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In Reply to: RE: Are you sure about tax treatment ? posted by Ross on July 10, 2017 at 19:42:58
Not so. If you sell personal items for less than you paid for them, no tax is due. However, if you sell for more than you paid, then you should report it as a capital gain on a collectible, taxed at your ordinary rate with a cap of 28%. You would report these sales on Part II of Form 8949, with Box F checked.
For a hired seller, how eBay works is irrelevant. He would report his total revenue, but the amounts paid out to the actual owners of the records would be treated as the cost of goods on his Sched C.
Follow Ups:
I looked into this. If you make sales consistent with and incidental to a hobby interest and eBay sales don't grossly exceed purchases in a given year, it is extremely unlikely that you would be regarded as behaving criminally. You can Google around and find what constitutes a "business" versus a "hobby" to the IRS but it's all gray area.
If your proposed sales DO greatly exceed your purchases, the right thing to do would be to declare profit as schedule (?), other income. So be sure to have good enough bookkeeping to show the profit after expenses as accurately and low as possible, that you can whip out smartly in an audit.
In any case, eBay does not does not issue 1099 tax forms to sellers, nor does it report seller's sales figures to the IRS. So no eBay sales by themselves will trip any flag with the IRS and they'd have to catch it in an audit. (You *know* if you're doing stuff that will trip a flag with the IRS and get you audited!-- The downside is that some secret percentage of audits are random and you might face one regardless.)
ebay may not send you a 1099K but paypal or other third party processors will.
the threshold is $20,000 AND 200 transactions.
dave
;-)
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