Good new and bad news. The Bad news is that my watch sales enter the bracket that Paypal/ebay have to declare and therefore I got a 1099. The good news according to my accountant, but not so much my wife and my banker, is that my purchases offset the sales so as a "Hobby" I won't owe anything. The lesson? Use eBay and paypal less and Bank transfer more. or paypal gift. The other lesson? try to keep the sales to more than the purchases I guess...or at least the same. Last lesson? Hobbies are tax sensitive. didn't know that.
Nope...over (X amount of dollars). Fewer transactions, bigger boys and Camera equipment. I defaulted into Paypal payments out of comfort even if not using eBay
That is why i buy watches, nothing to buy besides beer, rum and fishing gear where i live Dennis ( as you know fishing gear has been free lately)
Oh mine didn't, he doesn't get it at all. He sits there with a long worried face looking at me like I'm about to grow antennae or a second head. Then sighs and "moves on"
Who? Me? Non-residents of the USA can check out here, the rest of this isn't going to apply to you. Anyway, here is a nice synopsis of the US hobby loss rules from the IRS: http://www.irs.gov/uac/Is-Your-Hobby-a-For-Profit-Endeavor? The document may be summed up by this sentence: "An activity is presumed for profit if it makes a profit in at least three of the last five tax years, including the current year." Assuming one doesn't meet the above standard (most of us will not), the amount spent on watches is only deductible against the proceeds when that particular watch is sold. I would also recommend keeping track of servicing costs, postage in/out, eBay/PayPal fees, etc., by watch. These expenses would be part of the cost basis when the watch is sold. Any gains from sales of hobby-type items are taxed as collectibles at 28%, not as long-term capital gains (20%). If you qualify as a for-profit business, you can then deduct some of your ancillary costs like security, insurance riders, and travel exclusively for purchasing activities. You may be able to deduct losses against your overall income in bad years. In the profitable years, your net income from the activity will be taxable at ordinary rates (up to 39.6%, plus phaseouts), plus self-employment tax (that rate will vary based on other sources of income). And thus ends the tax lesson for today. gatorcpa
