Blowout Cards Forums
Blaster Master

Go Back   Blowout Cards Forums > COMMUNITY > Off Topic

Off Topic This section may contain threads that are NSFW. This section is given a bit of leeway on some of the rules and so you may see some mild language and even some risqué images. Please no threads about race, religion, politics, or sexual orientation. Please no self promotion, sign up, or fundraising threads.

Reply
 
LinkBack Thread Tools Display Modes
Old 03-03-2011, 06:22 PM   #126 (permalink)
Member
 
raiderguy10's Avatar
 
Join Date: Sep 2009
Location: Bismarck, ND
Posts: 3,187
Default

Quote:
Originally Posted by momosgarage View Post
I think this is it.



So you are saying he must write paid trade magazine articles in order to offset and deduct for the unpaid stuff that "counts for tenure" and the pre-writting required for book deals? Essentially because there are no tax provisions for tenure track professors to deduct for thier unpaid academic writting expenses, which is required to keep thier jobs.
I'm not saying he has to do that to be a sole proprietor and write off the expenses. I'm saying it will raise less flags, and look more justifiable if he does. How's that
__________________
My HOF PC:
http://www.blowoutcards.com/forums/football/187413-my-nfl-hof-collection-27-go-very-scan-heavy.html
Need Bidwill, Carr, Hewitt
raiderguy10 is online now   Reply With Quote
Old 03-03-2011, 07:05 PM   #127 (permalink)
Member
 
bravesfan#1's Avatar
 
Join Date: Nov 2009
Location: North Carolina
Posts: 1,787
Default

I have a quick question:

Today in the House, the new 1099 mandate was repealed. Does this affect the new $20 K paypal rule?
__________________
Master's in Accounting from NC State University. Soon to be CPA and CFE.

http://s286.photobucket.com/albums/ll91/hendersonlacrosse7/
bravesfan#1 is offline   Reply With Quote
Old 03-03-2011, 07:08 PM   #128 (permalink)
Member
 
raiderguy10's Avatar
 
Join Date: Sep 2009
Location: Bismarck, ND
Posts: 3,187
Default

Quote:
Originally Posted by bravesfan#1 View Post
I have a quick question:

Today in the House, the new 1099 mandate was repealed. Does this affect the new $20 K paypal rule?
No that had to do with sending a 1099 to suppliers . Something completely different. It was also not a surprise to anyone that it was repealed.
__________________
My HOF PC:
http://www.blowoutcards.com/forums/football/187413-my-nfl-hof-collection-27-go-very-scan-heavy.html
Need Bidwill, Carr, Hewitt
raiderguy10 is online now   Reply With Quote
Old 03-03-2011, 07:17 PM   #129 (permalink)
Member
 
raiderguy10's Avatar
 
Join Date: Sep 2009
Location: Bismarck, ND
Posts: 3,187
Default

I stand corrected. Today was the repeal of the 1099 relating to healthcare reform. The supplier one is still forthcoming. Either way has no effect on the paypal one.
__________________
My HOF PC:
http://www.blowoutcards.com/forums/football/187413-my-nfl-hof-collection-27-go-very-scan-heavy.html
Need Bidwill, Carr, Hewitt
raiderguy10 is online now   Reply With Quote
Old 03-03-2011, 07:29 PM   #130 (permalink)
Member
 
kobemagee29's Avatar
 
Join Date: Jul 2007
Location: rockford
Posts: 2,191
Default

Can you tell me if the paypal payments received as Gift's", count toward the $20,000 or 200 transcations??
kobemagee29 is offline   Reply With Quote
Old 03-03-2011, 07:41 PM   #131 (permalink)
Member
 
raiderguy10's Avatar
 
Join Date: Sep 2009
Location: Bismarck, ND
Posts: 3,187
Default

Not sure. If I had to guess it'd be no because of how they are meant to be used. But I do know you get suspended/kicked out of paypal if you receive significant amounts of gifts. I would guess the 'gift' option won't be around much longer. Why would it? Paypal loses their fees and they know its being abused.
__________________
My HOF PC:
http://www.blowoutcards.com/forums/football/187413-my-nfl-hof-collection-27-go-very-scan-heavy.html
Need Bidwill, Carr, Hewitt
raiderguy10 is online now   Reply With Quote
Old 03-03-2011, 07:45 PM   #132 (permalink)
Member
 
patchgenie's Avatar
 
Join Date: Aug 2009
Location: texas
Posts: 2,534
Default

Quote:
Originally Posted by kobemagee29 View Post
Can you tell me if the paypal payments received as Gift's", count toward the $20,000 or 200 transcations??
I saw on the paypal website that it is NOT being counted. what if a mother has to send her kid money for the laundry at college? the government should be going after banking fraudsters instead of the little guy making 50 dollars on cards.

