I'm somewhat hesitant to enter this "fray", but since I've for many years been
a collector of vintage systems, here goes:
My business is consulting (computer design, architecture, patent matters, and
technical due-diligence for VCs) - so I've had my own "S" Corp. since 1986
(Minimum tax - $800/year in CA).
Every item (including vintage computers, etc.) that I buy or sell is entered
into my accounting system. Every dollar I earn using my vintage systems in
my work or for resale goes into that system. At the end of the year my CPA
creates a balance sheet, P&L, etc. (It costs about $1,500/year for tax
accounting - which is deductable). I take advantage of every legal means to
reduce my taxes - and I keep impeccable records.
I've been audited twice - and came out totally clean (well almost - once the
IRS concluded that I didn't declare $300 in income - but they let it drop
because my records otherwise were impeccable).
So if you're willing to do the necessary paperwork - and have your "hobby" as
a collector work for you to make $, you can have a win-win in terms of
expensing collectables.
I've also considered forming a 501(3c) non-profit corporation - but so far
that hasn't been necessary - as the utililization of my collectables in
conjunction with my business has just about always turned a (taxable) profit.
Cheers,
Lyle
On Thursday 06 November 2003 03:32, Joe wrote:
> At 10:02 PM 11/5/03 -0800, you wrote:
> >> 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!
> >
> >I rather figured this was the case, and was part of why I recommended
>
> getting professional advice. Any idea if storage costs go towards showing
> that you didn't make a profit?
>
> It should be, but the same rules woiuld apply that applies to a home
> business; the area would have to be used exclusively for your hobby
> business. The costs for a storage unit should apply but you can't charge
> off the costs of your living room (unless you use it exclusively and IRS
> would probably make you prove that). My living room would qualify :-( but I
> don't claim it.
>
>
> Unfortunately in my case, I don't have receipts that show how much I paid
> for all this junk, and I sure can't remember in most cases.
>
> I have the same problem. I buy most of my stufff in big lots so costs is
> minimal. But the expenses and travel are usually a lot more than the item
> costs.
>
> Joe
>
> >And yes, I will end up getting professional advice in the long run on
> > this.
> >
> > 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/ |
--
Lyle Bickley
Bickley Consulting West Inc.
Mountain View, CA 94040
"Black holes are where God is dividing by zero"
Received on Thu Nov 06 2003 - 11:12:02 GMT