The Blues Lawyer explains new rules & regulations of buying and selling on reverb and other marketplaces.

They could hire 860,000 new IRS folks and they still couldn't put a dent in all the person-to-person transactions that happen. And if they find you made a profit they then could tax you what...on the piddly $65 profit? After they went thru the other 100 transactions where you didn't profit? Good luck with that.
 
SpiderWars said:
They could hire 860,000 new IRS folks and they still couldn't put a dent in all the person-to-person transactions that happen. And if they find you made a profit they then could tax you what...on the piddly $65 profit? After they went thru the other 100 transactions where you didn't profit? Good luck with that.
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That’s not how it works. The IRS will make you prove it wasn’t profit. Plus you can’t offset profits with losses. You pay tax on the gross profit and can’t deduct losses unless you are an actual business engaged in selling goods for profit. Most of us would be considered hobbyists.
 
mhenson42 said:
That’s not how it works. The IRS will make you prove it wasn’t profit. Plus you can’t offset profits with losses. You pay tax on the gross profit and can’t deduct losses unless you are an actual business engaged in selling goods for profit. Most of us would be considered hobbyists.
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This tax season people are going to be in for a rude awakening. I would want to have any stock in PayPal, eBay, or Reverb. I can’t see see this as sustainable. If you self 10k in gear even at a loss, I can’t see average people expecting that $1500 tax burden. Soon, all there will be is corporations.
 
mhenson42 said:
That’s not how it works. The IRS will make you prove it wasn’t profit. Plus you can’t offset profits with losses. You pay tax on the gross profit and can’t deduct losses unless you are an actual business engaged in selling goods for profit. Most of us would be considered hobbyists.
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That was exactly the point I was trying to make. There are hundreds if not thousands of transactions that do not make a profit yet still must be tracked as if they could have...then there is that one transaction where you made $65 profit. How much is the tax on that? That's my point...they would be looking for needles in haystacks only to nail you for $3.75 in unreported taxes. Hence my good luck with that. They have bigger fish to fry.
 
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scottosan said:
This tax season people are going to be in for a rude awakening. I would want to have any stock in PayPal, eBay, or Reverb. I can’t see see this as sustainable. If you self 10k in gear even at a loss, I can’t see average people expecting that $1500 tax burden. Soon, all there will be is corporations.
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If you sell gear at a loss, there is no tax due. You just have to be able to prove it was a loss if you get audited and they question the transactions.
 
SpiderWars said:
That was exactly the point I was trying to make. There are hundreds of not thousands of transactions that do not make a profit yet still must be tracked as if they could have been...then there is that one transaction where you made $65 profit. How much is the tax on that? That's my point...they would be looking for needles in haystacks only to nail you for $3.75 in unreported taxes. Hence my good luck with that. They have bigger fish to fry.
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It doesn’t take much work for them to ask you to provide documentation. If you can’t they can say you owe tax on all of it. The burden will be on the tax payer not the IRS
 
mhenson42 said:
It doesn’t take much work for them to ask you to provide documentation. If you can’t they can say you owe tax on all of it. The burden will be on the tax payer not the IRS
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And that's where I call shenanigans...they just don't ask you to provide documentation for everyday, random purchases that nobody keeps documentation on. And even if they did it's easily produced, legit or not. If somebody is moving lots of stuff for a profit that's different...but for 99.9% of us ham n eggers it's just a total non-issue.
 
mhenson42 said:
It doesn’t take much work for them to ask you to provide documentation. If you can’t they can say you owe tax on all of it. The burden will be on the tax payer not the IRS
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This, of course is only if you are audited. Audits only happen to a small percentage of the population. Very small. My understanding is they are going after the bigger fish who have underreported their taxed for years. Typically higher earners, the top 12 percent or less. Even by hiring the numbers they are trying to hire(good luck with that; they will experience what most other employers have for the past year) they won't be able to even come close to their goal.
 
Funk'n Metal said:
Use your favorite search engine and enter 1099k, Schedule C, Schedule D, and Form 8949. Hopefully that will put your minds at ease. This blues lawyer must have got his credentials from a cereal box. Not legal advice, but have been dealing with this a long time.
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Yeah, uninformed windbag.
 
SpiderWars said:
They could hire 860,000 new IRS folks and they still couldn't put a dent in all the person-to-person transactions that happen. And if they find you made a profit they then could tax you what...on the piddly $65 profit? After they went thru the other 100 transactions where you didn't profit? Good luck with that.
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once CASH is removed from the equation though, game over. and we appear to be getting there quickly. you know folks are doing more and more, in-person CL deals... using PP, Venmo, apple pay, etc.... it's quick, it's easy, no worries with handling that disease riddled fabric that is cash. :LOL:
 
Racerxrated said:
This, of course is only if you are audited. Audits only happen to a small percentage of the population. Very small. My understanding is they are going after the bigger fish who have underreported their taxed for years. Typically higher earners, the top 12 percent or less. Even by hiring the numbers they are trying to hire(good luck with that; they will experience what most other employers have for the past year) they won't be able to even come close to their goal.
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They'll have all that funding pulled before they even get to try.
 
scottosan said:
that’s not what I gathered from that at all. If you are a private party you cannot deduct a personal purchase at all.l, and you are taxed on the selling price. The receipts would only be applicable for legitimate businesses.
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I am not disputing thats what this guy is saying. But I am just in disbelief that you are taxed on the total selling price and not profit/loss. I dont sell online at all but going by this guy, if your a regular flipper your going to be killed in taxes. Thats why I asked if anyone has dealt with the IRS on this. Its a little extreme if thats the case,
 
phil b said:
I am not disputing thats what this guy is saying. But I am just in disbelief that you are taxed on the total selling price and not profit/loss. I dont sell online at all but going by this guy, if your a regular flipper your going to be killed in taxes. Thats why I asked if anyone has dealt with the IRS on this. Its a little extreme if thats the case,
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This is the 1st year they did this, so no one has had to deal with it yet. Not even the IRS.
 
While I do feel all of this 1099 nonsense is completely ridiculous on fed's part I don't think those who sell something every now and again are going to have to worry much. It'll likely be the gear flippers who do a lot of transactions or for a living with large profits that would need to be concerned.

While the IRS in all accounts would end up being able to go after you for that $10.63 you owe them on the pedal you sold I highly doubt that would be on their radar. They don't even have the proper resources and funding to go after the big fish.
 
creep66 said:
Based on our accountant, we can show cost and pay tax on the profits.
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That’s not a solution for people that typically use the standard deduction. It’s not just a matter of deducting the cost of the item sold as related to the 1099. In order to do that you’ll have to opt to do itemized deductions for your entire filing and not take the standard deduction. That is my most recent understanding
 
scottosan said:
That’s not a solution for people that typically use the standard deduction. It’s not just a matter of deducting the cost of the item sold as related to the 1099. In order to do that you’ll have to opt to do itemized deductions for your entire filing and not take the standard deduction. That is my most recent understanding
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I’m a CPA… but consult your own tax advisor😉….That’s not how it will work. Much like when you sell stock, you’ll likely have to put in proceeds and cost basis. If there’s a gain, then you pay tax on the gain. It’s not going to be gross income and then itemize cost basis/expenses. Never in the history of the federal income tax have you paid tax on proceeds that were less than your cost basis
 
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