Trading > selling and simple math

[ascendedbidoof]

@rgw151

When i trade my apple for a banana, how much of my banana do i need to give the irs?

At least two bites. If they take too big a bite they’ll spit some of it back into your hand around March.

[admiral]

@celestialdragon

If anyone in Australia is wondering:
www.ato.gov.au/business/starting-your-own-business/in-detail/online-selling—hobby-or-business-/

If your intent is to buy and sell for profit, you must declare the earnings.

If you have Pokemon cards as a hobby and decide to sell them, you don’t have to declare the earnings… but if you then start buying and selling your hobby products for profit, you then have to declare the earnings.

I’m on the fence in my case haha. I talk about reselling for profit, yet theres a chance I never will sell as I enjoy collecting.

I’ve never had to pay CGT on items I sold in Australia, even when I profited greatly and still reported the sale.

[mitty]

@pichufan

In the UK it doesn’t work like this sadly. If you sell a card you acquired for £5 for £10 you’re expected to pay taxes on the £5 you profited; likewise if you were to trade the same card you acquired for £5 for a card at that time valued at £10 you’d still need to pay tax on £5 - the transaction may not have been monetary but the item you acquired still has a monetary value.

Whether anyone in the UK would actually declare tax on items they traded is of course another thing, but certainly if the trade garnered enough attention (like the recent Illustrator/Charizard trade) it wouldn’t be surprising in the UK if you suddenly attracted the attention of HMRC.

kinda lame as it pressures you to sell the “asset”

[teamrocketcollector]

So… OP’s math is not 100% right. In the United States, long-term capital gains are 15%, so if you hold a card for 1 year or more, you’re good to go. It goes to 20% if you’re earning like $300k a year. There are some states that also have capital gains tax, so you’d have to look there. However, there are some states that don’t.

When it comes to trading cards, technically you have to pay tax, but it’s also about proving it. If two people get together and exchange cards, how will anyone know?

Here’s where it gets tricky, though… Let’s say you bought a card for $5,000. It increases to $10k. You trade it for another card worth $10k. You’re excited because of no taxes. But then you sell the card for $15k. In the eyes of the IRS, you have $15k in profit even though you technically spent $5,000 originally. If you’re paying 15% capital gains, it’s $4,500 on the $15k rather than $3,000 on the $10k ($15k-$5k).

This is where things can start to get really messy.

[justinmew]

Thanks for the information. This is all very interesting. I can not believe you can be taxed for trading/bartering Pokémon cards. You learn something new every day.

[surfnsnow]

@teamrocketcollector

So… OP’s math is not 100% right. In the United States, long-term capital gains are 15%, so if you hold a card for 1 year or more, you’re good to go. It goes to 20% if you’re earning like $300k a year. There are some states that also have capital gains tax, so you’d have to look there. However, there are some states that don’t.

When it comes to trading cards, technically you have to pay tax, but it’s also about proving it. If two people get together and exchange cards, how will anyone know?

Here’s where it gets tricky, though… Let’s say you bought a card for $5,000. It increases to $10k. You trade it for another card worth $10k. You’re excited because of no taxes. But then you sell the card for $15k. In the eyes of the IRS, you have $15k in profit even though you technically spent $5,000 originally. If you’re paying 15% capital gains, it’s $4,500 on the $15k rather than $3,000 on the $10k ($15k-$5k).

This is where things can start to get really messy.

The lower capital gains rate in the US doesn’t apply to collectables:
www.thetaxadviser.com/issues/2019/nov/taxation-collectibles.html

[teamrocketcollector]

@surfnsnow

@teamrocketcollector

So… OP’s math is not 100% right. In the United States, long-term capital gains are 15%, so if you hold a card for 1 year or more, you’re good to go. It goes to 20% if you’re earning like $300k a year. There are some states that also have capital gains tax, so you’d have to look there. However, there are some states that don’t.

When it comes to trading cards, technically you have to pay tax, but it’s also about proving it. If two people get together and exchange cards, how will anyone know?

Here’s where it gets tricky, though… Let’s say you bought a card for $5,000. It increases to $10k. You trade it for another card worth $10k. You’re excited because of no taxes. But then you sell the card for $15k. In the eyes of the IRS, you have $15k in profit even though you technically spent $5,000 originally. If you’re paying 15% capital gains, it’s $4,500 on the $15k rather than $3,000 on the $10k ($15k-$5k).

This is where things can start to get really messy.

The lower capital gains rate in the US doesn’t apply to collectables:
www.thetaxadviser.com/issues/2019/nov/taxation-collectibles.html

Welp! I was wrong and damn, that is absolutely insane!

[trevcatchem]

@rgw151

When i trade my apple for a banana, how much of my banana do i need to give the irs?

The entire banana.

[emba]

Lets be honest here, even if you were basically required to pay taxes for trading expensive items, literally no one would do it unless you’re running an actual larger scale business. Unlike selling, there won’t be any funds leaving/entering your bank account and no one is going to give a shit about it. If you think you would actually get in trouble for not reporting taxes for traded items then you’re delusional af

[gengaranimal]

I have always heard that the US Gov’t taxes collectible sales hard since they do not view these sales as contributing to the GDP. But with more and more individuals generating income this way–almost by necessity in my opinion as it concerns adults in their 20s and 30s and even 40s trying to get by–you can bet the Gov’t will be figuring out ways to capture unreported collectibles “income.” But with the decrease of traditional employment options with insurance, benefits and retirement offerings, the squeeze is definitely on. I believe it’s high time that with the middle class challenges today and the temptation to try and escape The Man to have any kind of quality of life, the Gov’t needs to incentivize the reporting of income generated by the currently unreported billions of dollars in side hustle wages. Continuing to try and disincentivize the sales of collectibles by hammering it through a high tax rate is antiquated thinking at best. Unless the Gov’t wishes to continue alienating and polarizing millions who will only become more resentful and oppositional to the idea of taxes both having a benefit to and being a collective responsibility of the average working US citizen, some policies need to seriously evolve.

