Another F&F vs G&S Debate (Moved From Scammer Thread)

[AntDog]

I’m not paying taxes on shit I already paid taxes on. The IRS can KMA. I sell up to just under that $600 via G&S, then if I go over that, F&F.

I’d like to think at this point I’m fairly trustworthy. I make sure the folks I deal with are as well.

 

[Peter Hartwig]

I’m not paying taxes on shit I already paid taxes on. The IRS can KMA. I sell up to just under that $600 via G&S, then if I go over that, F&F.

I’d like to think at this point I’m fairly trustworthy. I make sure the folks I deal with are as well.

As far as the IRS is concerned the limit has been $20,000 the last 2 years. They threatened, but it never came to be. I think this year they are using 5 or 6 thousand. Some states though
Are using a $600 limit, but if you keep records you likely wouldn't be paying anything, and if you used PP G & S throughout you would have the records.
Just saying

 

[AntDog]

As far as the IRS is concerned the limit has been $20,000 the last 2 years. They threatened, but it never came to be. I think this year they are using 5 or 6 thousand. Some states though
Are using a $600 limit, but if you keep records you likely wouldn't be paying anything, and if you used PP G & S throughout you would have the records.
Just saying

And be taxed on it if they decided to? FTS. Just saying.

Until it’s definitive, I got to do what I got to do.

 

[DocJekl]

As far as the IRS is concerned the limit has been $20,000 the last 2 years. They threatened, but it never came to be. I think this year they are using 5 or 6 thousand. Some states though
Are using a $600 limit, but if you keep records you likely wouldn't be paying anything, and if you used PP G & S throughout you would have the records.
Just saying

True, but many of my knives (and other people's) have already been acquired via trade or PPFF, with NO receipt to prove our cost at time of purchase. If I can't prove the cost due to lack of a receipt, then I'd get nailed for owing taxes after I get sent a 1099. So, no, I am not selling with G&S unless I have a receipt. Otherwise I just wont sell.

States that are using the $600 threshhold when the IRS has been delaying the rule suck, and the govt eventually only allowing us to sell $599 of our private non-business possessions via an online cash pay system (without receipts from acquiring those items) sucks.

 

[toker]

I’m not paying taxes on shit I already paid taxes on. The IRS can KMA. I sell up to just under that $600 via G&S, then if I go over that, F&F.

You're only paying taxes if you make a profit off a sale. So if you bought a knife for $500 and sell it for $500 (including fees, shipping, etc.) then you would have made $0 income on it.

If you don't have the receipt for your original purchase, the IRS will let you claim fair market value for the item, which is really easy to provide proof for.

Is the lower reporting threshold ridiculous? Yes.

 

[DocJekl]

You're only paying taxes if you make a profit off a sale. ... If you don't have the receipt for your original purchase, the IRS will let you claim fair market value for the item, which is really easy to provide proof for.

So, what is the procedure for getting FMV that the IRS will accept?

 

[toker]

So, what is the procedure for getting FMV that the IRS will accept?

Form 1099-K FAQ

Q7. I received a Form 1099-K for selling a personal item, but I don’t remember what I originally paid for it. (added Feb. 06, 2024)

A7. A personal item is something you owned for personal use such as a car, refrigerator, furniture, stereo, jewelry, silverware, or concert tickets, etc.

If you do not remember the original purchase price, or basis, of the item sold, you can attempt to find or estimate it a few different ways.

You can contact the bank or credit card company used to purchase the item for copies of old statements.

You can contact the company or individual who sold the item to you. They may have records of the sale or other information to help determine the cost.

For more information on how to establish this basis, go to IRS.gov: Publication 551, Basis of Assets

Generally, you should keep accurate records for personal items you may sell. If your records are lost, destroyed, or are not available due to circumstances beyond your control and your return is audited, examiners may allow you to present reconstructed records. Additionally, examiners may accept oral testimony when records do not exist.

