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"Suck it up and just accept G&S"...thoughts?
- Thread starter Docscoot
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The difference (and problem) as I see it is, with the new 1099 being filed, the recipient now has to prove they are not breaking the law. That's way too far into "guilty until proven innocent" territory in my book. If there is wrongdoing, it's the government's obligation to prove it, not the other way around.
This isn't affecting just knife sales, either. For people who are seeking to downsize by selling possessions accumulated over a lifetime, this could be disastrous financially in terms unproven but assumed tax liability. No one has receipts for everything they bought over 20-50 years of living. To presume that all proceeds are profit is ludicrous and the burden to prove that they are not is unreasonable and wrong.
I'm pretty much just a buyer (have never sold a knife), and from my perspective G&S is strongly preferred due to the proliferation of hacked accounts we're seeing in the Exchange.
From the seller's perspective it does add a nuisance factor, but I doubt that anyone will have to pay significant (or any) taxes on these sales, because no one is making much or any money selling used knives. In fact, most are probably taking small losses on these sales. But if the sales are reported you do have to keep reasonably good records to prove your cost basis, and there is some additional work at tax time.
From the seller's perspective it does add a nuisance factor, but I doubt that anyone will have to pay significant (or any) taxes on these sales, because no one is making much or any money selling used knives. In fact, most are probably taking small losses on these sales. But if the sales are reported you do have to keep reasonably good records to prove your cost basis, and there is some additional work at tax time.
Well that's a separate matter IMO. They're doing this under the guise of trying to close the tax gap. Plenty of people DO dodge taxes they should be paying with these methods and the 1099s are really just a nudge to push folks to pay taxes they should be paying anyway. That's the IRS line anyway, whether you accept that or not. But my worry here is just that we're shooting ourselves in the foot by moving more to direct cash transfer payments as the norm rather than just sucking it up and doing a little bit of extra work on our taxes at the end of the year. I'll say it again, if you're selling something at a loss, that IS NOT taxable income, but you do have to show your work on that now which I agree is very annoying.
Totally agree. You now have to prove that there wasn't profit. So basically guilty until proven innocent. It's an unfortunate norm to have. Time will tell whether the IRS actually has anywhere near the resources to actually be cracking down here on tax filings that ignored 1099s, my guess is they are drastically understaffed still and will not have anywhere near the capacity to go after more than a few percent of these, but that's just a guess (based partly on just how bad the government is at doing most things, enforcing taxes included).
This is not quite right. This definition of expenses in the IRS hobby definition means things like postage, packaging, etc. Does not include the original purchase price of items which you absolutely can factor in. There are extensive discussions on this in other places on BF, worth reading through some of those as it's pretty well sorted out there.
Exactly right. If you read through all the text in the hobby part of IRS regs it goes through this. You also don't necessarily have to claim it as hobby income, can do it as small business (Schedule C), as an actual investment with capital gains (Schedule D, same way you'd deal with profit on sales from investment art, etc.), or as miscellaneous "other income" on a 1040 where you can offset sale price by original cost. I'm not a tax professional btw, which I guess goes without saying, so please take my advice with a grain of salt
RousingRabbles
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We’re aware of that, that’s why many of us are choosing to sell through F&F now to avoid it altogether. I don’t have receipts for many of the knives I sell, and I’m not going to spend an hour or more come tax season to prove to the IRS something that can be avoided altogether by choosing a more relevant payment option. You do you, but I have no problem buying F&F and will continue to sell that way from now on.
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This whole thing grinds my gears.
On the one hand: As usual, the government made a law without providing clear guidance on how to follow it or considering what the impact would be. I'm getting impacted, but I'm not entirely sure how, and that's infuriating.
On the other hand: People using F&F to buy or sell knives are explicitly violating PayPal TOS, which is both dangerous in terms of catching a PayPal ban or funds freeze and I think unethical because people doing so are defrauding PayPal (as much as I dislike them) of their payment for the use of their service. Nothing has changed in terms of taxation, only in tax reporting. I don't mind paying tax on net income received from sales, but I think it should be easy to figure out what that is, and it's not. Is it a hobby? Is it a sale of investments? Is is self-employment? The cost basis you can use for all those things is different. Why must it be so complicated?
