New Proposed Threshold for Sales is $600 instead of $20k

General
21

I would love to see like-kind exchanges brought back for collectibles, or at least collectible cards. They were removed in the 2017 tax act. With the revenue trading cards have been bringing in for card companies and the associated auction houses and online markets, I am surprised they don’t have a bigger presence on K Street.

www.irs.gov/newsroom/the-treasury-department-and-irs-issue-final-regulations-regarding-like-kind-exchanges-of-real-property

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22

So… stimulus bill now requires PayPal to report any yearly sales over $600? This could be a huge pain if accurate.

www.youtube.com/watch?v=6XrZ_dqUj40

23

Yep. There’s a big thread on efour about it somewhere. At least people have until end of the year to figure it out

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24

www.elitefourum.com/t/new-proposed-threshold-for-sales-is-600-instead-of-20k/32043/1

25

How is it a huge pain? Isn’t it easier because they will do all the paperwork reporting for you?

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26

Thanks missed that

27

All they do is send your total sales figure directly to the IRS. You have to know the cost basis of everything you sell.

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28

@admiral,

It’s a ‘huge pain’ because now THEY are watching us and going to take all our golden shekels we have been hiding under the the bedroom floor board. I don’t need PIMP daddy GOVERMENT! I just want to make my own moneys, it doesn’t matter I’m willing to give 15% to EBAY (; 0% for you PIMP daddy GOVERMENT!

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29

I’m not from USA so I’m kinda clueless about this, but isn’t managed payments system going to be a mandatory for (almost) all sellers on ebay sooner or later?

Does your regular bank accounts also automatically report taxes after a certain threshold like paypal does, since that will be the only way you will be receiving payments from ebay? Receiving payments with paypal won’t be an option at all once you’ve moved to managed payments.

30

I’ve merged these two threads on this topic

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31

Regarding option 2, do grading fees count towards cost basis when determining capital gains? I don’t operate a business, but I have sent in a ton of cards to PSA to be graded.

A lot of them are from my childhood collection. Those raw cards have a cost basis of $0, but I’m hoping that when I do eventually sell them I can subtract the cost of grading and only pay taxes on the remainder.

I also opened a ton of booster packs and sent in cards to be graded. How does one figure out cost basis on that? Do you divide the cost of the pack by 10? A pack of 10 cards for $5 → $0.50 cost basis per card? The whole thing seems so arbitrary, I have no clue how you guys do this lol. I’m not complaining, I always knew I’d have to pay taxes on this side venture when the cards come back and I sell. I just don’t understand how people actually do accounting on these things.

Maybe I should just consider everything a business, and treat grading fees and pack acquisition costs as business expenses. I’ll be selling hundreds of cards in 2021/22 when the cards are returned, so maybe tracking business expenses makes the most sense. Meh, I guess I’ll need to consult a professional.

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32

The entity required to send you a 1099-K is the one who actually processes the payments. Before eBay managed payments, Paypal was the payment processor, so they were the ones who would report your sales to the IRS. With eBay managed payments, eBay is now the payment processor, so they are the ones who have to report sales to the IRS and send you the 1099-K tax form.

As far as I know, the only tax form you should receive from your bank (in the U.S.) is a 1099-K for interest income, which is usually negligible.

33

christ I hate these threads (not @op, @the CPAs in the replies)

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34

Yeah, so the same rule applies to all payment processors over there, makes sense but I never put any thoughts into it.

Where I live no one will babysit you and report them on your behalf after a certain threshold, it’s everyone’s own responsibility. Actual banks might file a report if there are massive amounts of money coming to your account on a regular basis if they are suspecting money laundering, but that’s pretty much it. Paypal won’t report anything no matter how many sales you do.

35

You’re supposed to report income regardless of receiving the 1099-K so technically it shouldn’t make a difference, but I’m guessing most people don’t report unless forced to.

36

I know what you mean, but it’s important to talk about these things. It’s a sign that the hobby is becoming more established. We shouldn’t ignore tax planning and there is another thread about estate planning (what will happen to your collection when you die). These are all things people regularly talk about in art and more established hobbies.

37

Can’t say I really understand all this, but I am now wondering, should I be doing something with to my taxes in regards to my collection? Easily spent $3000+ last year

38

This thread is regarding the sale of cards and taxes due on the profit/gains.

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39

I assume the new regulation only applies to transactions starting from 1/1/2022, can anybody confirm that?

40

Note that Captial Gains tax decreases if you’ve held the card for more than a year as it’s then considered a “long term” investment. Wondering what’s the trend for the hobby - Capital Gains or Business?