 

[DocJekl]

Form 1099-K FAQ

Q7. I received a Form 1099-K for selling a personal item, but I don’t remember what I originally paid for it. (added Feb. 06, 2024)

A7. A personal item is something you owned for personal use such as a car, refrigerator, furniture, stereo, jewelry, silverware, or concert tickets, etc.

If you do not remember the original purchase price, or basis, of the item sold, you can attempt to find or estimate it a few different ways.

You can contact the bank or credit card company used to purchase the item for copies of old statements.

You can contact the company or individual who sold the item to you. They may have records of the sale or other information to help determine the cost.

For more information on how to establish this basis, go to IRS.gov: Publication 551, Basis of Assets

Generally, you should keep accurate records for personal items you may sell. If your records are lost, destroyed, or are not available due to circumstances beyond your control and your return is audited, examiners may allow you to present reconstructed records. Additionally, examiners may accept oral testimony when records do not exist.

But it's not easy. The 2 ways they suggest are often not possible in the circumstances I outlined, where (1) I wont have had a receipt (esp if traded) and (2) the person I bought from likely does not have a receipt either.

Then I had to dig up Publication 551 Basis of Assets for more info. The 15 page document gives me NO information on other ways to calculate the fair market value, in the event that neither I nor the previous owner have receipts. It's mostly focused on real-property like land and buildings, stocks and bonds, etc. with minimal talk about inventory.

I'm out, but thanks for the info.

 

[toker]

But it's not easy. The 2 ways they suggest are often not possible in the circumstances I outlined, where (1) I wont have had a receipt (esp if traded) and (2) the person I bought from likely does not have a receipt either.

It's in the last paragraph for sales.

If your records are lost, destroyed, or are not available due to circumstances beyond your control and your return is audited, examiners may allow you to present reconstructed records. Additionally, examiners may accept oral testimony when records do not exist.

My mother is a recently retired IRS agent, so I asked her a lot of questions about the rule change. In the event of an audit, they would look at the transaction and see if it looked suspicious. For something like a knife, you could easily bring up the historical MSRP with a Google search. If you paid more for it, you could just show the PayPal transaction receipt or show a similar completed eBay auction. Most IRS agents aren't looking to nail you for a few bucks here and there. They're looking for larger transactions and evidence of large $ cheating.

YMMV, since this information is worth what you paid for it

 

[dericdesmond]

Thanks for the valuable info toker

 

[AntDog]

Form 1099-K FAQ

Q7. I received a Form 1099-K for selling a personal item, but I don’t remember what I originally paid for it. (added Feb. 06, 2024)

A7. A personal item is something you owned for personal use such as a car, refrigerator, furniture, stereo, jewelry, silverware, or concert tickets, etc.

If you do not remember the original purchase price, or basis, of the item sold, you can attempt to find or estimate it a few different ways.

You can contact the bank or credit card company used to purchase the item for copies of old statements.

You can contact the company or individual who sold the item to you. They may have records of the sale or other information to help determine the cost.

For more information on how to establish this basis, go to IRS.gov: Publication 551, Basis of Assets

Generally, you should keep accurate records for personal items you may sell. If your records are lost, destroyed, or are not available due to circumstances beyond your control and your return is audited, examiners may allow you to present reconstructed records. Additionally, examiners may accept oral testimony when records do not exist.

Or just, not.

 

[DocJekl]

It's in the last paragraph for sales.

If your records are lost, destroyed, or are not available due to circumstances beyond your control and your return is audited, examiners may allow you to present reconstructed records. Additionally, examiners may accept oral testimony when records do not exist.

My mother is a recently retired IRS agent, so I asked her a lot of questions about the rule change. In the event of an audit, they would look at the transaction and see if it looked suspicious. For something like a knife, you could easily bring up the historical MSRP with a Google search. If you paid more for it, you could just show the PayPal transaction receipt or show a similar completed eBay auction. Most IRS agents aren't looking to nail you for a few bucks here and there. They're looking for larger transactions and evidence of large $ cheating.

