This is one of the things I’m most interested to see play-out over the next 5 years or so.
The fundamentals of vintage are obviously so much more solid than modern, yet the eBay sold listings for 9 and 10-graded modern chase cards paint a very clear picture - the demand is there, even at price points that aren’t too shy of mint wotc in some cases. As we know the pricing of mint graded modern makes no sense comparative to mint graded wotc considering age & rarity, and ‘high demand’ being the remaining stand-alone fundamental makes for a volatile and risky market longer term. Although due to the funny nature of people and emotion, good/bad fundamentals are no guarantee of performance - so let’s see what happens.
@josh B When I was buying modern singles I had a very good understanding of the market. But when I watch videos by top 10 Pokemon on YouTube I’m completely stunned at the modern PSA 10 prices! I’ve thought this for years now. I currently don’t have any modern anymore but I’ll sure say I’m glad I bought those singles when I did. I tripled my money or most on the Rainbow rares I bought in most cases except random unpopular ones that never performed. Thought about doing it again but I’m a collector not a seller. I only sold them because I spent more money on graded Wotc cards as well as what I spend out of my checks. But ya the logic makes no sense especially the booster boxes. Like how are people really paying $700 plus for sets like Evolutions which was probably one of the most printed sets ever created available at $100 a box or less forever until recently
One fundamental modern has going for it: much, much more people are able to partake in the creation of an “artificial scarcity” by never having to sell. We have a millionaire elite that grew up on this stuff, LGS-owners turned wealthy hobby tycoons, kids turned high-income adults, pseudo distributors, crypto, outside investors, an entire branch of wealth created through Covid alone, etc etc etc. There is so much more money in this hobby on every level.
Extreme speculation and hoarding is only different from scarcity if it differs in practice, and I’m not sure it will ever get to that long-term because if things “go bad”, those hoards are more likely to swiftly shift from many low-fry speculators to a few high-end speculators that can afford to sit on them almost irrespective of climate. There may be an opportunity somewhere in there as the transition happens (if it does, of course), but that period could be short-lived.
Now, this possible scenario doesn’t really create an investment opportunity for the masses, because it is all about volume. You create a permanent, fixed inflation at the expense of stifling long-term explosive growth. It’s an ancient maneuver.
This automatic $600 1099 change isn’t going to have a “pokemon go up” nor “pokemon go down” effect.
Some people won’t see any effect until they get that surprise 1099 in January 2023 and then they’ll scramble. Some people will get their shit sorted and do things properly now likely to their benefit if they do it well. Some people will continue to skirt the law through cash, crypto, trades, ff xfers, or just in plain sight and not file the paperwork or pay the taxes lol.
The biggest impact the new tax law of automatic 1099s will have is on freshly released sealed product. There will be little incentive to scalp/flip anymore since it is so easy to quickly hit $600 in sales.
The second biggest impact is collectors selling off their doubles or cards they don’t want. If someone has $1,000 of doubles to sell, why wouldn’t they just sell $500 this year and $500 next year? Since this is spaced out, you might not see as much quantity available on the market for singles.
This won’t impact high end cards that are valued over $5,000. I think it will impact a $1,000 card, because now someone might just hold onto it since they would pay 20%-30% taxes on it if they sold it.
Another being the fact that our tax system has marginal brackets. So the rate applied to your last dollar earned is not the same as your first and you, myself, and someone like Elon Musk all pay the same marginal tax rate on our first dollar earned (after standard or itemized deductions), but we obviously pay a very different marginal rate on our last dollar earned.
@butchdawg32 had that awesome video on taxes where he looked at a Pokemon “side hustle” with a static $50k/year main job which would have had all the income of the Pokemon hobby within the same fixed marginal bracket. If however you had no primary income or had a much higher income you’d have to apply potentially very different rates to your Pokemon earnings.
And also no… except for very specific and uncommon subsidy/benefit cliffs a raise will never make you make less money due to rolling into a higher tax bracket. I heard that so much in Corporate America lol.
Really a disservice the lack of financial education in highschool, it is always sad to hear about people not taking raises because they think they’ll lose money… On the topic though, I imagine smaller sellers may not pay much attention since ebay will provide them the form as usual and it seems like a lot of effort to keep meticulous records to calculate what “net” means when some of these cards are from years ago etc. Maybe it’ll push more of those small sellers to less regulated sites off ebay
Has anyone mentioned getting a resellers certificate to be exempt from sales tax? Might be a good idea to limit taxes where possible with this new threshold for reporting.
This doesn’t limit your taxes, all it does is shift your cost burden. For example if I buy a product for $100 and pay 10% sales tax, my cost burden is $110. If I sell it for $200 I owe taxes on $90.
If I don’t pay the initial sales tax, my cost burden is $100 and my profit (taxed) is $100. Depending on your income taxes and sales tax % this is unlikely to have a huge impact
I am not a tax professional.
If you’re buying to resell you should be doing this anyways. This is what I mean when I say some people would benefit if they just did things above board.
