Originally Posted by HoustonCPA
What kind of expenses can I deduct in relation to the cards I sell?
These expenses would be costs incurred in association with the listing and final value fees on eBay, Paypal fees, COMC fees, and shipping costs – both actual postage as well as envelopes, toploaders, etc. You are also allowed to deduct the cost that you incurred to initially acquire the card. This does not mean that you can deduct the cost of a box purchased from Blowout if you only sell a handful of cards from the box. You should allocate the cost of the box among all of the cards that came in the box.** Example: I purchase a box from blowout for $100 shipped. If the box contains 100 cards, the cost per card is $1. I sell 15 cards for $30 on eBay. eBay charges me $3 in total fees and Paypal charges $1 in fees. It cost me $2 to ship the cards. In this example, the total cost of just the cards sold is $15 (15 cards * $1 per card). On your tax return, you would show $30 of sales, $15 of costs associated with the items you sold (also known as purchase costs), $4 of selling fees ($3 from eBay and $1 from Paypal), and $2 for shipping. In this example, you would only be taxed on $9 of net profits ($30 less the $15 purchase costs, $4 in selling fees, and $2 shipping). If you are an individual, all of this would be disclosed on Schedule C.
**There are other methods you can use to allocate the costs of the box among the cards; this would be a good discussion to have with your tax professional to avoid paying unnecessary taxes (keyword being avoid – see last sentence of question 2).
Thanks for all the great information you provided us.
Just to recap. I buy Bowman Jumbo box at $125.00 and sell a rare rc auto for $50.00. I have to give the cost of card sold at only .26 (12 packs ber box 32 cards per pack brings 384 cards $100/384=.26 per card). This would show a profit (prior to fees and expenses) of $49.74. While the rest of the 383 cards from the box would be worth $10.00 and still in my inventory would that make that profit on the one card accurate?
How do I account of the rest of the cards as most likely I would never sell them. Need to see a CPA right away.