I’m thinking the trend is going to be cash and f&f payments 
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That is not true for collectibles unfortunately unless you are in the highest bracket
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To me, I might pull out from selling on ebay due to this. I get too much anxiety from the risk of the IRS. Going forward I might just sell in person and meet at a local police station to do the deal. I would even be willing to sell for less than ebay price since I don’t have to pay the 15% in transaction fees to feebay and feepal. Thankfully, I live in a huge metro area with lots of other collectors in the community.
For online, if you aren’t willing to do cryptocurrency, then I’m not interested.
Well if this does not start until 2022 then this is going to be a BIG year for sellers. A lot of people are going to get caught with their pants down. Imagine you are not fully aware of the new rule and you sell thousands in cards, then suddenly you get that tax form and you have NO money because you spent it already acquiring MORE cards. Ooof…
A good strategy is to save 25% of all sales from now on for tax purposes just to be safe. No one wants to owe money they do not have… that would suck.
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Bigger problem is the records requirement. You need to have support for all the deductions you’re going to take on schedule C. That’s why this is more pain in the A… than people imagine. If you get audited the auditor is going to disallow all of your schedule C deductions then you need to provide support for it. If you don’t have support then you’re basically screwed.
Most people start off as collectors and then only consider selling later on but the problem is how many collectors are keeping records of what they paid for their cards? Imagine spending tens of thousands buying PSA cards and you can’t deduct the cost you paid for those cards because lack of support for the cost basis.
This also might discourage people from investing in pokemon TCG to begin with because of the tax implications will be a pain in the A… to deal with. Easier to just invest in stocks since everything is being recorded by your stock broker.
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@pikachuisbestpokemon, I don’t think you can deduct period unless it counts as a business and not many of us utilize collecting as a business.
“Beginning in 2018, the IRS doesn’t allow you to deduct hobby expenses from hobby income. you must claim all hobby income and are not permitted to reduce that income by any expenses.”
Am I wrong? SO you just get straight taxed unless you deal with people in person or have paypal ff. Everyone that uses eBay better make sure they hold onto 25% of their sales now, or they will be VERY annoyed at tax time.
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You can still deduct the purchase price even if you’re a collector. The collectible’s tax is based on the gain (selling price - what you paid for the item). If you’re operating more as a business (flipper?) then you’re taxed on your profit and everything you use in the business that is directly linked to your sales can be deducted as a business expense. You can even deduct mileage driving to/from the post office to mail your packages.
My previous comments were mainly in regards to the documentation requirements which I think most collectors won’t have. So if you ever get audited then you’ll be in for a bind and hope the auditor gives you mercy for the amounts you’re deducting.
@pikachuisbestpokemon , So I can sell a card for 100 bucks on Tuesday and buy a card for 100 bucks on Wednesday and deduct the purchase so to not pay taxes? 100-100 = 0 gain OR sell multiple cards over a month for 1k, then buy a 1k card the following month, so 1k-1k = 0 gain?
OR are you talking about just the actual card you sell? Most of my cards that I sell have been in my possession for a long time, so deducting the original price makes no sense. Ideally, I would prefer to do what I stated above. Deduct purchases made using the money from sales even if the cards are different.
Where do the purchases get noted at tax time and to be clear I do not need to have a business to be able to do this?
The point is that as long as I keep collecting, I do not owe taxes for my sales?
I’ve never sold any personal belongings of this value but if I want to sell about 30,000$ worth of cards then buy 30,000$ of different cards. For tax purchases as long as I include the invoices from eBay I’ll have a net zero and won’t have to owe taxes right?
I spoke with my accountant and he said that is incorrect, but also that he has never had a client dealing with the sale of cards before…
The cards have a cost basis, so you need to be taxed for the gains. For example, if you buy stock at 100 per share and it rises to 200 per share and you sell the stock to then buy another stock for 200 per share, you must still pay the tax on that initial sale.
His immediate advice to me? Set aside 30% of each sale made, which sucks since I only want to replace one card for another. In person deals and trades would be most ideal it seems. You can deduct the cost to grade and cost basis, but for any card held a long time it would be close to zero. I’m not a professional so I could be wrong about something here of course. Tax law sucks…
+crypto
technically, the accountant is right, as the gain can be attributed to the exact item, but i don’t think everyone is tracking everything to the nth degree, so i think assassin’s way does capture it in a simple way that us joes can track more easily…
technically, this needs to be $30,000 net profit on the cards sold. you can take the cost of selling the goods and deduct from your gross sales receipt. If you check the Schedule C from IRS, you can see some simple formulas and what qualifies as those expenses. whatever paypal repots on 1099 is not really what you would be taxed on.
I don’t know if anyone has mentioned this, but on the bright side, this change might discourage scalpers. There may be less scalping due to taxes, and hopefully more product in the shelves.
Another possibility is scalpers may raise their prices to accommodate the new taxes, but I don’t think this will happen because there is a limit to how much over msrp people are willing to pay for a product.
What new taxes? Isn’t this only reporting?
You Americans love complaining about having to pay taxes on things you already had to pay taxes on. Don’t you guys love roads and the Fire Department?
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Lol that’s true. There are no new taxes, just a change in reporting. But you think scalpers are doing things by the book?