Sorry for wandering off down this path–this particular subject always triggers my rant button.

[rgw151]

@trevcatchem

@rgw151

When i trade my apple for a banana, how much of my banana do i need to give the irs?

The entire banana.

land of the free, home of the burger. 'Merica

[politoed666]

@emba

Lets be honest here, even if you were basically required to pay taxes for trading expensive items, literally no one would do it unless you’re running an actual larger scale business. Unlike selling, there won’t be any funds leaving/entering your bank account and no one is going to give a shit about it. If you think you would actually get in trouble for not reporting taxes for traded items then you’re delusional af

Reiterating this. I’m not advocating for tax fraud in any form, but the IRS does not give a fuck if you pulled a Charizard when you were ten years old and traded it for some other pricey Pokémon card twenty years later. They do not know, and if they did know, they have much more pressing things to worry about.

If recent posts on Virbank are any indication, the Pokémon TCG community at large has a dramatically heightened notion of its own importance in the eyes of the IRS. If you sold a card for $10k (and especially if there’s a financial paper trail of the transaction via eBay, PayPal G&S, wire transfer, etc.), you should probably report it. But an increasing number of community members, many of whom have not been around very long, seem to be under the impression that everybody who has ever bought, sold, or traded a card needs to maintain and report a detailed ledger of every fucking transaction lest the alphabet boys come break down your door.

The chances of this happening are infinitesimally minuscule. Obviously, you should pay your taxes, but people need to stop fear mongering about the possibility of prosecution if some guy flips a few ETBs on Virbank and doesn’t report it. I’m not going to name names (if I did, I’d probably exceed the allotted word count in a comment), but there are innumerable small-time individual buyers/sellers/traders who don’t report anything to the IRS whatsoever and face no repercussions. Again, you should report your transactions as best you are able… but whenever this topic comes up, people lose credibility by failing to acknowledge the distinction between realistic outcomes and theoretically possible outcomes.

[davidspokemon]

@justinmew

For trades though, shouldn’t they be ideally of equivalent value? So there are no gains or losses. Again, not a cpa here. Do not want to encourage tax evasion.

Yes, but you’d have to prove it some how if the IRS audited you.

Collectibles tax rate is also different than capital gains tax rates.

Bottom line - taxes suck.

[mcorey777]

A few questions. When you buy a card two years ago how in the world do I even find a receipt or proof it was X amount of money?

Second question. If I send everything I’m selling to PWCC does that change anything? I get I’m still collecting money from the sales but i didn’t sell them myself. And again taxes were paid when I bought each and every card. As well as whenever they sell. Why should I pay a third time? Isn’t paying taxes twice on one card enough?

I might sound crummy for saying this but if the IRS wants any additional taxes from me it’s on the roof! They better get a very tall latter if they expect to get a additional dime from me!

[justinmew]

@mcorey777

A few questions. When you buy a card two years ago how in the world do I even find a receipt or proof it was X amount of money?

Second question. If I send everything I’m selling to PWCC does that change anything? I get I’m still collecting money from the sales but i didn’t sell them myself. And again taxes were paid when I bought each and every card. As well as whenever they sell. Why should I pay a third time? Isn’t paying taxes twice on one card enough?

I might sound crummy for saying this but if the IRS wants any additional taxes from me it’s on the roof! They better get a very tall latter if they expect to get a additional dime from me!

When you sell through eBay/pwcc, I don’t think that is government tax. That’s fees from eBay and from pwcc. You should only be taxed twice by the government, when you buy and sell (taxed on the gains). And yes it’s crazy. When people mention their sales and income from Pokémon, it’s really deceptive. When you add up sales tax, fees (shipping, eBay, PayPal, pwcc), Capital gains tax, the take home amount isn’t as much as it first seems. When you trade something, there is none of the above, but as others have said, technically bartering/trading is a taxable event too

[davidspokemon]

@mcorey777

A few questions. When you buy a card two years ago how in the world do I even find a receipt or proof it was X amount of money?

Second question. If I send everything I’m selling to PWCC does that change anything? I get I’m still collecting money from the sales but i didn’t sell them myself. And again taxes were paid when I bought each and every card. As well as whenever they sell. Why should I pay a third time? Isn’t paying taxes twice on one card enough?

I might sound crummy for saying this but if the IRS wants any additional taxes from me it’s on the roof! They better get a very tall latter if they expect to get a additional dime from me!

In terms of proof, you just need to keep accurate records. Maybe print off your winning bids.

Second, you’re confusing sales tax with collectibles income tax.

You pay sales tax when you buy the card, ebay collects sales tax from your buyer when you sell the card.

Then you report the gain on your income tax and pay the required amount at the end of the year. The tax on the gain can become complicated if you own a business, etc, but in it’s simplest you pay collectibles capital gains tax when you file you income taxes.

[pikazardcollector]

Let’s put trading back in trading cards!

[mcorey777]

I want to trade my modern ungraded secret rares for wotc graded cards of equal or less value but I’m guessing that would be quite difficult. So my plan is ideally to grade and sell all my modern to put that money into my graded wotc collection.