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Old 03-02-2011, 01:50 PM   #85 (permalink)
raiderguy10's Avatar
Join Date: Sep 2009
Location: Bismarck, ND
Posts: 3,551

Originally Posted by raiderguy10 View Post
I am a CPA who prepares tax returns.

You are responsible to claim income on ALL receipts regardless if you receive a 1099 or not. If you make over $20,000 and have over 200 transactions on Paypal they will send you a 1099. You are required to report ANY amount of income and you are responsible for any income you make, whether it's below $20,000 or not.

Lots of people will tell you just to claim it's a hobby. That doesn't help you any either. You still have to claim hobby income, and your expenses are only deductible if 1) you itemize your deductions, and 2) they are subject to a 2% AGI limitation floor. You are better off having it be a business than being a hobby because most people won't be allowed to claim hobby deductions.
Originally Posted by raiderguy10 View Post
If you are a sole proprietorship, and if you can legitimately prove to the IRS that you shouldn't classify it as a hobby, then yes your statement is correct. Getting an EIN for a sole proprietorship can go a long way in proving that (and it's free). But the burden of proof is on you to show it wasn't a hobby (ie you don't get personal pleasure from doing it on top TRYING to make a profit). You can't do it trying to create a tax shelter.
Originally Posted by raiderguy10 View Post
If you sell one card you don't. A tv is tangible personal property. Like a car is not subject to taxation. If you have multiple sales and transactions you become a car dealer and report income accordingly. Its a case-by-case scenario. Its not black and white

These were posted earlier and should help a little.
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