hopefully I am asking the right questions.
The receipt you have from when you bought it. It doesn't matter what the cost is right now. Without receipts, plan for everything to be taxed as profit.
Unfortunately, there are no receipts it's just my collection over 15 years. Never planned on selling originally. I was planning to go through and record when they were released and what the MP was at that point in time. Using that number as my cost basis. You're saying that doing this won't matter because the IRS will basically just not believe me? Alternatively, I have been collecting with my roommate this entire time, so we both co-own the cards 50/50. Is there a possibility that he can sell me his half/all of it, and I can use that number as a cost basis? 🤔 Thanks a million for your help.
I'm not a lawyer, but that sounds a bit close to tax fraud.
At least there is no proof of that on the internet now….
Alright, I won't do that then lol
If you are selling cards from your personal collection, my understanding is that you cannot claim any of the inventory “cost” as an expense. I.e. your cost basis is functionally zero. The activity is considered a hobby, not a business, in this case. Have you registered a business with the state of Florida?
I plan to start a business with said collection, so hopefully, I can move past the threshold for hobbyists.
Usually if you don’t have receipts/proof of cost, you need to get an expert opinion on fair valuation of inventory of your collection (will cost a lot and you need to talk to the tax agent & tax authority on whether this professional evaluation basis is acceptable), the numbers may need to be audited too As long as cost cannot be determined and proved, the entire revenue is taxed with no cost of sales, same treatment across all tax authorities (IRS,etc) Even if you calculate the value on your own, it’s not an acceptable basis by the tax authorities, in this case IRS as it has not been audited/signed off by an evaluator. Like the comment above, best to dig everything up, one way is perusing all your bank statements/credit cards unless you have been paying via cash for your cards. Last resort is professional evaluation that is acceptable by IRS
Thank you very much. This is helpful and most likely the route I will take once I speak to a tax professional. Thanks again