mhenson42":cr04v049 said:
Moshaholic":cr04v049 said:
mhenson42":cr04v049 said:
Just keep contemporaneous documentation of your cost basis.
GEEZ LOUISE!!!
In freaking ENGLISH man, I'm just a humble software systems architect, not an MBA...
....in other words, keep your receipts.
Request receipts from people you buy stuff from.....Or keep a log that details all of the important information about a buy/sell transaction as of the date of the transcation.
If you can't get a receipt, just do one of the following to evidence your "tax cost basis" as the bean counters call it:
1.) Print off a copy of the PayPal payment confirmation evidencing who you paid the money to and how much. If shipping costs were included in your payment/transfer amount, just make a note on the printout of how much the shipping was of the total. Your "cost basis" is the total payment/transfer amount LESS the shipping cost;
2.) Print off a copy of emails evidencing what the sale price was. Same comments re: shipping costs in (1.) above apply here;
3.) Print off a copy of the eBay listing or RT (or other forum) listing showing the sale price of the item.
It's THAT easy.
As for any taxable gain, it can be calculated as follows:
Sale price of the item you sold
Less: Cost of shipping included in the sale price above
= Net cash received from sale
Purchase price of item you sold (as evidenced from the documentation outlined in points (1) to (3) above)
Less: Cost of shipping that was included in the purchase price
= Net cost basis of your item
Your gain is then:
Net cash received from sale (calculated above)
Less: Net cost basis of your item (calculated above)
= Gain (or loss)
If you have a gain, it's taxable. If you have a loss, it can be applied against other gains you might be reporting on your tax return from similar transactions. In this way, you could theoretically reduce your taxable gain(s) to zero. For example.....
Let's pretend you sell a Bogner XTC for $1,000, and you had paid $1,200 for it. You have a loss on disposition of $200.
In the same year, you sell a Gorilla for $1,300 that you had paid $1,000 for. You have a gain of $300 on disposition.
You can net the $200 loss against the $300 gain, resulting in a net taxable gain of $100 on your tax return. Make sense?
Now, we could get into the intracacies of the application of Depreciation/Capital Cost Allowance on your cost bases, but that is a discussion for a different thread (and likely a different audience!
)
Granted, the above discussion is based on Canadian Tax Law, but I believe U.S. tax laws are identical or otherwise very consistent in this area.
Good luck!