Last edited by patchgenie; 03-03-2011 at 07:46 PM. Reason: -
patchgenie is online now   Reply With Quote
Old 03-04-2011, 03:18 PM   #133 (permalink)
Member
 
Join Date: Sep 2010
Location: Chicago, IL
Posts: 628
Default

Also why isn't camarofan112 example considered a hobby? I have realtives who did the same for thier dog breeding side business and it seems that when they make money the IRS says "its a business", but when they loose money the IRS has said some years "this is a hobby".[/QUOTE]


Because they ran it for more then 3 years under the same name and EIN, L2 work with the system. the IRS looks at a business that dont get their head above water after 2/3 years closly.Even with profitable years behind them, but they could have also, used the tax they paid in the past to make up for the loss of the following year, the new 2010 Tax regulations have changed and are allowing for a 7 year Roll back on businesses that made profit, and are now at a loss, to regain the profit/loss margin and continue business. mostly because of the way things are now. It also helps if you know the laws and federal regulations for small business, I.E do they have a website? bussiness plan that shows profit/loss margin? How many Deductions are they taking? ALso hobby or not, any profit must be taxed. Any legal documentation pertaining or showing profit must be reported, as such with a loss. IMO their side business was always a hobby in the eyes of the IRS, to prove otherwise they would need a proper business plan, and prove that you can recover lost earnings in the future. Its best to stay right above the profit loss margin after the 1st year, with small growth in your capitol. Ive been doing this for a long time and have yet to have any issues, and i always keep in mind that this isnt a hobby, everything is for sale. I also buy cases and resell them aswell, national treasures BB was great to me last year at $275.00cost per box. Other products not so much, [Abolute BB] errr....
camarofan112 is offline   Reply With Quote
Old 04-25-2011, 12:08 PM   #134 (permalink)
Member
 
alexlazarevich's Avatar
 
Join Date: Feb 2010
Location: Champaign, Illinois
Posts: 3,300
Default

I have been speaking with a CPA (certified public accountant) and he tells me that:

"If it [buying/selling cards] is just a hobby the feds will let you deduct your expenses / costs up to the point of breakeven. I would report this on your schedule c form."

This seems to contradict what I've heard on this and other threads. I was afraid of being stuck paying taxes on all my PayPal gross sales without being able to offset any of that with my costs of buying cases.
alexlazarevich is offline   Reply With Quote
Old 04-25-2011, 12:12 PM   #135 (permalink)
Member
 
ohiomike's Avatar
 
Join Date: Mar 2009
Location: Northeast Ohio
Posts: 3,982
Default

Quote:
Originally Posted by alexlazarevich View Post
I have been speaking with a CPA (certified public accountant) and he tells me that:

"If it [buying/selling cards] is just a hobby the feds will let you deduct your expenses / costs up to the point of breakeven. I would report this on your schedule c form."

This seems to contradict what I've heard on this and other threads. I was afraid of being stuck paying taxes on all my PayPal gross sales without being able to offset any of that with my costs of buying cases.
A Schedule C is your Profit/Loss FROM A BUSINESS. The only bit of truth in that statement is you'd have to deduct your expenses on the Schedule C form, because the only way you would be allowed to do this is if you are a business and filing a Schedule C. If you're claiming hobby, all sales would be profit as far as the government is concerned because you can't deduct expenses for a hobby.

