Possible new tax law?

[Gusturd]

Originally Posted by earlywynnfan

So are you saying a used car dealership should pay taxes because those cars are only sold once or twice? But a card reseller shouldn't because cards are resold often??

Just trying to make sense of your post.

Pretty much yes. A car is a regulated and licensed product that is "used" by each purchaser and exacts a toll on the community...requiring infrastructure, pollution, drunk drivers...or worse yet texting teenage drivers. It makes sense to me it would be taxed differently than a 2.5" x 3.5" piece of cardboard that just sits there and changes hands 50 times or more in it's lifetime.

[earlywynnfan]

Originally Posted by Gusturd

Pretty much yes. A car is a regulated and licensed product that is "used" by each purchaser and exacts a toll on the community...requiring infrastructure, pollution, drunk drivers...or worse yet texting teenage drivers. It makes sense to me it would be taxed differently than a 2.5" x 3.5" piece of cardboard that just sits there and changes hands 50 times or more in it's lifetime.

So the person working full or part time selling a regulated, licensed product should pay taxes, but not a person working full or part time selling baseball cards?

[Gusturd]

I think you've gone off target. We're talking about sales tax. The person selling doesn't pay the sales tax, the person buying does.

[NiceDocter]

Anyone want to buy my used Radar Detector from 1975? X and K bands.... guaranteed to let you beat Smokey 75% of the time !

[MooseDog]

I'm not taking a position here, but sales taxes are generally a tax on a financial transaction, not on an individual item. So it doesn't matter how many times a particular item has been bought or sold, it's the act of the sale that triggers the sales tax.

Originally Posted by OldSchoolBaseball

Yes, I agree pay your taxes on your net earnings.

What I have never understood is why something needs to be taxed more than once (sales tax). If its new, yes, tax it initially. But when its resold and resold and resold again (like cards on ebay), sales tax should be excluded because that item was already taxed. This is always a complaint of antique store owners.

sales tax rant....sorry

[MooseDog]

The way it works in California is that the person holding the valid reseller permit (the merchant in most cases) is "...responsible for collecting...sales tax..."

A merchant may by all means NOT charge a customer a sales tax but is still liable to remit the tax on that transaction to the taxing authority, so in a sense the merchant selling can sometimes end up paying the tax.

Originally Posted by Gusturd

I think you've gone off target. We're talking about sales tax. The person selling doesn't pay the sales tax, the person buying does.

[Tabe]

Originally Posted by h2oya311

To clarify, I simply won’t sell on Net54 using PayPal goods again. PayPal f/f is fine. And the guy asking for the refund did everything right. I thought I did everything right. PayPal just wouldn’t refund the PayPal fees from using goods when I made the refund. I was dumbfounded.

What? I've refunded several times things that were paid by goods and never got charged fees. You have to use the "refund" option inside the original transaction to do it but the fees are always removed. Unless the buyer paid by F&F, in which case you'd have to send F&F back to do the refund with no fees.

[ajjohnsonsoxfan]

Originally Posted by Tabe

What? I've refunded several times things that were paid by goods and never got charged fees. You have to use the "refund" option inside the original transaction to do it but the fees are always removed. Unless the buyer paid by F&F, in which case you'd have to send F&F back to do the refund with no fees.

That's a new Paypal policy within the last year or so. They don't refund the paypal fees (roughly 3%) on refunds

[thatkidfromjerrymaguire]

I do have a serious question about this that I've seen asked on other threads and other boards but never I've seen a clear and concise answer...and usually it turns in to arguments.

Precursor: I have a very simple tax situation currently and I file my taxes with the Standard Deduction (i.e. I don't itemize).

Question: If I buy a baseball card for $1000, then I sell that card for $1500, should I report and pay tax on the $1500 transaction, or do I just report and pay tax on the $500 profit (and ensure I have documentation for my purchase price).

Remember, my taxes are simple and I have no interest in filing as business, incorporating, etc. I just want to comply with the tax laws in the easiest way possible.

[sb1]

You would pay 28% on the gain($500) as a collectible sale. You may also pay 3.8% more as part of the Obama Care Act depending on your AGI.

[thatkidfromjerrymaguire]

Originally Posted by sb1

You would pay 28% on the gain($500) as a collectible sale. You may also pay 3.8% more as part of the Obama Care Act depending on your AGI.

Appreciate the answer, thanks!

[todeen]

Originally Posted by Gusturd

How many collectors have an accountant to keep track of their baseball card purchases?

My wife reminds me about every dollar I spend on cards!

