Tax experst or accountants

[Flyingbullseye]

IF we have any tax experts or accountants here I got a income tax question for them.

I sold a rifle and scope this year and I don't know if I have to claim all of the selling price or what I made over/under what I originally purchased the items for. I believe it goes in the capital gains section?

I'm mostly looking to get pointed in the right direction as I realize quite often the value of asking advice on the net unless of course you happen to be a certified accountant.

Flyingbullseye

 

[doc76251]

Re: Tax experst or accountants

Do you report how much you made at a garage sale?

Cheers,

Doc

 

[SeanRT]

Re: Tax experst or accountants

First of all, I am an accountant (I graduated from University about 3 weeks ago with a Bachelor of Science in Business Administration - Accounting).

Second, you only need to claim anything that you made over what you originally purchased the items for (e.g. you bought the scope for $1,000 and sold it for $1,100, you should claim a $100 profit on the sold scope).

I THINK that you can claim this profit in the capital gains section, but you could also claim it in the "Other Earnings/Profit" section of the 1040.

Hope this helps...



Disclaimer: If you really want up-to-date tax advice, I suggest that you either call or visit a tax expert in your state. What I have posted should be used for informational/educational purposes only and should not be considered to be personal tax advice.

 

[SeanRT]

Re: Tax experst or accountants

Garage sales are similar. However, you would probably want to report it/them in the "Other Earnings/Profit" section of the 1040.




Disclaimer: If you really want up-to-date tax advice, I suggest that you either call or visit a tax expert in your state. What I have posted should be used for informational/educational purposes only and should not be considered to be personal tax advice.

 

[Queequeg]

Re: Tax experst or accountants

Talk to a licensed CPA who specializes in tax law. The tax code is enormous and it changes every year.

Since you paid taxes on the rifle when you bought it, as well as any and all accessories you sold it with, the argument that you should again be taxed for the sale would amount to double taxation. In that case, the question then follows, "Did you charge the buyer with applicable sales taxes?"

Capital gains (or losses) apply to capital acquisitions, i.e. those items purchased specifically as investments or used to generate income such as real estate, machinery, financial instruments, or for subsequent resale such as inventory.

Additionally, the profit on the sale of personal property, unless done as a specific source of supplemental income may not be treated as taxable below a certain amount.

State income and sales taxes also come into play, potentially, so I'd suggest you consult with a licensed CPA in your area.

 

[Red Mule]

Re: Tax experst or accountants

Half of my business is tax work. Profits from the sale of personal property are taxable at current rates and are reported on Form 1040 as Other Income. To correctly determine your profit, you will need to determine the cost basis in the item. Take the purchase price of the item and add any sales tax and federal Pittman-Robetson tax paid, plus any shipping or delivery cost you incurred. This is your basis. Subtract the basis from the sales price you received, and this is you gross profit. If you had any sales expense ( Advertising, shipping, etc ) this is subtracted from from the gross profit to arrive at your final net profit.

There are ways to legally avoid paying the tax, but they are likely not worth the effort unless the profit was substantial. If you are concerned about the tax effect, find a local CPA or IRS Enrolled Agent to consult with. I have no idea about any state tax issues but generally they are based off what is reported on you federal return.

Again, if you are concerned, take all of your records to a local professional for advice. Internet advice, including mine should be taken with a grain of salt. I don't have enough information to give you an opinion that I can stand behind.

 

[shibby575]

Re: Tax experst or accountants

Personally i think of it like this. I've paid income tax on the money used to purchase the item . I've paid sales tax on that item. I'll be damned if I'm paying any more tax on it.

 

[Smithcollector]

Re: Tax experst or accountants

CPA here. I'd look at the rifle/scope sale as a part of your overall gun-related hobby, and as such would aggregate all income from the hobby against all expense of the hobby for the year. As long as that amount is not net profit, I wouldn't worry about reporting it. Most people don't make money at their legitimate hobbies; the usual game is people characterizing hobby losses as deductions against other income.

 

[areaone]

Re: Tax experst or accountants

What happens if he sold it at a loss, would he have a long term or short term loss that would be recognized. Doubtful.

 

[Flyingbullseye]

Re: Tax experst or accountants

Thanks guys for giving me food for thought and pointing me in some useful directions. The rifle I'm probably screwed with as it had after market parts and I don't have the receipts so I'll probably have to claim all of it. The scope I made about $75. Time to talk to a CPA when all of my tax info comes in.

Flyingbullseye

 

[Smithcollector]

Re: Tax experst or accountants

It's not a capital asset and so if sold at a loss, it is not deductible unless he is operating the "hobby" with the intent to make a profit. It can offset other hobby income. You probably won't need receipts; certainly not unless you got audited, which is unlikely, and even then, the IRS will usually accept reasonable estimates unless you've pissed them off about something else. Given what I've read here, I wouldn't report it.

 

[shankster..]

Re: Tax experst or accountants

<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: shibby</div><div class="ubbcode-body">Personally i think of it like this. I've paid income tax on the money used to purchase the item . I've paid sales tax on that item. I'll be damned if I'm paying any more tax on it. </div></div>

<span style="font-weight: bold">I see this in your future:
</span>

 

[The Animal]

Re: Tax experst or accountants

If you held the rifle for less than a year and sold it at a profit = short term capital gain

If you held the rifle for longer than a year and sold it at a profit = long term capital gain

If it's a net loss, show the sale as a capital loss but check the box on your software as "personal loss" which is not deductible.

If it's a rifle you won at match and sold it, typically it's considered hobby income and you report it as other income and report your expenses, associated with your hobby, on your schedule A misc itemized deductions not subject to the 2% floor. Remember hobby losses are deductible to the extent of your hobby income.

Remember to give your accountant the complete story about the sale so he/she can report it correctly.

If you have trouble finding your expenses or receipts, consult your accountant about coming up with your "basis" for what it cost you and mention to them about the "Cohan Rule" for determining basis. If they don't know about this rule, they are an amature and find yourself a reputable accountant that won't allow the IRS to economically sodomize you due to their ignorance.

 

[shibby575]

Re: Tax experst or accountants

I don't know what you're talking about i never sold or bought any firearms. They were all given to me and I've given others away. No records means nothing ever happened.

 

[The Animal]

Re: Tax experst or accountants

I was responding to flyingbullseye's question.

If you can't understand my answer to his question, stop! Bring your stuff to a CPA. Your opinion about not paying taxes on income from the sale of an asset is something you shouldn't be giving advice to. Look up internal revenue code section 1221, 1222, 108 and read up on Publication 17 from the IRS website, then give a valid opinion.