At 01:32 PM 11/5/03 -0800, Zane wrote:
>>2) Hypothetically, say I sell an item on Ebay for... oh... $2500.00. The guy
>>could pay me via paypal, or he could send me a cashiers check. Does Paypal
>>report transactions to the IRS? Or more importantly, if I sell items on ebay
>>all year... do I have to track all that and report to IRS? Never really
>>thought of it cause it probably isn't much money anyways. But I am curious
>>if ebay and/or paypal reports to the IRS.
>
>This is a very good question. Unfortunately I think there are two
separate answers, with the primary one being you need to talk to someone
that professionally prepares taxes. The other answer, is that this is
going to vary from state to state.
>
>Having said that, I suspect this falls under "Hobby Income", and that if
you don't make a profit it might not be taxable.
The problem is that with the IRS you have to PROVE that you didn't make a
profit. If they get something from PayPal (or anywhere else) that shows
that you sold something for money (note that I didn't say profit!), then
you need to have records showing that it's cost and your expenses are equal
or greater than the income from the sales or else you owe taxes on it. In
addition to the possible taxes you may (will!) also be charged interest AND
penalties AND you could even be charged with income tax evasion!
The IRS <B> IS </B> monitoring E-bay sales!!!!!!! (Note emphasis on
IS.) They may or may not be getting Paypal records but they ARE monitoring
E-bay sales via the internet. I know a lawyer that has a client that HAS
already been called in by the IRS and asked about his E-bays sales. (Yes
he's in DEEP Doo-Doo!) This was several years ago so it's already
happening. I've been told that the IRS has a LARGE computer system by the
name of Carnivore or some such that's used to monitor all of the E-bay
transactions. Hint: I keep records of my travel and expenses (including
meals) when I'm out scrounging and my legal deductions are ALWAYS more than
what I make off of the stuff that I sell. We can (and do) use that loss to
offset our regular 9-5 job income. It normally knocks a couple of k off of
our income which translates to $1000 to $1200 less taxes that we have to pay.
Joe
At least I hope this is the case, as things are almost to the point that
my wife can start selling chunks of my collection off, and I'm pretty sure
that in the long run I won't make a profit.
>
> Zane
>
>--
>--
>| Zane H. Healy | UNIX Systems Administrator |
>| healyzh_at_aracnet.com (primary) | OpenVMS Enthusiast |
>| | Classic Computer Collector |
>+----------------------------------+----------------------------+
>| Empire of the Petal Throne and Traveller Role Playing, |
>| PDP-10 Emulation and Zane's Computer Museum. |
>| http://www.aracnet.com/~healyzh/ |
>
Received on Wed Nov 05 2003 - 18:31:09 GMT