Pay Pal 1099K

[madcap_magician]

I know this is not new news (for those seeing this for the first time) but rather my follow up after talking to my personal tax accountant. He, like most accountants this time of year, is so far behind the 8 ball that it took a little time to connect and have a decent conversation about this.

He does not recommend dancing around this subject (tax guys LOL). I explained that this is only a hobby - buying/selling etc. He advised me that calling it a hobby does fall under hobby income and therefore is taxable. He also believes it is only a matter of time that FF will be tracked somehow and will somehow be recorded (not sure when but most good things come to an end as he put it). His advise was to call it a business and keep track of knife purchase prices and sale prices including the fees to ship and cost of shipping materials. When the 1099 arrives he said he will simply review my notes to see how much I've sold in knives including shipping and supplies and what I paid for them. As we all know, selling usually generates a loss even if you break even on the knife due to shipping costs. After explaining to him the same, he said that we most likely would be showing a loss and write it off. Let the government deal with the loss, not me. So now I have mixed feelings about all this. Record keeping sounds like a real pain in the ass for something that is supposed to be fun and adventurous. ????

Any other thoughts on this matter? Anyone hear something similar from their tax accountant or possibly another way to go at it since we started discussing this topic

One other item. I am seeing a lot of forum discussions and a lot of negative comments on the sudden push to sell friends and family. It appears it is really turning a lot of people off. In my sales I still offer both options. GS with fees and taxes included and FF with a discount (usually less than what I paid - there is that loss factor again). My opinion as of right now is you have both options. Take the one you feel most comfortable with. Any thoughts on this matter?

The thing is to me that A) if I use PayPal, I'm going to pay them their cut for the services. I know that's an unpopular view because PayPal is the worst, but my sense of ethics says if I'm using their service, I can't just refuse to pay for it because I don't like the company. And then B) I am going to do it like your accountant said, but treat it like cryptocurrency or other short-term investment income rather than a sole proprietorship business, although it's not clear to me whether I can include fees and shipping in my cost basis at that point (I know we can't do that for hobby income). More than that, though, C) using PayPal F&F is probably going to bite people hard. They are literally using it for tax evasion, and I suspect that it has occurred to the IRS and PayPal that people might do this. I expect to see a lot more audits and a lot of people complaining about how this is all because PayPal is anti-2A (which is true) and not because they were literally committing tax evasion (which is false).

 

[Choppaman]

The thing is to me that A) if I use PayPal, I'm going to pay them their cut for the services. I know that's an unpopular view because PayPal is the worst, but my sense of ethics says if I'm using their service, I can't just refuse to pay for it because I don't like the company. More than that, though, B) using PayPal F&F is probably going to bite people hard. They are literally using it for tax evasion, and I suspect that it has occurred the IRS and PayPal that people might do this. I expect to see a lot more audits and a lot of people complaining about how this is all because PayPal is anti-2A (which is true) and not because they were literally committing tax evasion (which is false).

That is where my tax accountant didn't want me going. The skirting around it part. I don't know. Feel like either way is a lot of work. Guess I should have thought about that before opening a museum full of knives. LOL

 

[madcap_magician]

That is where my tax accountant didn't want me going. The skirting around it part. I don't know. Feel like either way is a lot of work. Guess I should have thought about that before opening a museum full of knives. LOL

I have been fortunate in that my collection fits in one cabinet and it turns over with some frequency, so I have nothing older than 2017 in my collection and I bought all of it online, so I just went back through my gmail account and recorded the order number, source, price paid, shipping cost if any, etc. into a spreadsheet. I have a full inventory of my knives and a record of all knives I've sold since 2021 and the cost basis for them. I am actually OK paying taxes on net income (although obviously I'd still prefer the old way), but the bookkeeping is definitely a huge hassle.

 

[rhino]

I know this is not new news (for those seeing this for the first time) but rather my follow up after talking to my personal tax accountant. He, like most accountants this time of year, is so far behind the 8 ball that it took a little time to connect and have a decent conversation about this.

He does not recommend dancing around this subject (tax guys LOL). I explained that this is only a hobby - buying/selling etc. He advised me that calling it a hobby does fall under hobby income and therefore is taxable. He also believes it is only a matter of time that FF will be tracked somehow and will somehow be recorded (not sure when but most good things come to an end as he put it). His advise was to call it a business and keep track of knife purchase prices and sale prices including the fees to ship and cost of shipping materials. When the 1099 arrives he said he will simply review my notes to see how much I've sold in knives including shipping and supplies and what I paid for them. As we all know, selling usually generates a loss even if you break even on the knife due to shipping costs. After explaining to him the same, he said that we most likely would be showing a loss and write it off. Let the government deal with the loss, not me. So now I have mixed feelings about all this. Record keeping sounds like a real pain in the ass for something that is supposed to be fun and adventurous. ????

Any other thoughts on this matter? Anyone hear something similar from their tax accountant or possibly another way to go at it since we started discussing this topic

One other item. I am seeing a lot of forum discussions and a lot of negative comments on the sudden push to sell friends and family. It appears it is really turning a lot of people off. In my sales I still offer both options. GS with fees and taxes included and FF with a discount (usually less than what I paid - there is that loss factor again). My opinion as of right now is you have both options. Take the one you feel most comfortable with. Any thoughts on this matter?

And to complicate it further, what happens when you sell items you've had for decades? You might have an idea what you paid for them, but it's unlikely you have receipts since no one could have anticipated this level of invasion into our fiscal lives.

 

[Choppaman]

And to complicate it further, what happens when you sell items you've had for decades? You might have an idea what you paid for them, but it's unlikely you have receipts since no one could have anticipated this level of invasion into our fiscal lives.

Yep!