If i sell a $4000 amp on Ebay/Reverb do i gotta pay IRS ?

[RedB4Black]

Wait what?
So we have to pay taxes on stuff we buy, used or new, and then pay taxes again when we sell over $600 worth, or prove that we didn't make a profit? Is this right?

Yes. But technically this is nothing new. There's now just a mechanism with which they can enforce it.

If you find a $100 on the ground, you technically have to report that on your taxes as income...but there's really no way the IRS could enforce the reporting of that income - so noone would ever report it.

 

[Donnie B.]

If you find a $100 on the ground, you technically have to report that on your taxes as income.

Yup.

If I buy gear from anyone on this forum, I WILL NOT request any formal paperwork to submit along with my 2021 taxes.


Just want to get that out there up front.

 

[Candiria]

Yup.

If I buy gear from anyone on this forum, I WILL NOT request any formal paperwork to submit along with my 2021 taxes.


Just want to get that out there up front.

The problem is sending money through PayPal will get reported, unless the friends/family option remains exempt. We're going to have to use bank wires or USPS checks ($1,000 at a time).

 

[Donnie B.]

The problem is sending money through PayPal will get reported, unless the friends/family option remains exempt. We're going to have to use bank wires or USPS checks ($1,000 at a time).

Western Union has a no questions asked $2,500 transaction limit with a 4% fee.

 

[Scumback Speakers]

In my case, what I paid and what I sold something for is pretty well documented since a lot of it is insured...and I have the accountant from hell who makes me save PDF files, receipts, credit card statements and statements of anything I buy of value with a scanner, then saved as a PDF file.

As a guy who's had four audits, two trips to Federal Tax Court and won all of them, I've learned the hard way to have excellent documentation.

Trust me, the IRS saw a pile of receipts for business expenses from me in 2004 in a box. The field agent groaned, and asked me why I didn't just bring in Visa, Amex and MC statements?

I replied "Because I know once you guys see that you'll want the receipts to support those charges, and I'm cutting to the chase and making you earn your paycheck."

15 minutes later (with a disgusted look on their face) they declared that there was "no change". But it still cost me $3500 to have my accountant sit with the IRS field agent to make sure they didn't fuck up the audit reconsideration paperwork. The whole thing took about 18 hours, at $200 per hour to watch the IRS.

So yeah...PayPal Gift...that'd be a whole new way for me to fund my accountant's next vacation! No thanks.

 

[Philo Beddoe]

Wait what?
So we have to pay taxes on stuff we buy, used or new, and then pay taxes again when we sell over $600 worth, or prove that we didn't make a profit? Is this right?

Go here and read..but essentially.. yes..

https://www.cnbc.com/2021/03/26/its...g-the-irs-about-income-from-online-sales.html
I have a feeling a whole lot more USPS money orders will be flowing thru the mail system next year..

Forums/Craiglist might see a bump too..

 

[glpg80]

If you think you’re excluded think again, starting in 2022, Biden plans to make these individual state rules apply to all states at the federal level

Phil is right. I already mentioned this on post 12 back on page 1.

 

[scottosan]

Wait what?
So we have to pay taxes on stuff we buy, used or new, and then pay taxes again when we sell over $600 worth, or prove that we didn't make a profit? Is this right?

It’s really my meant when you are making a profit. Most hobbyists are usually selling for what they paid or even taking a loss.

 

[Iceman8.6]

It’s really my meant when you are making a profit. Most hobbyists are usually selling for what they paid or even taking a loss.

But don't you have to prove you are taking a loss or coming out even via actual receipts?

 

[AxeFiend]

Then I hope you’re paying cash for every single transaction for guitar gear because the second you use reverb, eBay, or PayPal, they are filing their own 1099s. Yours has to match.

Lmao

 

[scottosan]

But don't you have to prove you are taking a loss or coming out even via actual receipts?

Keep a pic of the Craigslist or marketplace ad.

 

[AxeFiend]

I'm sure you're supposed to.


But nope, government can go fuck themselves.

That's funny. I actually did laugh. I just don't think it would be as funny in court. It wouldn't hit the same, as the kids say. We all know the Govt. doesn't specialize in "f"ing themselves. Do you know what they are good at? Collecting taxes in court. Prob best to get that teen angst out at home and file the write off or pay cash like these people are telling you to. It's much easier than fines, garnished pay or jail time. You don't want to be the guy in the slammer who is there because you didn't pay uncle Sammy. Especially if your celly is a gang banger.

 

[Candiria]

But don't you have to prove you are taking a loss or coming out even via actual receipts?

No because it doesn't matter unless you have a business. The majority of us won't have what qualifies as a business under IRS scrutiny, so there are no expenses to consider. Meaning you get taxed on the earnings with no deduction for expenses. Unless they changed guidelines for a business as well.

These are the characteristics of a business according to the IRS:

Whether you carry on the activity in a businesslike manner and maintain complete and accurate books and records.

Whether you have personal motives in carrying on the activity.

Whether the time and effort you put into the activity indicate you intend to make it profitable.

Whether you depend on income from the activity for your livelihood.

Whether your losses are due to circumstances beyond your control (or are normal in the startup phase of your type of business).

Whether you or your advisors have the knowledge needed to carry on the activity as a successful business.

Whether you were successful in making a profit in similar activities in the past.

Whether the activity makes a profit in some years and how much profit it makes.

Whether you can expect to make a future profit from the appreciation of the assets used in the activity.