I wonder if I buy items and the auction closes for less than I paid: must I report each "sale" made as income if I'm losing money on sales? I really need a tax professional if you're out there. I would hate to have a tax bill for $100s or (gulp) $1000s of dollars after a year in which my business lost money. The IRS makes me nervous about starting-up a business...thanks for any advice to all.
2007-08-13 14:46:54 · 7 answers · asked by Justin 2 in Business & Finance ➔ Taxes ➔ United States
No you dont report it....... unless you charging tax...... if you have a business and are taking in taxes then you have to report it.......... keep track of everything you buy and sell........ good records are a must........and get an accountant...... who knows the tax laws..........
2007-08-13 14:56:07 · answer #1 · answered by Anonymous · 0⤊ 0⤋
There are so many potholes in your question, but I will try to put it in perspective.
1. If you are doing this as a small business I recommend you go to IRS.com and download a schedule C. It will help you figure out your income and expenses.
2. I don't think you need to report every little sale you made, but you should keep records. You only report the aggregate to the IRS.
3. Business 101. You buy a bunch of stuff (inventory) for a certain price. That is your cost basis+whatever it takes to get, maintain, house that inventory .
3. You sell some stuff. If you sell the stuff for more than you paid for it you have made money (and the irs is interested).
4. If you sell the stuff for less than you paid for it you have a loss.
5. If at tax time you have more money from selling stuff than you do keeping or losing money, that goes on your schedule as a profit.
6. If you buy a bunch of stuff and can't sell it, the cost goes on your schedule C as a loss.
7. The difference between your "profit" and your "loss" can mean either that you owe the IRS, or they owe you.
Do a trial run with last year's schedule C. You will learn a lot from it.
2007-08-13 22:11:44 · answer #2 · answered by Anonymous · 0⤊ 0⤋
Are you selling on ebay with the intention of making a profit? If so, then the sale you mention in your question can be recorded as a loss which will offset your gains on other sales.
So do report both sales that make a proft and sales that make a loss.
2007-08-13 21:56:00 · answer #3 · answered by ninasgramma 7 · 1⤊ 0⤋
No, if you sell something at a loss you do not have any taxable income from that sale. If you are constantly selling at a loss the IRS may eventually rule that your "business" is actually a hobby and your losses will be limited to the income from the hobby activity.
2007-08-13 21:55:25 · answer #4 · answered by Bostonian In MO 7 · 2⤊ 0⤋
I would think that you could include the seller fees in addition to the $100 loss as a loss.
By the way, I know a way to get money back anytime you buy something from Ebay. If you want more information, then send me an email.
2007-08-14 00:53:07 · answer #5 · answered by Anonymous · 0⤊ 0⤋
If you are making a business of selling on ebay, you'd total your sales on ALL the items you sold, and subtract the cost of all of them and also allowable expenses. You'd only pay tax on the net.
2007-08-13 22:00:44 · answer #6 · answered by Judy 7 · 1⤊ 0⤋
You do realize, don't you, that the IRS has no idea what you sell on eBay unless YOU report it to them?
You don't pay taxes on a loss anyhow.
2007-08-17 20:43:00 · answer #7 · answered by Let me steer you 7 · 0⤊ 0⤋