But on the third hand: Using G&S to buy or sell knives is also dangerous because PayPal is capricious about their weapons policy, doesn't make it easy to understand exactly what you can and cannot buy and sell using their service, and enforces their policies erratically and inconsistently.
But on the fourth hand: Lots of people were using F&F before to dodge fees and in a small minority of cases also enhance their ability to scam, and now they're just doing the same thing for the same reason only now they're doing so self-righteously because they've got it in their heads that they're the ones who have been wronged.
And on the fifth hand: Scamming is just as easy in G&S, really.
On the one hand: As usual, the government made a law without providing clear guidance on how to follow it or considering what the impact would be. I'm getting impacted, but I'm not entirely sure how, and that's infuriating.
On the other hand: People using F&F to buy or sell knives are explicitly violating PayPal TOS, which is both dangerous in terms of catching a PayPal ban or funds freeze and I think unethical because people doing so are defrauding PayPal (as much as I dislike them) of their payment for the use of their service. Nothing has changed in terms of taxation, only in tax reporting. I don't mind paying tax on net income received from sales, but I think it should be easy to figure out what that is, and it's not. Is it a hobby? Is it a sale of investments? Is is self-employment? The cost basis you can use for all those things is different. Why must it be so complicated?
But on the third hand: Using G&S to buy or sell knives is also dangerous because PayPal is capricious about their weapons policy, doesn't make it easy to understand exactly what you can and cannot buy and sell using their service, and enforces their policies erratically and inconsistently.
But on the fourth hand: Lots of people were using F&F before to dodge fees and in a small minority of cases also enhance their ability to scam, and now they're just doing the same thing for the same reason only now they're doing so self-righteously because they've got it in their heads that they're the ones who have been wronged.
And on the fifth hand: Scamming is just as easy in G&S, really.
Well, before you suck it up, maybe consider this;
If you're selling on this forum, and prefer PayPal F&F, specify in your sales ad that payment must be made within 24, 48hrs or whatever.
My point is, aren't most hacked accounts called out within hours? It may make a sales ad seem more trustworthy. Just a thought...
If you're selling on this forum, and prefer PayPal F&F, specify in your sales ad that payment must be made within 24, 48hrs or whatever.
My point is, aren't most hacked accounts called out within hours? It may make a sales ad seem more trustworthy. Just a thought...
I've always been against F&F personally so I won't be asking for it if I sell something in the future. But I will go to USPS Money Orders or maybe personal checks if I know you. I realize this may possibly limit the buyer pool, but I have knives that are many years old and I have no receipts for most of them. Going forward I will be sure to keep records of anything I buy, but that still leaves me getting fleeced for selling anything purchased before this BS. I haven't sold a lot in the past, but I had plans to sell several this year and now this has giving me a big pause as to whether I will bother or not.
And I have no problem paying taxes. But to pay taxes on something twice and get penalized for liquidating my property at zero profit or a loss ... not gonna happen.
And I have no problem paying taxes. But to pay taxes on something twice and get penalized for liquidating my property at zero profit or a loss ... not gonna happen.
I guess my evolving thinking is maybe F&F etc for deals with strangers should just not be the rule, but certainly still an option where you might not have original receipts etc. I just worry if everyone uses it all the time it could become a problem with attracting more scams if they see a more vulnerable forum.
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Yes, I'll admit I'm in a better situation than most for this. I've been tracking purchases for the past year ever since we heard about this tax change, and my collection shifts often enough that everything I own right now I was able to find my receipt for and document it. I don't have any knives I've owned for so long that I can't document the purchase price.
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It's possible, but in many other forums where I buy knives and gun parts, FF is the norm, and I've only ever actually been scammed on BF selling an item and accepting GS. The problem with GS is it makes it easier for buyers to scam. FF makes it easier for sellers to scam. Pick your poison.
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