If a CPA told you that, I would honestly find a different CPA. Unless this was just a very brief conversation in which they misunderstood you, it doesn't sound like they know what they're talking about.
__________________
Find me at SPORTLOTS.COM - OHIOMIKE
Domestic orders over 50 cards ship ABSOLUTELY FREE with me, copy and paste this URL:

http://www.sportlots.com/inven/invenbin/dealerpage.tpl?dealer=ohiomike

Last edited by ohiomike; 04-25-2011 at 12:16 PM.
ohiomike is offline   Reply With Quote
Old 04-25-2011, 12:14 PM   #136 (permalink)
Member
 
alexlazarevich's Avatar
 
Join Date: Feb 2010
Location: Champaign, Illinois
Posts: 3,300
Default

Quote:
Originally Posted by ohiomike View Post
A Schedule C is your Profit/Loss FROM A BUSINESS.

If a CPA told you that, I would honestly find a different CPA.
Yikes. That is exactly what he said. And I also told him I did NOT have a business, this was my personal taxes. The CPA might have misunderstood me in that I didn't have a business, although I did tell him that a few times at least.

Ugh.

Last edited by alexlazarevich; 04-25-2011 at 12:19 PM.
alexlazarevich is offline   Reply With Quote
Old 04-25-2011, 12:24 PM   #137 (permalink)
Member
 
ohiomike's Avatar
 
Join Date: Mar 2009
Location: Northeast Ohio
Posts: 3,982
Default

Quote:
Originally Posted by alexlazarevich View Post
Yikes. That is exactly what he said. And I also told him I did NOT have a business, this was my personal taxes.

Ugh.
Yeah, if you don't have a business and don't plan to establish one, and he is telling you to file a schedule C, talk to someone else. I imagine he had to know this stuff at some point to get his CPA status, but if the majority of his work is in corporate accounting he may not be very familiar with personal tax info and sole proprietorships. But Schedule C is for businesses and that is fairly simple tax knowledge, so the fact he's advising you to file one for a hobby is not good.

In his defense though, it does sound like you should be filing a schedule C because it does sound like you are a business. Whether you can convince the government you're not, I don't know... thats where you should be talking to a CPA that knows personal tax law better than the current one you're talking to. Honestly though, if you explain what you're doing and a CPA is advising you to try to claim its only a hobby, I don't know that I'd trust that CPA either. You're way more likely to have the IRS audit you if you are selling thousands and thousands of dollars worth of cards and trying to not pay your taxes on it by claiming hobby rather than establishing a business and claiming your expenses offset your profits. And if you get audited while claiming hobby, and the IRS deems you are a business you could be subject to back taxes and penalties going back several years. Any CPA worth his salt is not going to advise you to try to hide business income as a hobby... and the ones that do could very well get it completely wrong like the first guy you talked to.
__________________
Find me at SPORTLOTS.COM - OHIOMIKE
Domestic orders over 50 cards ship ABSOLUTELY FREE with me, copy and paste this URL:

http://www.sportlots.com/inven/invenbin/dealerpage.tpl?dealer=ohiomike

Last edited by ohiomike; 04-25-2011 at 12:30 PM.
ohiomike is offline   Reply With Quote
Old 04-25-2011, 12:32 PM   #138 (permalink)
Member
 
alexlazarevich's Avatar
 
Join Date: Feb 2010
Location: Champaign, Illinois
Posts: 3,300
Default

Quote:
Originally Posted by ohiomike View Post
Yeah, if you don't have a business and don't plan to establish one, and he is telling you to file a schedule C, talk to someone else. I imagine he had to know this stuff at some point to get his CPA status, but if the majority of his work is in corporate accounting he may not be very familiar with personal tax info and sole proprietorships. But Schedule C is for businesses and that is fairly simple tax knowledge, so the fact he's advising you to file one for a hobby is not good.

In his defense though, it does sound like you should be filing a schedule C because it does sound like you are a business. Whether you can convince the government you're not, I don't know... thats where you should be talking to a CPA that knows personal tax law better than the current one you're talking to.
I buy and sell cards in the 10's of thousands, so yeah, I think I either need to make this a business, or lie and say it is a business on my taxes. (I think the CPA might have been suggesting something like this because he confirmed using schedule c just now?) But I hate lying, so maybe I should start a business? Thing is I do this because I love it, not because I want, or even expect to make much money on it at all. Right now my costs are more than my gross income. I just don't want to be stuck paying 20K in my personal taxes because I couldn't deduct my cards costs from my cards gross income. And it looks like I'll have to because I'm above the 200 items 20K PayPal thing.

