Subject:
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Re: When a hobby becomes a business, cost basis, income taxes, etc.
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Newsgroups:
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lugnet.market.theory
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Date:
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Fri, 29 Sep 2000 21:53:44 GMT
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Viewed:
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585 times
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In lugnet.market.buy-sell-trade, Ben Gatrelle writes:
> Posted to .buy-sell-trade and .auctions, FU set to market.theory
>
> I notice that the trend is definitely toward selling parts rather than sets.
> In the past I have sold, mostly on eBay, mostly complete sets. I have
> purchased a selection of sets on clearance recently and have been planning on
> parting them out for sale on brickbay. I used to very carefully keep track of
> the cost and quantity of every set I bought. Some months the profit from the
> sets I sold would cover the cost of the sets I've kept. Other months I would
> spend a whole lot more than I made from sales. Other months I would actually
> make more than I purchased and kept. I think a lot of people auction and sell
> their sets and parts to offset the ones they keep for themselves. No new news
> here. My question is about turning this "hobby" into a business.
>
> If I buy a 100 piece set for $10 keep five or ten pieces, sell the rest of the
> pieces for $15, do I say I made a profit of $5 (assuming no auctioning fees,
> etc.). Do I need to adjust the cost figure for the pieces I kept? I'm not even
> sure how to ask the questions in my mind.
>
> I guess what it comes down to is does anyone know how much money you
> can "make" at a hobby before the IRS requires you to claim it as income? Or
> conversely if you say this is a business and you are trying to make a profit,
> what do you do about the pieces and/or sets you keep? Do you include this as a
> Research and development cost? I guess I need to talk to a CPA or bookkeeper
> about what I can and cannot do if I want to jump into this selling thing with
> both feet, or just one foot.
>
> This is too long already so...
> Any comments would be appreciated
>
> BEN GATRELLE
In California at least, you can go to the State Board of Equalization (offices
all over the place) and become a licensed reseller. If there is a fee, it is
a paltry one. You have to keep track of expenses and sales and pay taxes
(special state form - easily handled).
It wasn't so much the amount of money made as it was the nature of how you
were making the sales. If you have a garage sale, that's an "occasional" sale
and no license is needed. If you have a regularly scheduled weekly garage
sale, you need a resellers license. There is some clause about you are not
supposed to be using the stuff you are buying and selling (because of tax
reasons I believe).
Dumping stuff every now and then on eBay would be okay, but doing it on a
daily or weekly basis would require a resellers license. Auczilla would
probably not require a license in California, Brickbay probably would (one is
occasional, the other is constant). Best to check and be safe.
Again, I have no idea how other states handle this kind of thing - if you are
in California, they have all sorts of info to help you out.
Bruce
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Message is in Reply To:
 | | When a hobby becomes a business, cost basis, income taxes, etc.
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| Posted to .buy-sell-trade and .auctions, FU set to market.theory I notice that the trend is definitely toward selling parts rather than sets. In the past I have sold, mostly on eBay, mostly complete sets. I have purchased a selection of sets on (...) (24 years ago, 29-Sep-00, to lugnet.market.buy-sell-trade, lugnet.market.auction, lugnet.market.theory)
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