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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Sat, 30 Sep 2000 13:28:56 GMT
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Viewed:
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434 times
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In lugnet.market.buy-sell-trade, Ben Gatrelle writes:
After having thought about this awhile and calling the IRS (but I'm not an
account and YMMV), my understanding is the following. If you aren't a
business, then any individual sets you sell and make a profit on are taxed
as capital gains (sets--or parts, for that matter). It doesn't matter
whether the hobby as a whole makes money or not, only individual items. I
know nothing about declaring the thing a business, but even if you don't,
there is potential tax liability with any sale that makes a profit.
Alan >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
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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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