YMMV, since this information is worth what you paid for it

I deleted my whole whiny paragraph about how I didn't want to have to get audited to give an oral testimony, or sit with an examiner who might allow me to reconstruct my records. And that I didn't want to show that I used PPFF instead of G&S where they could then try to hit me with fraud charges when I know I was only selling something for what I paid and it wasn't worth the effort to prove it when I don't get paid for my time to prove it. But then I removed it all before posting.

I guess I should have left that in....

 

[EngrSorenson]

My mother is a recently retired IRS agent

I was wondering how you were rattling off so many facts at 2! Sheesh!

Reported for family.

 

[Triton]

I’m not paying taxes on shit I already paid taxes on. The IRS can KMA. I sell up to just under that $600 via G&S, then if I go over that, F&F.

I’d like to think at this point I’m fairly trustworthy. I make sure the folks I deal with are as well.

That's your call of course and became I've seen you around here for a long time I might be more inclined to take the risk. However for most people on the exchange I would just move on. There's nothing I'm buying here that is a necessity or that I have to take a risk over. I would encourage others to do the same.

 

[EngrSorenson]

That's your call of course and became I've seen you around here for a long time I might be more inclined to take the risk. However for most people on the exchange I would just move on. There's nothing I'm buying here that is a necessity or that I have to take a risk over. I would encourage others to do the same.

This is it ^^^ use F&F at your own risk.

 

[toker]

Or just, not.

Just pointing out why some of the tax excuses for only wanting F&F aren't based in reality. There are a few sellers that I would trust with F&F, but not a random low-ball offer without picture proof and account proof.

That's 99.99% of the scams that keep happening to people.

I was wondering how you were rattling off so many facts at 2! Sheesh!

It's nice to have your own tax service and person you can bounce questions off. She was a Senior Auditor who mostly did corporations and large businesses, but did a lot of training for new agents. She still does tax returns for a lot of close friends and family to keep busy. Even though she doesn't charge people, she'll spend hours optimizing their returns.

Talked to her this morning again about what she would have done for items with no receipt. She said she just would have Googled the results and found the MSRP of the item. As long as everything was reasonable, they wouldn't look into it further. It's not worth the time of even a low level agent to nickel and dime you here and there. They're looking for an overall $ and pattern of fraud.

 

[EngrSorenson]

She was a Senior Auditor who mostly did corporations and large businesses, but did a lot of training for new agents

We're pretty far off topic now, but I appreciate her years of service.
Auditors are pretty unpopular, and I'm sure no one's ever glad to see them, but they help keep the wheels on the bus.

 

[ooitzoo]

As far as the IRS is concerned the limit has been $20,000 the last 2 years. They threatened, but it never came to be. I think this year they are using 5 or 6 thousand. Some states though
Are using a $600 limit, but if you keep records you likely wouldn't be paying anything, and if you used PP G & S throughout you would have the records.
Just saying

Pretty much my feelings on the topic

And be taxed on it if they decided to? FTS. Just saying.

Until it’s definitive, I got to do what I got to do.

That's fine but keep in mind you're effectively committing fraud. Is it minor? Yes. Are you likely to get caught or face any punishment? No. Still fraud though and you don't know to what extent it'll be audited in the future.

You're only paying taxes if you make a profit off a sale. So if you bought a knife for $500 and sell it for $500 (including fees, shipping, etc.) then you would have made $0 income on it.

If you don't have the receipt for your original purchase, the IRS will let you claim fair market value for the item, which is really easy to provide proof for.

Is the lower reporting threshold ridiculous? Yes.

I would add that the IRS would have to provide some level of evidence that a profit was made. In effect, if you sold a $500 item for $500 and they want to claim you made a profit the onus is on them to show that.

But it's not easy. The 2 ways they suggest are often not possible in the circumstances I outlined, where (1) I wont have had a receipt (esp if traded) and (2) the person I bought from likely does not have a receipt either.

