Paypal and the future of our hobby.

blowoutcards · 03-11-2010, 09:57 PM

Paypal and the future of our hobby.
March 11, 2010 at 7:48 PM

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When this was introduced in 2008, this seemed like a long ways off, but we're less than a year away from something that could kill off certain facets of our hobby. For those of you who are unaware, it will be mandatory to report merchant card and third party payments to the IRS (via 1099-K) in 2011. This means Paypal, people.

On the surface, it doesn't look like it might affect a lot of us. Surely, we are doing this as a hobby. Surely, some of us are just selling off bits of our personal collection. Surely--

However, if you read the gobbledygook the IRS has on the subject, you will find a reason to fret over this new tax law. Oh, and...

Warning! I am not a lawyer or accountant!

Okay, anyway, this is what I mean...
"Further, section 6050W(e) provides a de minimis exception that exempts third party settlement organizations from reporting transactions with respect to a payee if the aggregate amount of such transactions does not exceed $20,000 or the aggregate number of such transactions does not exceed 200."
Okay, so I agree - if you sell over twenty grand, you should report that income. Heck, if I sold more than a grand in pure profit, I would report that income. That's just being smart. Also, I am not telling you to NOT report income. What I'm worried about is those of us who don't do this as a business, but as a ! hobby. You see, the part that bothers me is the bit about 200 ! transact ions.

Let's say that over the course of the year, I buy boxes of cards and sell off what I don't need. I'm not flipping - I'm not out to make money. I'm simply getting rid of the cards I don't want. One day, I buy a box of Brand X for $100, and keep all the on-card auto cards and whatever strikes my fancy. I decide to sell the low numbered patch card and some jersey cards and end up getting $250. I have to claim that $150 as profit, don't I? Profit = income, right? You just sold an error for $60 out of a .99 pack of Topps Opening Day? Look at all that income. That's gotta be reported, right? Cards are collectibles and as such are appreciated assets. Those gains must be reported, am I right? Yikes! And, it gets worse...

A stay at home mom has two kids who grow out of clothes faster than she can buy them, lists all the old clothes on eBay. She doesn't really make a profit, but she sold 500 things last year, because she had 4 years of baby clothes from two! different kids (boy and girl) piled up in the closet. Since she had over 200 transactions, will she get a 1099-K? How many of you casual eBayers have over 200 transactions a year selling cards? Do you consider yourself in business?

How are you group break hosts doing? How many transactions do you have per year? Is that YOUR money? Is that profit? No, but you do have well over 200 transactions for the year though. As far as anyone looking at the "books" knows, that looks like a lot of incoming money for items going out the door. What then? How will you explain that to the IRS?

I just don't think any of this is good for us. It's one thing to be a dedicated seller, but quite another to be a casual eBayer who makes a few extra bucks to fund their collection. Group breaks are a whole other monster. Yes, I know income is income, but at what point do we have everything we do get micromanaged by The Man? At what point does eBay or Paypal start snitching on us! for making a little more money than they think we should?

It's scary.

If there are any lawyers or accountants who can help clear this up, please leave a comment.

Wax Wombat!: Paypal and the future of our hobby.

kajshack · 03-11-2010, 10:20 PM

Well, I'm not an accountant, but it looks like those of us who flip are going to have to keep receipts and records. This will be awesome because if the IRS considers me to be a business then I can report my losses, and I don't come anywhere close to making a profit buying and selling cards.

IndySportsCards · 03-11-2010, 10:56 PM

The government is good at taking the fun out of life. I'll just quit using Paypal and stop selling cards online. I don't make any money at it and I definitely don't want to be turned into an accountant to do so.

pskell02 · 03-11-2010, 11:00 PM

I've been thinking about this for a while now. I think my new approach is going to be to only accept checks/MO's for personal deals on here. Stop using ebay completely and migrate everything over to COMC. Just pay the quicker processing on the hot cards and new releases.

As far as group breaks go, going to have to start doing that all on a check's and MO's. This may more or less kill group breaks as it will take a lot more trust in the breaker with no PayPal type protection

ramsey13 · 03-11-2010, 11:05 PM

Wonder where COMC fits into this?

hairysasquatch · 03-11-2010, 11:23 PM

[QUOTE=pskell02;497914]I've been thinking about this for a while now. I think my new approach is going to be to only accept checks/MO's for personal deals on here. Stop using ebay completely and migrate everything over to COMC. Just pay the quicker processing on the hot cards and new releases.

