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BUYING, SELLING, and TAXES ???

F

FAS284

Senior member
I have a friend who ran a pseudo-business on ebay buying and selling laptops for a bit of profit (about 20 in all) and made couple thousand in profit... now he wants to know whether and how to figure this in his 1040 tax return .. its not explicity written anywhere that he has to pay tax on a sort of independent money making business so he asked me for advice and i'm hoping there are guys out there who really know their taxes (especially those who do a lot of selling/buying on anandtech forums) .. 🙂 thanks
 


<< its not explicity written anywhere that he has to pay tax on a sort of independent money making business >>



Have you read your tax laws lately???
 
hmm.. can anyone give me direct links or tell me where, specifically to look for info regarding this? i'd appreciate it so I can pass it on.. thanks
 


<< its not explicity written anywhere that he has to pay tax on a sort of independent money making business so he asked me for advice >>

lol! Where have you been for the last...50 years? Every penny that you receive is one form of income or another (I use that term loosely, some monies are not technically considered income). ALL income must be reported. That doesn't mean everything you report is going to be taxed or classified as "income", but it still MUST be reported.

There are exceptions such as gifts, loans, presents, and other things that do not have to be reported if they're under a certain $$ amount. But, it matters not whether your friend does this on the 'side' or full-time business, he must still report the income generated from the sale of those laptops. Whether or not he actually decides to is another matter.
 
Go to the www.irs.gov site and download Publication 17. It's a whopping big PDF file which will explain in excruciating detail what income must be reported. You can bet the works that it is subject to income tax. Look at the instructions for Schedule C.

Just a thought, whomever told your friend that "it's not explicitly written anywhere that he has to pay tax on a sort of independent money making business" should refrain from giving tax advice.
 
showed my friend these posts and he first wants to thank those of you for the advice and will look further at those publications..
and he says to kranky: no one told him that, rather it is in his own words and he is SEEKING advice, not being advised.. 🙂

he also asked me to ask you guys: if you buy a computer in august for say, $500 and you sell it a month later for $700.. and then in october, you buy another comp for $1000 and sell that one month later for $1200 would the profit of $400 have to be reported? In other words, its not superficially a business (hence pseudo-business) but rather a situation where you use the goods for sometime before deciding you want something better... and repeat that situation several times 🙂 hope this clarifies his situation.. thanks for helping him out!
 
Total inventory is $1500
Total sales are $1900
Reported profit $400

Subtract overhead and expenses 🙂

Pay tax on net profit 🙁 or loss 😀
 
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