Does it sound to you like I should make it a business? Is that what you do?

Appreciate your advice.
alexlazarevich is offline   Reply With Quote
Old 04-25-2011, 12:40 PM   #139 (permalink)
Banned
 
Join Date: Jan 2011
Location: Stafford, TX
Posts: 2,051
Default

So, what would I need to claim I am a business? Can I just be a sort of "independent contractor" in selling cards to claim it as a side business?
I'll have to look at my tax book later. I don't think I'll hit $20k in sales, but my monthly group break club will put me close. I have receipts for everything and I need to probably detail my transactions on eBay now.
tehchamp is offline   Reply With Quote
Old 04-25-2011, 12:57 PM   #140 (permalink)
Approved Group Break Host
 
jlzinck's Avatar
 
Join Date: Dec 2008
Location: Cape Cod, MA
Posts: 18,237
Default

Quote:
Originally Posted by ohiomike View Post
If a CPA told you that, I would honestly find a different CPA. Unless this was just a very brief conversation in which they misunderstood you, it doesn't sound like they know what they're talking about.
+10,000

Said CPA is an idiot, a cheat or didn't understand.
jlzinck is online now   Reply With Quote
Old 04-25-2011, 12:57 PM   #141 (permalink)
Member
 
ohiomike's Avatar
 
Join Date: Mar 2009
Location: Northeast Ohio
Posts: 3,982
Default

First of all I'm not a CPA or anything close, so talking to one is the route you want to take. I established my business on Jan 1, 2002 so I am in my 10th year and once you get over the initial learning curve its not all that difficult to manage the tax end of the business from year to year.

It sounds like the CPA you are currently talking to and you are getting something lost in the details. I'm not surprised if a CPA is telling you that using a Schedule C is the way to go, but a Schedule C is exactly "Profit or Loss from Your Business". So if he's advising you to use this form while claiming a hobby, he's wrong. But maybe one or both of you are just getting some of the details confused.

Knowing what I know about you from the forums, I'd say that yes, you definitely want to establish yourself as a business and then take your CPA's advise and file a Schedule C on your tax return.

The easiest thing to do is file for a vendors license, and if you plan on doing shows in the future, you may want to make it a transient vendors license (allows you to sell in more than just your home county). The application will cost you a fee... I think mine in Ohio was around $50, but it was a one time fee. In addition to changing your income taxes, you will also be responsible for applicable Sales taxes, but if you're selling online only, those shouldn't end up being too much (only sales to Illinois residents would apply to you for sales tax purposes). But a CPA will be able to help you through all of this. One thing I'd probably advise, but run it by your CPA first, is backdating the establishment of your business to January 1st of this year. It just seems to make things run smoother if your business year matches up with the calendar year, at least IMO.

But you're much better off learning the ropes and going about things legally than trying to hide your level of sales activity as a hobby.
__________________
Find me at SPORTLOTS.COM - OHIOMIKE
Domestic orders over 50 cards ship ABSOLUTELY FREE with me, copy and paste this URL:

http://www.sportlots.com/inven/invenbin/dealerpage.tpl?dealer=ohiomike

Last edited by ohiomike; 04-25-2011 at 01:10 PM.
ohiomike is offline   Reply With Quote
Old 04-25-2011, 01:16 PM   #142 (permalink)
Member
 
raiderguy10's Avatar
 
Join Date: Sep 2009
Location: Bismarck, ND
Posts: 3,187
Default

Your CPA is correct that you can't generate a loss from a hobby. Hobby expenses don't go on a schedule c though. Hobby expenses are misc itemizations. He is right but the placement is wrong.
__________________
My HOF PC:
http://www.blowoutcards.com/forums/football/187413-my-nfl-hof-collection-27-go-very-scan-heavy.html
Need Bidwill, Carr, Hewitt
raiderguy10 is online now   Reply With Quote
Old 04-25-2011, 01:17 PM   #143 (permalink)
Member
 
pac213up's Avatar
 
Join Date: Aug 2007
Posts: 4,986
Default

Quote:
Originally Posted by alexlazarevich View Post
I have been speaking with a CPA (certified public accountant) and he tells me that:

"If it [buying/selling cards] is just a hobby the feds will let you deduct your expenses / costs up to the point of breakeven. I would report this on your schedule c form."

