Anyone else receive this "ebay"warning?

[34swtns]

If you sell an item for more than you pay for it, the amount above what you paid for the item is taxable. I.E. you buy a game used jersey for $400 and you turn around and sell it on Ebay for $600, the $200 difference between what you paid and what you made is taxable.

Makes you wonder how long before ebay and other auction houses are more closely regulated by the gub'ment.
'Cause they're losing a TON of money in taxable income every day and don't think they don't know it.

[bigtime59]

The minute everybody selling on eBay has to run their "business" like an actual "business" is the minute eBay shrivels up and blows away.
The day after, somebody will be making a fortune off the bartering site they just set up.

[legaleagle92481]

In some states i.e. New York it is not just the seller who faces possible tax issues as the buyer is responsible for paying sales tax. For purchases that the seller did not charge tax the buyer is supposed to remit the tax owed for all such purchases to the State when filing his or her tax return. Currently it is on the honor system but if that changes it will help kill Ebay.

[transam9572]

I stopped using paypal for this reason. Nice post.

[sylbry]

In some states i.e. New York it is not just the seller who faces possible tax issues as the buyer is responsible for paying sales tax. For purchases that the seller did not charge tax the buyer is supposed to remit the tax owed for all such purchases to the State when filing his or her tax return. Currently it is on the honor system but if that changes it will help kill Ebay.

Many states have use tax lines on their state income tax returns for individuals to remit sales tax on items they purchased and didn't pay sales tax. But many states also have a minimum threshold (here in MN it is $600).

Most people have no idea the number of pitfuls on ebay when it comes to taxes; from income tax, to collecting sales tax on instate sales, to remitting use tax on purchases. If Quill v North Dakota ever gets reversed then a whole new can of worms appears.

[PwKw13]

In some states i.e. New York it is not just the seller who faces possible tax issues as the buyer is responsible for paying sales tax. For purchases that the seller did not charge tax the buyer is supposed to remit the tax owed for all such purchases to the State when filing his or her tax return. Currently it is on the honor system but if that changes it will help kill Ebay.

This is something that I've never understood. Why should taxes be paid on both ends -- when buying and selling? If an item is going to be treated as an investment and taxes are paid on the gain, why should sales tax be paid up front? Sales tax isn't paid on the original purchase price of a stock.

[5kRunner]

This is something that I've never understood. Why should taxes be paid on both ends -- when buying and selling? If an item is going to be treated as an investment and taxes are paid on the gain, why should sales tax be paid up front? Sales tax isn't paid on the original purchase price of a stock.

Stock is a bad comparison. Stock is a security. Sales tax is never paid on securities.

Jerseys/Bats/Helmets etc are goods. Basically, unless you buy goods for resale you should be paying sales tax on them.

[sylbry]

This is something that I've never understood. Why should taxes be paid on both ends -- when buying and selling? If an item is going to be treated as an investment and taxes are paid on the gain, why should sales tax be paid up front? Sales tax isn't paid on the original purchase price of a stock.

If you are purchasing "tangible personal property", state sales (or use) tax is collected/paid on the purchase (unless an exemption exists) and federal and state (if applicable) income tax is due on the sale if a profit is made.

[PwKw13]

Thanks guys for clarifying.

Two more questions: Is sales tax considered part of the initial purchase price? Can losses on sales be duducted for tax purposes?

[sylbry]

Thanks guys for clarifying.

Two more questions: Is sales tax considered part of the initial purchase price? Can losses on sales be duducted for tax purposes?

Yes, sales tax is part of the purchase price if you are a hobbyist. If you are a business, you would provide the seller with a resale certificate and buy it sales tax exempt.

Business losses can be deducted. Hobby losses can not.