It's better to donate them and take the tax deduction anyway.

Even if one does not sell 20k worth, it still doesn't mean that you don't report what you sold as income.

Also, it is worth mentioning that certain sales of "collectibles" are subject to preferential tax rates.

The plus side of this is that it will deter people who sell stolen or questionable goods online and keep the market open to legitimate sellers. This may mean higher prices for those continuing to sell.

BUT it seems that now Ebay and Amazon and such will be asking for SS# s and Tax ID numbers for people signing up to sell, which will be reported once the 20k is triggered on the various venues one is selling on. E.g. you likely won't be able to avoid the 20k requirement by splitting sales between Amazon and Ebay or something else. This will just deter casual sellers who will opt not to provide for such information.

The days of the hobby seller are numbered.

I can only qualify for the standard deduction, so no schedule A deductions for me. I'd love to take a loss on a Schedule C for difference in all the DVDs I have bought over the years and the amount I was able to sell them for on Half.com and Ebay (minus postage and packaging costs, Half and Ebay commissions and Pay Pal fees, of course).

This is such a non issue.

I'm pretty sure it's not. It's only going to get worse.

Nemien's right DVD's should be for entertainment

If anybody is selling 20k worth of merchandise on Ebay in a year they should be paying taxes.

A lot of "self employed" people don't pay taxes on their income. Hair stylists who do hair at home, for example. I work for a bank and never seen one of them paying taxes on their income. Perhaps the IRS should start checking into things like that instead. I am sure that is far more prevalent than some power seller on Ebay moving tens of thousands of dollars in DVDs.

People who do that are taking a huge risk. All it would take is for a client to report their service as a tax expense and it gets traced by to the self employed person.

My point is even if I sell over 20K in dvds, if I am selling it for less than I paid, that is not taxable income!

I seriously doubt that anybody is selling 20k in DVDs at a loss, and even if they are they are bigger idiots for not reporting it since they can deduct it.

[QUOTE=supermike07;10041502]You more than likely paid taxes once (when you bought it), so why more tax?

Different Taxes. You paid state & local sales tax when you bought the DVD. When you sell it you're paying federal income tax.

Different Taxes. You paid state & local sales tax when you bought the DVD. When you sell it you're paying federal income tax.

$20k OR 200 transactions. That's about 4 DVDs a week, which is going to include even casual sellers. You can deduct the cost of the DVD and fees from PayPal or Amazon, but you must do that on your return.

Amazon and eBay must be sweating big time, as this is going to seriously curtail online selling.

I thought it was $20k AND 200 transactions?

A little ambiguous:

"Exception: Very small merchants won't be issued information returns. "Small" for this purpose means annual gross sales on merchant cards of no more than $20,000 or 200 or fewer transactions. In other words, reporting is required only if gross amounts for the year exceed $20,000 and there are more than 200 transactions."

The "very small merchants" seem to qualify as less than $20,000 OR less than $20,000, but as applying to the targeted merchants, it does say AND. There is an inconsistency there, and I don't think it is possible from the article to say which way it falls.

Remember, this is just a "proposed" rule. Discussion for such a rule has been going on for quite some time though. It entails a lot of cooperation from online sales venues and this will place a huge burden on information gathering infrastructures.

Technically, in a perfect world, you wouldn't have to report any income... to anyone.

There wouldn't be any federal income tax. State, maybe.

FWIW, federal income taxes are only about a 100 years old.

You can only report a loss on Schedule C if you were running a business, which usually means setting business accounts, tax ID and so forth. The IRS distinguishes between business people and hobbyists who sell some things to offset some of the cost of their hobby. The latter are not entitled to deduct their losses as a "business" loss. Reporting a loss on a Schedule C for a year is a good way to trigger at least some IRS inquiry.

However, in determining whether you made money for the year, you should look at all your sales and not just individual ones. So if I sell DVD A for a $3 profit and then sell DVD B and lose $5, I have a net loss of $2. You subtract the buying price (plus sales taxes, shipping and any other costs you had to acquire the item) from the net selling price (minus listing fees, shipping costs, packing materials, etc.) to determine whether you made a profit or not on an item. That's one reason why businesses have "year end" clearance sales. If the item's still in their inventory on January 1, they can't deduct a loss. If they sell it, they deduct the amount of the loss from their sales total for the year. (They also don't have to report the item as an asset for year end property tax).

And if you do have a profit on Schedule C, remember that you have to pay self-employment tax on that as well.

Just because something gets reported to the IRS doesn't mean it's going to come back to you. To gross $20,000, you would have to sell 2,000 DVDs at $10 apiece and that's some serious volume. If the IRS sees someone selling 200 DVDs at $3-5 apiece, they aren't going to waste time going after them.