This seems to contradict what I've heard on this and other threads. I was afraid of being stuck paying taxes on all my PayPal gross sales without being able to offset any of that with my costs of buying cases.
My understanding is hobby expenses can be deducted up to the amount of hobby income.

Publication 529 (2010), Miscellaneous Deductions
pac213up is offline   Reply With Quote
Old 04-25-2011, 05:36 PM   #144 (permalink)
Member
 
Join Date: Jan 2011
Location: boston
Posts: 70
Default

if im looking to buy and sell cards with paypal,possibly buying on ebay, should i get personal or preminum?

thanks
wutupboyz95 is offline   Reply With Quote
Old 05-24-2011, 01:43 PM   #145 (permalink)
Member
 
alexlazarevich's Avatar
 
Join Date: Feb 2010
Location: Champaign, Illinois
Posts: 3,300
Default

I spoke to another accountant, a very reputable one with decades of experience with corporate and personal tax returns. I asked her the following:
  1. If I sell more than 200 items and 20K, PayPal will send out 1099's
  2. Can I offset those profits with a cost basis equal to the amount I paid for the cases/cards
The answer is absolutely yes. I can offset my profits with my cost basis. I can use the Schedule C form on my personal tax return. I do NOT need to incorporate a business in order to file a Schedule C form.

She said PayPal already sees me as a business by their definition of 200 items & 20K sales. But there is no business incorporation that I need to do in order to use the Schedule C form on my personal taxes for 2011. I can offset my profits with cost basis.

She said this happens all the time with people who have hobbies. There's millions of people who have hobbies that slowly begin to turn profits, and many of those people do take advantage of the Schedule C form on their personal taxes in order to offset profits with cost basis. Painters, car collectors, builders of musical instruments, etc. etc. There are plenty of people who do these things, and are NOT incorporated businesses, and they file Schedule C forms all the time on their personal tax returns.

She said she is not aware of anything that would make sports card collectors/hobbiers exempt from this. I told her about my experiences on this forum, that many are under the impression that you CAN'T offset your profits with full cost basis. She said, if that is the case, then ask them to point you to any documentation or IRS website that outlines how sports cards are exempt, because she would really like to know.

There is some serious book work I'll need to keep track of, namely inventory. (items I bought in 2011 but did not sell and must carry over to the next tax year) But as long as I keep good records of inventory, I will be fine. Declaring an inventory dollar amount could be as simple as dividing the cost of a purchased case by the number of cards in the case (minus any throw aways), minus the amount of any cards from that case that have already been sold in the previous year.

However, the state return is a little different. I must fill out a couple of online state tax forms declaring my "business", and I will be issued a tax ID #. I then must collect state taxes on any items that I sell in my state. If a buyer claims exemption from state taxes (they are a reseller) then I would just need to get their tax exempt ID from them, and then I don't have to charge them tax. But I must collect state taxes for all in state sales, and there is a little bit of paperwork to accomplish this. She said this is not hard, and the Illinois website has these forms on their website, and take 5-10 minutes to fill out and send in.

That comes from a professional accountant with decades of corporate and personal tax experience.

That is what I'm going to do on my taxes for 2011.

Alex
alexlazarevich is offline   Reply With Quote
Old 05-24-2011, 01:53 PM   #146 (permalink)
Member
 
raiderguy10's Avatar
 
Join Date: Sep 2009
Location: Bismarck, ND
Posts: 3,187
Default

Alex,

Your CPA is 100% correct. The problem many are having here is that they won't do enough business to get the 1099 from paypal, but they still want to file their taxes correctly and be transparent to the IRS. To some it is a hobby, and it needs to be accounted for correctly. Some who get a 1099 will be a hobby asx well. Simply receiving the 1099 doesn't necessarily make you a business. You can always claim the 1099 income as business income, but the point was if you are questioned by the IRS the burden of proof is on YOU the taxpayer that it's a business not a hobby. That's kind of been the scope we've been dealing with on this thread. And I do agree with your CPA saying getting a 1099 should be enough to qualify you as a business. It's when taxpayers are claiming $20K in income and $30K of expenses from opening cases of cards that the taxpayer may have to prove to the IRS it's a business not a hobby. Anytime flow-through entities generate losses they open themselves up to be scrutanized by the IRS. I wanted to make sure everyone knew consequences of what they do so they know POSSIBLE ramifications if they aren't transparent to the IRS.
__________________
My HOF PC:
http://www.blowoutcards.com/forums/football/187413-my-nfl-hof-collection-27-go-very-scan-heavy.html
Need Bidwill, Carr, Hewitt
raiderguy10 is online now   Reply With Quote
Old 05-24-2011, 01:53 PM   #147 (permalink)
Approved Group Break Host
 
