Quote:
Originally Posted by mgugs46
Right, but the reason I got to the 200/20k limits is from accepting payments from hosting various club breaks on BO. Obviously there is no profit in these for me. Most of the loss is from buying my own cards/jerseys/etc via PayPal, so I guess my question is this:
If I can show via PayPal transactions that I collected xxx amount of $$, and used it to purchase cases from BO, and said monies cancel out with product, shipping, fees - would that be enough to show that I made no profits?
The other thing that confuses me is it lists the money I transfer in and out of my Paypal from my bank account. If I transferred 10k in one clip, then sent it back to my bank for some odd reason, would that still trigger Paypal to give me a 1099?
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Unfortunately tax code is not cut and dry in this area.
You MUST list the 1099 amount as income. You can deduct losses up to the amount of sales on Schedule A.
Now if you are never audited you are fine. If you are audited you need to show all your records to the IRS Agent, who's ranks have increased by large amounts because of the health care legislation, and the AGENT decides if the expenses are legit or not.
If they are you are just out your time for being audited.
If not then you owe back taxes, interest and penalties.
Your best bet is to have a tax professional do your taxes. One that will come with you for an audit.
The government is looking for "revenue" more now than ever.
In college, back in the stone age, my professor did a case study on a may who won $13K+ at the racing track. He got audited and had to bring in all his losing tickets to the audit.
The auditor found that 30 or so tickets with $300 in wagers were all dirty and covered with footprints and food and drink residue.
The auditor did not accept ANY of the tickets and the man was required to pay the taxes, interest and penalties on the whole $13K+
Now I know this is an extreme case and it happened 25 years ago but better to protect yourself.