Random Thought Thread

bluemax_1 said:
My understanding is that it's a PITA, and encompasses all e-payment methods. Transactions totaling $600 or more per year get reported.

Even if you bought something for $1000, then sold it for a loss at $600, the onus is on the individual to show that, in order to ensure that the $600 isn't taxed/taxable. 😕
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Exactly, and there lies the rub

It's invasive...and problematic for those who have not kept, or simply do not have receipts for their purchases,...as well as items they received as gifts or inherited.
 
fonedork said:
As I understand it, you aren't allowed to deduct expenses when you report hobby income. The entire amount received is treated as straight income.
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Actually, it's a little more complicated than that.

Hobby "income" is always taxable and hobby "losses" are not deductible BUT a determination of whether what you're doing is a "business" or not which entitles you to deduct a loss is based on whether you had a "profit" in 3 of the past 5 years and it doesn't matter how much the profit is; just that you made a profit of some kind and paid taxes on it.

While you need to prepare your return "honestly" and keep accurate records, the burden is actually on the government to prove that you are not entitled to the deductions that you claim and will need to "audit" you so that you can present the documents that verify your deduction

BUT, given the labor shortages at the IRS and its priority on combating high amount tax avoidance/fraud schemes, the likelihood of you being audited is low. There also is a 3 year statute of limitations upon the IRS' ability to audit your return

So if they have flagged your return for audit, based on claiming a loss for a "hobby," they probably would not do it until at least the 4th or 5th year -- because it takes that long to prove if you're running a "business" or not BUT they have at least 10 years to retroactively claim any "hobby" losses that may be subject to denial in prior years.

So the question is whether you want to risk a later determination that denies a prior deduction for hobby "losses" or not. IMO, if you never made a profit but your claimed losses are minimal, I'd throw the dice and file the loss.

On the other hand, if you never showed a profit for 3 of the past 5 yrs but if the losses are "substantial" (use your own definition of this) then you should take the time to consider whether you are willing to risk the imposition of back taxes, penalities and interest on the losses if those losses are denied.

I'm sure this is as clear as "mud" but, as I said at the top, it's "more complicated" than that."

LOL!!! ;)
 
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I spend about $7,000 a year just to calculate how much money I owe the IRS. Which is usually not very much. In part because the expense involved in keeping up with how much I owe them. That's money burnt. Spent but provided no actual value to anyone. It's amazing that we keep doing things this way. It's even more amazing that instead of simplifying it, we continue to complicate it. It's beyond my comprehension. Literally, not figuratively.
 
Nathan the Machinist said:
I spend about $7,000 a year just to calculate how much money I owe the IRS. Which is usually not very much. In part because the expense involved in keeping up with how much I owe them. That's money burnt. Spent but provided no actual value to anyone. It's amazing that we keep doing things this way. It's even more amazing that instead of simplifying it, we continue to complicate it. It's beyond my comprehension. Literally, not figuratively.
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The tax system is so broken that the IRS doesn't even understand it. My wife, who is an accountant from the UK, is always amazed at what a confused mess taxes are here.
 
f5uFErA.jpg
 
Back from the wonderful hotel and a visit to rivers edge cutlery (I held off from a purchase there for myself to use the money on a CPK)

Walk in my front door and it's 44 degrees....... great trip mood and future knife purchase money gone


The universe has a way of equalling things out while saying fu(k you at the same time ....
 
I completely agree, Jo the Machinist Jo the Machinist , and can't like your post enough.

I've brought up this matter in the past when I've seen such.

A year or two back I offered to buy a new flag for a neighbor who is a Vietnam vet. (I told him I meant no insult, and was bringing it to his attention as a friend, but that his tattered flag needed to be retired the next time he went to the VFW or American Legion.)

He replaced it within a day.

I love our flag.
 
Blues said:
I completely agree, Jo the Machinist Jo the Machinist , and can't like your post enough.

I've brought up this matter in the past when I've seen such.

A year or two back I offered to buy a new flag for a neighbor who is a Vietnam vet. (I told him I meant no insult, and was bringing it to his attention as a friend, but that his tattered flag needed to be retired the next time he went to the VFW or American Legion.)

He replaced it within a day.

I love our flag.
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At least it wasn't the US flag, but I just cannot believe that this is in front of our courthouse. An individual it would bother me but our courthouse? That's just ridiculous.
 
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