If you’re just looking to buy sales tax exempt as a discount for your collecting and don’t plan to file anything for taxes on resale profits that’s a bad idea.
Exactly! My hypothetical was taking what I felt was a common situation for many new sellers (working a regular W2 job and selling extras as a side hustle). Tax rates could vary significantly depending on location, income, filing status, and more. For example, you could theoretically be paying up to 65% on profits if you lived in California and were in the highest income brackets: 37% federal, 13% state, and 15% self-employment tax.
I think Dan is right though, this new reporting process will affect everyone different. New sellers or small sellers who aren’t reporting gains or tracking expenses seem to be in the most “danger,” whereas most experienced sellers are mostly unaffected.
@butchdawg32 , @shadowrex , @diogonen , @surgenius , @gottaketchumall , @eeveeteam , @thevenusaurgarden, @mcorey777, all great points. Ironically, I intended more of a discussion of market impact, but ya’ know, we do deal with money a lot… Specifically, The point about everybody’s first dollar and lack of fiscal education in the US, ooof! Laying on that truth so thick, we might gain weight!
I wonder how much we’ll hear about sellers blind-sided next April when they have +30% in taxes due… It’s going to be another interesting year, ladies and gentlemen. Perhaps the seller exodus will be delayed until afterward.
As others have said, the rules have not changed, only the threshold for automatic reporting.
Side rant:
My biggest problem with the new $600 ceiling is that it is easy for the average person to exceed it when they sell old junk around the house for a net loss. Yet, if one doesn’t have receipts for 20 year old items they may be forced to pay taxes on something they are actually losing money on.
For instance, last year I sold several of my old video game consoles and games for well over $600 total. However, all of that was sold for a huge loss. Unlike Pokemon, most of my things have not appreciated. An Xbox console was worth $300 when it came out, but I don’t think I got more than $100 when I sold mine last year. According to the new reporting threshold, if I were to sell it now I’d actually have to pay taxes on that $100 since I no longer have the 20 year old receipt. Obviously I did not report that $100 sale on my taxes last year, because I know I actually lost $200 on the item, even though I can’t prove it.
I’m not sure what relevance this has to Pokemon, since most things have appreciated quite well over the years. I guess someone who bought an expensive card in 2020 without proper documentation might find them self in a tough spot trying to prove cost basis if they sell said card on eBay this year. They might lose money on the card and still pay taxes. It sucks, but it reinforces the importance of good record keeping.
I’ll go ahead and make a macro speculation: some sellers pre-emptively leave this year out of fear, significantly more rage-quit next year out of frustration (after receiving a 1099-K), and even more continue to ignore their tax obligations despite receiving a 1099-K (gambling with the IRS).
Even more speculative: I think this may be one of several factors contributing to a market reversal next year (it takes time). Right now, the market is saturated with graded cards, market sentiment is significantly down, many sellers are competing to liquidate, new supply is restricted by high grading prices, and a significant amount of smaller/newer sellers will be disincentivized by unexpected losses and tax obligations. This feels A LOT like 2017 to me after the market corrected after the 20th Anniversary and Pokemon Go. Shortly after, there was a consolidation period, and then the market was back to steady/healthy growth (until 2020). Again, 100% speculation on my part, but these types of trends have precedent.
I think most accountants (and the IRS) would accept a fair market value estimate on the original cost of personal items being sold at a loss . . . especially like an X-Box, where MSRP is widely documented. That’s my understanding anyway.
I see, that’s good to know. I admit I have a very limited understanding of tax laws. It’s why we have professionals that help us deal with this stuff. The good thing is we are at least talking about it. A lot of people are going to be in for a surprise when they get their first 1099 in 2023. I hope it has no affect on the hobby, but it’s reasonable to expect it could discourage some of the more casual participants (even though it really shouldn’t).
If you are purchasing with the intent to sell at a later date. You are purchasing for resale. If you purchase for resale, you shouldn’t be paying sales tax. Sales tax is meant to be paid by the end consumer. When big box stores buy a pallet of toys from a wholesaler with the intent to resell the pallet on their shelves or online. They do not pay sales tax on those items, the end consumer pays sales on the item. Think about how many times a card changes hands and is needlessly charged sales tax because each person is essentially reselling the item.
TLDR; pay $0 more in taxes than you’re legally obligated to after talking to your tax professional. I run things by 2 of them sometimes.
I asked my tax attorney this a few years ago, and he gave me an answer similar to what your said, Classics. Again, one should check with a tax preparer, or attorney, I certainly will ask mine again.
I’ve been watching some videos from the oct-feb hype of 2021… man i am glad things have fallen back down to earth at the current moment. The fact this thread is relatively dead means things have levelled off and people are buying items they want without too much worry and anxiety about price point. It’s been really nice buying cards at prices that if they tank 50% again, it wont kill me or I wont care that much.
I wonder how the hype guys and “investors” are doing from the hype craze.