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[glynparson]

Originally Posted by h2oya311

No, that’s to avoid the 3%+ in PayPal transaction fees. Has nothing to do with taxes. And to my chagrin, the last time I let a Net54 buyer pay with regular PayPal, he requested a refund when the card wasn’t to his satisfaction. No problem I think. I am a man of my word and my reputation is far more important than money. Well, it’s a problem when I don’t get refunded the 3% PayPal fee on the sale of those goods. Never again.

Carry on.

The only difference is you are cheating a private company where if you lie on your taxes you are cheating the government. Either way you are a cheat.

[h2oya311]

Originally Posted by glynparson

The only difference is you are cheating a private company where if you lie on your taxes you are cheating the government. Either way you are a cheat.

Thanks Glyn. I love you man. You are truly the most interesting man in the world.

[birdman42]

Originally Posted by sb1

You would pay 28% on the gain($500) as a collectible sale. You may also pay 3.8% more as part of the Obama Care Act depending on your AGI.

No, collectibles are taxed *at most* at 28% (if you've had the item for more than a year). Anything you hold for less than a year is taxed at ordinary income rates. Whatever your marginal bracket is, that's the tax rate on the gain.

Collectibles have their own special treatment. Ordinary capital gains get taxed at 0, 15, or 20% depending on the rest of your tax situation. Gains on collectibles are taxed as ordinary income, with a cap of 28%. So if your total situation leaves you in the 12% tax bracket, your tax on the gain is 12%. If you're in the 32% marginal bracket or higher, then your tax is 28%.

Pre-1987 the max rate on all capital gains was 28%. The Taxpayer Relief Act of 1997 reduced the max rate on most capital gains to 20%, but left the top rate on collectibles at 28%.

Another way in which collectible gains are different is that typically you can't net your gains against your losses. (You usually can if you're actively buying and selling.) You sell two blocks of stock, one with a gain of $500 and one with a loss of $500, you net the two and no tax is due. But if you sell a card for a $500 gain and another for a $500 loss, you still owe tax on the $500 gain.

Disclaimer--I don't see many collectible sales in my tax work. But I am a total tax nerd, and I enjoy wandering off into the weeds of the tax code.

Bill

[68Hawk]

Originally Posted by birdman42

No, collectibles are taxed *at most* at 28% (if you've had the item for more than a year). Anything you hold for less than a year is taxed at ordinary income rates. Whatever your marginal bracket is, that's the tax rate on the gain.

Collectibles have their own special treatment. Ordinary capital gains get taxed at 0, 15, or 20% depending on the rest of your tax situation. Gains on collectibles are taxed as ordinary income, with a cap of 28%. So if your total situation leaves you in the 12% tax bracket, your tax on the gain is 12%. If you're in the 32% marginal bracket or higher, then your tax is 28%.

Pre-1987 the max rate on all capital gains was 28%. The Taxpayer Relief Act of 1997 reduced the max rate on most capital gains to 20%, but left the top rate on collectibles at 28%.

Another way in which collectible gains are different is that typically you can't net your gains against your losses. (You usually can if you're actively buying and selling.) You sell two blocks of stock, one with a gain of $500 and one with a loss of $500, you net the two and no tax is due. But if you sell a card for a $500 gain and another for a $500 loss, you still owe tax on the $500 gain.

Disclaimer--I don't see many collectible sales in my tax work. But I am a total tax nerd, and I enjoy wandering off into the weeds of the tax code.

Bill

Appreciate your response, that's the clearest I've ever had the tax on collectables explained.

[Gusturd]

Originally Posted by birdman42

No, collectibles are taxed *at most* at 28% (if you've had the item for more than a year). Anything you hold for less than a year is taxed at ordinary income rates. Whatever your marginal bracket is, that's the tax rate on the gain.

Collectibles have their own special treatment. Ordinary capital gains get taxed at 0, 15, or 20% depending on the rest of your tax situation. Gains on collectibles are taxed as ordinary income, with a cap of 28%. So if your total situation leaves you in the 12% tax bracket, your tax on the gain is 12%. If you're in the 32% marginal bracket or higher, then your tax is 28%.

Pre-1987 the max rate on all capital gains was 28%. The Taxpayer Relief Act of 1997 reduced the max rate on most capital gains to 20%, but left the top rate on collectibles at 28%.

Another way in which collectible gains are different is that typically you can't net your gains against your losses. (You usually can if you're actively buying and selling.) You sell two blocks of stock, one with a gain of $500 and one with a loss of $500, you net the two and no tax is due. But if you sell a card for a $500 gain and another for a $500 loss, you still owe tax on the $500 gain.

