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 13:25:10 GMT
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Viewed:
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1441 times
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In lugnet.market.brickshops, Sun Yun writes:
> 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 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 you're trying to track the value of your inventory from year to
year...
>
> 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.
You don't need those things to be a business. My husband receives a small
income (in addition to his normal salaried job) writing articles and giving
talks. He's filled out a schedule 'C' for years to report this income. He
doesn't have a 'business name' (other than his own name), and certainly has
never incorportated or gotten a Federal Tax ID number (I think that may be only
needed if you pay employees ??), but it is an income-producing 'business' all
the same.
I'm not an expert, but this is how we do it.
Karen
>
> 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 is in Reply To:
 | | Re: Brickshops and Taxes???
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| (...) 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 (...) (21 years ago, 9-Apr-03, to lugnet.market.brickshops)
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