Then I had to dig up Publication 551 Basis of Assets for more info. The 15 page document gives me NO information on other ways to calculate the fair market value, in the event that neither I nor the previous owner have receipts. It's mostly focused on real-property like land and buildings, stocks and bonds, etc. with minimal talk about inventory.

I'm out, but thanks for the info.

You can be "out" but keep in mind that PPFF for a non-FF transaction is 1) fraud and 2) not recommended for the buyer

If it's really a problem for someone then I guess you can go back to the days of checks / MO

 

[madcap_magician]

I have entirely solved this problem for myself. It's not like we haven't known about this issue for like four years now, so there has been plenty of time for everyone to figure out how they're going to handle it.

I don't buy secondhand, which helps. I have a spreadsheet that documents all the knives and guns currently in my collection, including purchase dates, from whom I purchased it, the purchase price and any ancillary costs such as separate shipping or payment fees, and my order number from the dealer. I also never delete e-mail receipts for knives.

When I sell a knife, I provide a completed bill of sale for the buyer's records so they have a record of what they paid and when, and I have a record of what I received and when.

This is not abundantly time consuming. Should I have to do it? I don't think so. But it does make my life easier. When this tax law change first came on the horizon is when I started tracking purchases and sales, and my collection, though some $20,000, also rotates with some regularity, and I have nothing more than seven years old in it.

So at any given point, should the 1099 reporting actually into effect and get to me, I have documentation going back to 2017 about what I've purchased and sold and can document cost of goods sold. I try to on average make a little money with sales, but not so much that it would add up to any meaningful taxes from profit. My target is to try and buy things that I am confident I can resell quickly at retail plus G&S fees and shipping and maybe $10-20 extra should I decide to move on from it later. Sometimes I get lucky on a drop and am able to make a fair bit extra, and this is balanced out by my occasional impulse purchases or bad judgment about how something will hold value. This year I have sold 14 knives for a net $(83.83) loss in total, mainly from one knife which I bought retail two years ago and which did not hold its value nearly as well as I thought it would. I sold eight knives for a profit ranging from $6.27 to $196.76 and six at a loss ranging from $(12.28) to $(302.93).

But I work with spreadsheets all day, every day, anyway.

 

[jlauffer]

I have entirely solved this problem for myself. It's not like we haven't known about this issue for like four years now, so there has been plenty of time for everyone to figure out how they're going to handle it.

I don't buy secondhand, which helps. I have a spreadsheet that documents all the knives and guns currently in my collection, including purchase dates, from whom I purchased it, the purchase price and any ancillary costs such as separate shipping or payment fees, and my order number from the dealer. I also never delete e-mail receipts for knives.

When I sell a knife, I provide a completed bill of sale for the buyer's records so they have a record of what they paid and when, and I have a record of what I received and when.

This is not abundantly time consuming. Should I have to do it? I don't think so. But it does make my life easier. When this tax law change first came on the horizon is when I started tracking purchases and sales, and my collection, though some $20,000, also rotates with some regularity, and I have nothing more than seven years old in it.

So at any given point, should the 1099 reporting actually into effect and get to me, I have documentation going back to 2017 about what I've purchased and sold and can document cost of goods sold. I try to on average make a little money with sales, but not so much that it would add up to any meaningful taxes from profit. My target is to try and buy things that I am confident I can resell quickly at retail plus G&S fees and shipping and maybe $10-20 extra should I decide to move on from it later. Sometimes I get lucky on a drop and am able to make a fair bit extra, and this is balanced out by my occasional impulse purchases or bad judgment about how something will hold value. This year I have sold 14 knives for a net $(83.83) loss in total, mainly from one knife which I bought retail two years ago and which did not hold its value nearly as well as I thought it would. I sold eight knives for a profit ranging from $6.27 to $196.76 and six at a loss ranging from $(12.28) to $(302.93).

But I work with spreadsheets all day, every day, anyway.

Yep, also been doing this (other than the not buying secondhand part) since 2018, after MA changed the threshold for the 2017 tax year.