If i sell a $4000 amp on Ebay/Reverb do i gotta pay IRS ?

  • Thread starter Thread starter Samhain
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Depends on if you turned a profit on it. If you sell something for equal value or at a loss then you aren't obligated to pay income taxes on the sale. If you sell something for more than you paid for it you are technically supposed to pay capital gains taxes on the profit. So the people listing JP2Cs on reverb for $6000 right now would be obligated to pay taxes on that extra $3000-$4000 they're pulling in.
 
You’re obligated to claim it on your taxes and then write a schedule C as a write off if you didn’t make money on it. You’ll have to have proof of value that can stand in court because if you do this and get audited, you’ll need proof like an original purchase receipt.

I was pre-taxed for state involving my bogner XTC, but will have to claim it to match reverbs filing of a 1099 to the government. I’ll have to put my metroplex on my taxes when PayPal files their taxes as well so that everything matches and I pay appropriate taxes since the seller wouldn’t use gift and wanted the 2.9% protection.

Let’s make one thing clear - you are legally required to file taxes, especially If the platform you use makes money off of your transaction - IE - PayPal 2.9%. If you use PayPal gift, then technically it’s a gift, and not subject to taxes. However it will still show on the transaction history filed to the government by PayPal. I wouldn’t risk the audit for tax evasion. Just file it and write it off.

All of these changes happened in 2018 when a bill was passed. There was a dude on these forums that forgot to claim a gear purchase on his taxes and was fined $5,000 after auditing. I’m going to pay the taxes on my high dollar amps because that’s the right thing to do.
 
Iceman8.6 said:
How does it work if you sale something you've had for 30 or more years? Can't remember what something costs and no receipts.
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Reverb has an average sale price tool that you can use - it shows average sold prices for various gear. Since it’s actual transaction prices, it would stand in court.
 
What about used gear? I bought a Mark III red stripe recently and replaced the broken pilot lamp, replaced all the filter caps, did the 2nd volume mod for R2, and put in a new reverb tank.

I should turn a nice profit when selling but how the fuck would anyone be able to calculate the details???
 
DanTravis62 said:
I'm sure you're supposed to.


But nope, government can go fuck themselves.
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Then I hope you’re paying cash for every single transaction for guitar gear because the second you use reverb, eBay, or PayPal, they are filing their own 1099s. Yours has to match.
 
Tax is based on the gain, not the proceeds. As stated above, you better be able to substantiate your cost basis if you get audited.
 
mhenson42 said:
Tax is based on the gain, not the proceeds. As stated above, you better be able to substantiate your cost basis if you get audited.
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Unless you’re buying and then you’re not even free from state taxes:
  • Vermont, Massachusetts, Virginia, Maryland: $600 USD in gross payment volume from sales of goods or services in a single calendar year regardless of the number of transactions;
  • Illinois: $1,000 USD in gross payment volume of goods or services in a single calendar year with at least 4 payment transactions processed.
People like to complain of PayPal gift these days but they’re only limiting their buyer market. I only used non gift on my metroplex because of the rarity. I won’t even bother otherwise unless seller is paying state tax overhead since I live in the shit state of MD with a $600 annual purchase limit.

If you think you’re excluded think again, starting in 2022, Biden plans to make these individual state rules apply to all states at the federal level.
 
glpg80 said:
Unless you’re buying and then you’re not even free from state taxes:
  • Vermont, Massachusetts, Virginia, Maryland: $600 USD in gross payment volume from sales of goods or services in a single calendar year regardless of the number of transactions;
  • Illinois: $1,000 USD in gross payment volume of goods or services in a single calendar year with at least 4 payment transactions processed.
People like to complain of PayPal gift these days but they’re only limiting their buyer market. I only used non gift on my metroplex because of the rarity. I won’t even bother otherwise unless seller is paying state tax overhead since I live in the shit state of MD with a $600 annual purchase limit.

If you think you’re excluded think again, starting in 2022, Biden plans to make these individual state rules apply to all states at the federal level.
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Yes. I was speaking from a sellers stand point. But unless you live in a zero sales tax state, you owe tax (sales or use) on any purchase (unless exempted) regardless of where you buy it. Whether a state can enforce a use tax on me buying something from Utah or wherever is another matter.

Interestingly enough, Texas has a sales tax exemption for the purchase of gear used in the production of audio recordings that are for sale or public display. So it's very easy to meet that standard if you want to avoid sales taxes here.
 
glpg80 said:
You’re obligated to claim it on your taxes and then write a schedule C as a write off if you didn’t make money on it. You’ll have to have proof of value that can stand in court because if you do this and get audited, you’ll need proof like an original purchase receipt.
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This is what I do as well. I actually pay LESS tax by claiming all of it. If you report it as income, you can also report related costs/expenses, and you can carry depreciation over multiple years. My CPA charged me maybe $120 for the additional form and time, but last year it reduced my adjusted income by about $5K. This seems like a better way to hold onto more of my money than by doing things under the radar.

We have a local sound engineer who furnishes and runs production for a couple of the main bars/clubs in town. Not his primary job, just something he does on weekends for cash. He ended up getting audited, and part of that included (or stemmed from) the discovery that he'd talked openly on Facebook about not reporting the income, which then made it a criminal matter and not just fines and back taxes. He's someone who's booked most weekends of the year, so probably larger sums of money than what we're seeing in gear sales, but still a bad idea to brag in plain view about engaging in criminal misconduct.
 
Scumback Speakers said:
Is PP Gift not reported for income by PayPal, Dave? As a business, it's not an option so I don't know.
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I'm not Dave but I stayed at a HIE last night.

Gifts are not taxable or reportable on any tax return, provided the gift is less than $15,000 in any one tax year. But I would suggest you get a letter from the donor as a "just in case I'm audited" measure.
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glpg80 said:
It’s not legally reported for income since gifts are considered friends/family, not sales/services rendered, and are therefore excluded. Although this is my experience, I’m not a tax professional.
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This is the key. Friends and Family. Only way to go if you can, imo.
 
DanTravis62 said:
It's USED GEAR FFS ?

Do you pay tax at a garage sale? This crap is ridiculous. The government has NO RIGHT to tax resale of used items. None.
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“Internal Revenue Code (IRC) Section 6050W states that all US payment processors are required by the Internal Revenue Service (IRS) to provide information to the IRS about certain customers who receive payments for the sale of goods or services…”

Paypal, reverb, eBay, Zelle, Venmo, etc.

There are stipulations but not everyone is free and there are state level controls as discussed above as well.

Cash is king.
 
DanTravis62 said:
It's USED GEAR FFS ?

Do you pay tax at a garage sale? This crap is ridiculous. The government has NO RIGHT to tax resale of used items. None.
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The problem is the PLATFORM that is used to sell….they are taking a cut if it’s Reverb/EBay so they are reporting YOUR sale to the government (state, federal) because your sale dictates their business income. If you use PP gift, on a forum sale you should be fine. But it’s when we use eBay or Scamverb that we get reported to the government.
Here, Craigslist, or FB groups you should be safe.
 
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