Subject:
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Re: Brickshops and Taxes???
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Newsgroups:
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lugnet.market.brickshops
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Date:
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Wed, 9 Apr 2003 03:25:03 GMT
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Viewed:
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1457 times
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In lugnet.market.brickshops, Ray Silva writes:
> they key word there is "profits" and that does not mean that if you buy
> something for $1 and sell it for $2, you made $1 in profit....the rules of
> accounting allow you to deduct a lot of stuff if you are running a
> business....such as the gas to drive the car to get you to the store to buy
> the item, etc. the computer you bought to browse the internet and sell your
> items over the internet MAY be deductible too.
Sure, I mean I can write off all kinds of stuff. But what does money earned
from something like this qualify as? Capital gains? Wages and tips? Other
income on Schedule SE?
I guess, I'd like to hear how other people are handling this. If you don't
do anything, that's a valid response as far as I'm concerned.
I think for the great majority of people who run shops on bricklink and
ebay, they probably don't consider it a business or anything needing proper
accounting. My shop does not have a Federal tax ID, it's not incoporated,
and all the other things that would make it a "business" etc.
But at the same time over the past year, I've made some good discretionary
income through it so i'd like to handle it correctly.
> ----- Original Message -----
> From: "Alan Demlow" <demlow@lightlink.com>
> To: <lugnet.market.brickshops@lugnet.com>
> Sent: Tuesday, April 08, 2003 7:31 PM
> Subject: Re: Brickshops and Taxes???
> > I'm no tax expert, so take my advice with a grain of salt, but I believe
> > Lego profits are taxable as capital gains if you don't treat your • brickshop
> > as a business (and I called the IRS to confirm this when I had the exact
> > same question a few years ago, though with their track record...). The
> > reasoning, as I understand it, is that Lego you acquire for personal • (hobby)
> > use which is later sold for a profit is considered an investment by the
> > IRS--as is anything else you acquire for personal use and later sell. Of
> > course, most stuff you acquire for personal use and sell later (e.g., at a
> > garage sale) is sold at a loss, which means you don't have to pay taxes on
> > the sale or declare it in any way. But technically if you bought a shirt
> > for $5 and sold it for $10 at a garage sale after wearing it a few times
> > you'd owe capital gains tax on it, if I understand correctly! I'm not • sure
> > where the line is drawn between "business" and "items bought for personal
> > use and later sold at a profit"--that you'd have to ask an accountant
> about.
Thanks Alan. Your explaination makes a lot of sense.
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Message has 2 Replies:
 | | Re: Brickshops and Taxes???
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| (...) I use Schedule C to calculate and report profit and (loss). If you use something like TurboTax, you'll also be led to stuff like calculating depreciation on items that are used in your business, as appropriate. This is not qualified tax advice (...) (22 years ago, 9-Apr-03, to lugnet.market.brickshops)
| | | Re: Brickshops and Taxes???
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| (...) I would suggest business income, using the Schedule 'C'. You also need to use schedule 'SE', which is for social security tax. You enter the net profit (or loss) from your schedule 'C' on the schedule 'SE'. The really tricky part comes when (...) (22 years ago, 9-Apr-03, to lugnet.market.brickshops)
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Message is in Reply To:
| | Re: Brickshops and Taxes???
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| they key word there is "profits" and that does not mean that if you buy something for $1 and sell it for $2, you made $1 in profit....the rules of accounting allow you to deduct a lot of stuff if you are running a business....such as the gas to (...) (22 years ago, 9-Apr-03, to lugnet.market.brickshops)
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