1099-K

[Ephraim Kibbey]

Just a word to the wise:

I have sold on GunBroker but I am more often a buyer.
I depend on the sellers.
This is important for any sellers and businesses that receive payment through Venmo, PayPal etc..

I just saw on the news that the new tax code for tax reporting in April has an added wrinkle (probably more than one!?!)

Last year an individual had to receive $20,000 or more from the cash app folks for them to be required to send you and the IRS a 1099-K reporting what you took in via their platform.

THIS YEAR THE CUT OFF IS $600!!!
That is just ONE nice replica!!!
That means any collector selling just one of their collection could get caught up in this new rule.

Furthermore the IRS has not yet figured out (according to the reporter) how to separate friendly exchanges like "here is the $10 I borrowed from you last week) from income.

Round and round we go!

 

[Salvavita]

Yes sir, you are correct. I have been concerned all year about the money I send my daughter who is out of state attending Nursing school. I have kept the amounts small and ALWAYS provided a reason. If you read the Act, you will probably, laugh at the reasons Congress and the Administration provided.

 

[Rustmangler]

Yes a concern as I send money to lots of people like jackrabbit among others. They have 87,000 new agents for a reason.

 

[Jackrabbit1957]

I really see this as the beginning of socialism taking hold of our country. If you can control the money you control the people. It needs to be stopped here and now. The ones who are most affected are law abiding citizens just the ones affected by gun control laws are law abiding citizens.

 

[Speedo66]

Yes a concern as I send money to lots of people like jackrabbit among others. They have 87,000 new agents for a reason.

They were supposed to go after the ultra wealthy, but they probably have better tax lawyers than the IRS does, so instead they'll go after the low hanging fruit.

 

[Malachi Leviticus Blue]

If you are selling on GB via money order you dont have to worry about the 1099-K
But if you get a 1099-K, remember it is only taxable if you earned a profit and only the profit is taxable not the entire amount.
I've heard from tax folks that are planning to list the amount in misc income and again in misc deductions.

 

[Rustmangler]

I don't make very much money and with property tax and income tax hits me pretty hard. This year the government will get over 80% of my income. In the year 2000 they got 107% of my income. Small business pays income and SS tax and that alone is 55%. This 1099-K looks bothersome to me.

 

[AlexanderA]

THIS YEAR THE CUT OFF IS $600!!!
That is just ONE nice replica!!!
That means any collector selling just one of their collection could get caught up in this new rule.

But if you get a 1099-K, remember it is only taxable if you earned a profit and only the profit is taxable not the entire amount.

This is why it's all the more important to keep track of the basis (cost) of any item you sell. And by that I mean proof (such as a receipt) going back to the original purchase, plus the cost of any improvements, such as gunsmithing or restoration work.

I've heard from tax folks that are planning to list the amount in misc income and again in misc deductions.

That's incorrect. You should report the sale on Schedule D (and Form 8949) as the sale of a capital asset. However, losses on sales of assets held for personal use are not deductible, and gains on the sale of collectible items are taxed at the special 28% "collectibles" rate. You might want to talk to a tax advisor on this. It's not easy or simple.

Where the tax implications are really significant is if you sell a machine gun that has appreciated tremendously since the time you bought it. The IRS has a pretty good idea of what these were going for 10, 20, or 30 years ago. They know what your (relatively low) basis is likely to be. As an MG owner myself, I'm planning to let my wife inherit them, so that she can take advantage of the stepped-up basis (fair market value at the date of death). If she sells then, there will be no tax.

ETA: Items held in a trust are not "transferred" upon death, and therefore don't get a stepped-up basis. The original basis carries over. Be warned.

 

[woodnbow]

I really see this as the beginning of socialism taking hold of our country. If you can control the money you control the people. It needs to be stopped here and now. The ones who are most affected are law abiding citizens just the ones affected by gun control laws are law abiding citizens.

Socialism took hold with the progressive income tax. Got a hell of a lot stronger foothold with social security.

 

[Malachi Leviticus Blue]

...You should report the sale on Schedule D (and Form 8949) as the sale of a capital asset...

I'm not saying your wrong, but the IRS has given the advice that if you are selling personal belongings at a loss then you don't even need to report it. Obviously, that could be confusing, since what do you do with the 1099-K.
There are plenty of accountants and tax folks that have differing opinions on how to handle the 1099-K.
There are also folks still working to raise the reporting limit so it doesn't turn into a IRS log lam for one reason.

 

[AlexanderA]

Obviously, that could be confusing, since what do you do with the 1099-K.

If you receive any kind of 1099, it should be resolved on the tax return. While it is true that personal items sold at a loss don't need to be reported, the presence of a 1099 changes that. The IRS has no way of knowing if the sale was at a gain or loss, until you claim the cost basis on the return (Schedule D).

 

[P89DCSS]

You do not need to have a receipt to establish basis for 1099-K income. Just as in the case of mileage for expenses against 1099 income you do not need a contemporaneous mileage log or gas receipts.

 

[Malachi Leviticus Blue]

The IRS is delaying the new $600 threshold -

https://www.marketwatch.com/story/i...ns-over-600-heres-what-went-wrong-11671825162

 

[P89DCSS]

The IRS is delaying the new $600 threshold -

https://www.marketwatch.com/story/i...ns-over-600-heres-what-went-wrong-11671825162

TLDR version:
Looks like the IRS delayed it for a year. IRS admitted there isn't any way to distinguish between actual income from sales and personal, non-taxable payments/gifts. Basically they tried to pull a fast one expecting most taxpayers would just accept the 1099-K as income. No plans to distinguish payment sources. HRB et al were licking their chops for an extra $200 in fees, I bet they're bummed.