jlzinck's Avatar
 
Join Date: Dec 2008
Location: Cape Cod, MA
Posts: 18,237
Default

It really comes down to if what you are doing is a for profit business or a hobby


Is Your Hobby a For-Profit Endeavor?
Business or Hobby? Answer Has Implications for Deductions

Quote:
An activity is presumed for profit if it makes a profit in at least three of the last five tax years, including the current year
You MAY have an issue if you are showing a loss every year. Remember if you get audited some pencil pusher is going to decide if your income is hobby or for profit business.

If he/she decides hobby you will have to pay back taxes and penalties.
jlzinck is online now   Reply With Quote
Old 05-24-2011, 01:56 PM   #148 (permalink)
Member
 
raiderguy10's Avatar
 
Join Date: Sep 2009
Location: Bismarck, ND
Posts: 3,187
Default

^^^ this ^^^
__________________
My HOF PC:
http://www.blowoutcards.com/forums/football/187413-my-nfl-hof-collection-27-go-very-scan-heavy.html
Need Bidwill, Carr, Hewitt
raiderguy10 is online now   Reply With Quote
Old 05-24-2011, 01:57 PM   #149 (permalink)
Member
 
Zerokruel's Avatar
 
Join Date: Apr 2008
Posts: 6,502
Default

My CPA whooped my ass this year. By the time I was done - she pretty much had me marching in a straight line. I also learned that next year I will come more organized... Her time was very "valuable"...
__________________
Currently looking for the following comic Books:
United Comics: 21,22,23,24,26
Tip Top: 173 & 184
Peanuts 1 (1953)
Peanuts: 1-4 (1963-64)
Zerokruel is offline   Reply With Quote
Old 05-24-2011, 02:05 PM   #150 (permalink)
Member
 
alexlazarevich's Avatar
 
Join Date: Feb 2010
Location: Champaign, Illinois
Posts: 3,300
Default

Thanks for all the great responses folks.

"An activity is presumed for profit if it makes a profit in at least three of the last five tax years, including the current year."

That is a very interesting quote, thanks for bringing that up. I will ask my accountant about it when I speak to her again next week. I did tell her that I do expect to make a profit when I sell EVERYTHING from the cases I buy. This will include sales on cards that I hold for more than a year and thus carry over as inventory. This is generally true, I am very close to making a profit so far in 2011, and with my successful 2011 Bowman break (10 cases) I should be in the green by the end of the year as long as I don't pick dogs like 10-11 Classics basketball anymore.

But it's good to know what to watch out for if I start losing money. I'll ask her about it. She's probably looking into it already.
alexlazarevich is offline   Reply With Quote
Reply

Bookmarks

Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are On
Pingbacks are On
Refbacks are On


LinkBacks (?)
LinkBack to this Thread: http://www.blowoutcards.com/forums/off-topic/125363-irs-paypal-questions-help-us.html
Posted By For Type Date
Scoundrel Art Community • View topic - USPS Price Increase.....REALLY?? This thread Refback 02-22-2013 08:48 PM
Scoundrel Art Community • View topic - USPS Price Increase.....REALLY?? This thread Refback 01-31-2013 10:34 AM
Required To Report Collectible Loss? - Tax Forum - Tax Help Forum, Payroll Tax Forum, Business Tax Forum, Tax Questions, Free Tax Advice This thread Refback 04-02-2012 04:49 PM


All times are GMT -4. The time now is 09:09 PM.


Powered by vBulletin® Version 3.8.7
Copyright ©2000 - 2014, vBulletin Solutions, Inc.
Search Engine Friendly URLs by vBSEO
Copyright © 2013, Blowout Cards Inc.