Maybe, maybe not, there are probably millions of people selling part time for profit. The whole idea behind this is that by tracking sales and sending out these forms the IRS can check if it is being reported on returns. In this economy I think they will go after every dollar.

The hobby vs business distinction has always been unclear to me. I sell a lot of DVDs, I estimate around $200/month on Amazon. However, I buy at least twice that amount, and those sales are an attempt to offset that cost. I generally only sell my DVDs once the price goes above $50, I figure if I can sell one DVD and buy ten to replace it that is a good deal. So if the IRS sees I am not reporting my ~$2500 in sales, I've got to dig out all of my old receipts, make an itemized return, become a legitimate "business" with a tax ID and so forth... a whole lot of extra work for a hobby. And all of this only to prove I'm losing money? And if I lose money year after year, doesn't this ultimately hurt the IRS by my extra deductions?

Wouldn't be so sure about that...

http://www.sacbee.com/2010/03/13/260...-car-wash.html

The owner of my LCS brought this up the other day.
According to him, it is not just selling that triggers the release of data but any transactions totaling over $20,000 or 200.
That's buying as well as selling, because it is assumed that the buying (in that quantity) is with the intention of resale.

He claimed to have read thru the bill himself (which I don't doubt), and also came to the conclusion that it isn't clearly worded which I'm sure leaves just enough room for them to do what they will and have the target later have to expend resources proving that what they did what not covered in this.

He is also unclear whether this bill starts next year as far as recording transactions, or if the transactions are intended to be recorded now for reporting in 2011.

In any case, this is going to make a HUGE difference for a lot of people in their buying/selling habits, and consequently impact a lot of online businesses- not just DVDs. All collectors routinely flip parts of their collection to pay for newer things.
I was on the road for 2 months, but in that time, there were some killer deals on DVDs at Amazon, and a 70% off sale at TFAW, plus I won a couple auctions on ebay. I made maybe a dozen transactions for about $400 total, but on a per piece count I bought over 40 items. Since getting home, I've ordered a couple dozen more books, and etc and am watching a few auctions and my yet pick up some more stuff. Even if I lie fallow from April to November, once the Xmas sales start, I'll easily exceed 200 individual items for the year.
It's not hard to do when items get marked down substantially, and thresholds for free shipping look more attractive than buying less and paying S&H out of pocket.

It's definitely made an immediate change for me. I am sitting on a huge dvd collection that can easily be sold online for over 10K. I paid much more for it. No, I didn't buy for reselling or investment. I bought for personal enjoyment, but I justified my buying with the mentality that I could always resell and recoup some of my money back if needed. Did I buy more than I needed? Certainly but it's my hobby and I'm addicted to collecting. Now, I'm wondering if I sell as much as possible. I'm sure I am not alone in my situation.

Another huge wrinkle of complication is if the IRS thinks you are making profit, the state level will come sniffing and wonder why you are not collecting and reporting sales tax to them. I'm sure only the mega sellers on Ebay go to this level of detail!

So if the IRS is counting how much "stuff" we buy online, why stop at DVDs? By this logic, if I buy or sell more than 200 items a year, regardless of what it is, the IRS assumes I am a business and therefore subject to taxation? What if I buy my groceries online using a credit card? Am I hoarding food to make a profit? And if I am buying DVDs with no intention at all to resell, just to have a library, I have to prove that to the IRS? Books? Games? Insert your hobby here.

I hear ya. This is gonna open up so a huge can of confusion and mess just like anything our government does. It's not worth the tiny bit of tax money they will get in the long run.

I found this on IRS.gov:

Online Garage Sales
If your online auction sales are the Internet equivalent of an occasional garage or yard sale, you generally do not have to report the sales. In a garage sale, you generally sell household items you purchased over the years and used personally. If you paid more for the items than you sell them for, the sales are not reportable. Losses on personal use property are not deductible, either. However, see Sales of Appreciated Assets at an Online Auction below for gain reporting.

Home-Based Online Auction Seller Businesses
If your online garage sale develops into a business and/or you have recurring sales and are purchasing items for resale with the intention of making a profit; you may have started an online auction business.




http://www.irs.gov/businesses/small/...202939,00.html




Sounds like the IRS can't even fucking decide what is taxable or not. "Generally" is so ambigious sounding.

Where is this "bill" so we can read it for ourselves rather than reading "the sky is falling" interpretations from a third party?

It was part of the Housing Assistance Tax Act of 2008. (great way to sneak it in) You can read about it here, and there is a pdf link with more info:

http://www.irs.gov/irs/article/0,,id=215740,00.html