Disclaimer--I don't see many collectible sales in my tax work. But I am a total tax nerd, and I enjoy wandering off into the weeds of the tax code.

Bill

This is helpful but what does this mean for the collector? Should all collectors become businesses so they can deduct expenses/losses on the cards they sell?

[mmier118]

Originally Posted by birdman42

No, collectibles are taxed *at most* at 28% (if you've had the item for more than a year). Anything you hold for less than a year is taxed at ordinary income rates. Whatever your marginal bracket is, that's the tax rate on the gain.

Collectibles have their own special treatment. Ordinary capital gains get taxed at 0, 15, or 20% depending on the rest of your tax situation. Gains on collectibles are taxed as ordinary income, with a cap of 28%. So if your total situation leaves you in the 12% tax bracket, your tax on the gain is 12%. If you're in the 32% marginal bracket or higher, then your tax is 28%.

Pre-1987 the max rate on all capital gains was 28%. The Taxpayer Relief Act of 1997 reduced the max rate on most capital gains to 20%, but left the top rate on collectibles at 28%.

Another way in which collectible gains are different is that typically you can't net your gains against your losses. (You usually can if you're actively buying and selling.) You sell two blocks of stock, one with a gain of $500 and one with a loss of $500, you net the two and no tax is due. But if you sell a card for a $500 gain and another for a $500 loss, you still owe tax on the $500 gain.

Disclaimer--I don't see many collectible sales in my tax work. But I am a total tax nerd, and I enjoy wandering off into the weeds of the tax code.

Bill

Can I deduct the cost of goods sold, eBay fees, sales tax collected, shipping etc. if I just take the standard deduction and don’t itemize? To me it seems like eBay will send me a 1099 with all those included and I will owe income tax on the whole amount since I am a hobbyist not a business. Is that correct?

[topcat61]

Ebay has been inconsistent in their sales tax collection since the start and people have complained about it for years. In fact the only reason why ebay collects sales tax is because the Supreme Court overturned their 1992 decision to allow internet business who don't have a physical presence in the state to collect on their behalf.

It's not that I don't trust ebay (I don't), but I'd like a complete break down on these taxes and "applicable fees" with an audit.

Is ebay including the shipping charge as a part of the overall sale and basing the amount of tax on that? I'm not a fan of ebay for all sorts of reasons and they're not the most transparent company to do business with.

[Directly]

Does PayPal send out 1099's ?-say a buyer pays $100,000 for products through their system--

[bnorth]

Originally Posted by Directly

Does PayPal send out 1099's ?-say a buyer pays $100,000 for products through their system--

A 1099 is for a seller.

[Directly]

FYI--I was informed the new reporting 600.00 in sales law doesn't go into effect until next year (2022)

[swarmee]

Originally Posted by topcat61

Is ebay including the shipping charge as a part of the overall sale and basing the amount of tax on that? I'm not a fan of ebay for all sorts of reasons and they're not the most transparent company to do business with.

If you find the right screen in eBay's seller pages, they do have a breakdown chart of shipping/fees/etc vs. the straight sale price of the item. It's in one of the blowout tax threads. If I find the instructions to get to it, I'll update this post.

[IronHorse2130]

Originally Posted by Directly

FYI--I was informed the new reporting 600.00 in sales law doesn't go into effect until next year (2022)

I took a look at that part of the bill and it wasn't clear to me if it takes effect in 2022, meaning people will first receive a 1099 in 2023 or in 2022 for sales that took place in 2021.

[jayshum]

It's been a long time since I signed up for eBay or PayPal so I don't remember, but I don't think I had to give them my social security number to get an account. Also, I have only sold a few things on eBay so maybe it's different for large volume sellers, but how can either eBay or PayPal submit any tax information to the IRS about sales someone makes without a social security number to submit it under?

[thecatspajamas]

By the end of the year, eBay will require most if not all sellers to enroll in Managed Payments, which requires their social to be provided for enrollment, so it will be a moot point for eBay. I would imagine other selling platforms though will require their sellers to provide whatever information is necessary for them to remain federally compliant as a condition of continued use of their platform as a seller. I see a lot of TOS revisions coming.

[I Only Smoke 4 the Cards]

Originally Posted by Rich Klein

I will also point out that Brick and Mortar stores (of all types) have complained about this disadvantage and the supreme court decision helped to level that field as well. So for 99 percent of the stores in all fields, this does level the field a bit.



Regards

Rich

Agreed. Support your local shops!

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