I am interested to hear what the difference(s) between selling on COMC and ebay would be - you're still going to make money, right? How will you be able to sidestep the tax provisions?

beaverman3001 · 03-11-2010, 11:31 PM

Well, assuming you are taking a lose from the original box purchase I would imagine that would make the transaction exempt, since there was no profit. If someone is making profit on boxes after a full year of busting and breaks 200 transactions, they are stupidly lucky.

armyatc22 · 03-11-2010, 11:41 PM

isnt there another way to collect money for GB's....I rememeber one of my friends using a google account i think for payments cause of paypal shutting down accounts like 8 months ago...

cruiserdaddy7 · 03-11-2010, 11:51 PM

For the IRS to get report you need BOTH 200 transaction AND 20k in sales in any given year. Its not one of the two, but both so that should help alot of people. The main thing I think people wont like is Paypal wanting your SSN to do business now.

lionsrule54 · 03-11-2010, 11:58 PM

so would you only have to file if you have 200 transactions and over $20,000 in sales?

sidelinecards · 03-12-2010, 12:03 AM

i hope so..this would exclude me then. i was on payapl site and they never mention this?

Quote:

Originally Posted by lionsrule54

so would you only have to file if you have 200 transactions and over $20,000 in sales?

cruiserdaddy7 · 03-12-2010, 12:11 AM

Yes, you need both 200 items and 20k in sales. If you only hit one then you are safe. Regardless, I dont see myself wanting the shady company of Paypal having too much personal information.

beaverman3001 · 03-12-2010, 01:59 AM

Quote:

Originally Posted by cruiserdaddy7

Yes, you need both 200 items and 20k in sales. If you only hit one then you are safe. Regardless, I dont see myself wanting the shady company of Paypal having too much personal information.

I would, to try and limit scammers.

freethrowtommy · 03-12-2010, 07:40 AM

Quote:

Originally Posted by beaverman3001

I would, to try and limit scammers.

That might be a good point. If they have your SSN, it might be a lot easier to get claims out of scammers...

ter · 03-12-2010, 08:00 AM

It is never a good idea for companies like Paypal, ebay, to have more personal info about members. You guys are assuming that no employee (or ex-employee) would ever want that type of info let alone being able to pass all transactions on to the IRS.

iluvfish2 · 03-12-2010, 08:03 AM

Guys some things to quickly rememmber here:

# 1 - ANY hobby where you profit more than $600 in a year is required to file taxes (aka claim that income). Problem here is that it means you kinda need to keep track of your records. Total PITA trust me. Did it for my business last year (also the reason I got my business license). Figuring I'm going to loose money the next five years and if I dont then I'll continue the business, but at that point I've tried and have a solid record to stand behind if I'm ever autidited.

# 2 - Pat..just an FYI you dont want checks..they are trackable just like an online payment. Thats an easy check by someone. But for group breaks thats easy to show you didnt profit or even if you lost. Most of the breaks you've done are at minimal profit (or loss). Makes a quick and easy submission if your ever asked for it.

# 3 - COMC. I'm not sure how this works. Personally I think if you cash out and exceed the 600 limit over the course of the year, I'd expect you'd get a 1099. Easy to counter this as you've got fees you paid for listings and/or storage fees if needed. As for the cards, I'm not sure those really factor in since its kind of a trade (purchases they are not required to send any forms to you....otherwise blowout would be sending every one of us them

# 4-..disclaimer..I'm not a tax accountant and while I have filed my taxes every year and done them to the best of my abilities, I pray every day that the taxes I have submitted were done correctly

IndySportsCards · 03-12-2010, 08:46 AM

Quote:

Originally Posted by iluvfish2

# 4-..disclaimer..I'm not a tax accountant and while I have filed my taxes every year and done them to the best of my abilities, I pray every day that the taxes I have submitted were done correctly

Ditto. TurboTax is my friend.

mma138 · 03-12-2010, 08:52 AM

i do buy quite a bit. but i realy dont sell that much. i have never made any where close to 20 ,ooo so i guess i have nothing to be worried about.

iluvfish2 · 03-12-2010, 09:08 AM

Quote:

Originally Posted by IndySportsCards

Ditto. TurboTax is my friend.

Same here...prior to this year I loved the risk audit feature...never hit the yellow and reds until this year, but starting the business really skewed my numbers!

collegefbfan · 03-12-2010, 09:53 AM

I'm guessing most everyone on here who buys cases, boxes, cards and sells the extras, hits, etc probably falls under the Hobby Income (Side Business income) section of the IRS tax code. Its like dog breeding or keeping bees for honey. In general, hobby expenses are deductible only up to the income from the activity(certain limits apply, think Sch A, itemized deductions), loss deductions (generall) are not allowed. Now, there are things such as profit presumption that must be taken into account to take a loss deduction.
So, most of you don't keep a 6 or 8 or 12 ledger book that you track your costs and income from cards???

(I'm old school) Or at least an Excel spreadsheet? Keep records for things like this. In most cases its not going to affect you even if its a dozen things a month. And if you make money doing this, more power to you.

CaptainBOHICA · 03-12-2010, 10:16 AM

Quote:

Originally Posted by collegefbfan

I'm guessing most everyone on here who buys cases, boxes, cards and sells the extras, hits, etc probably falls under the Hobby Income (Side Business income) section of the IRS tax code. Its like dog breeding or keeping bees for honey. In general, hobby expenses are deductible only up to the income from the activity(certain limits apply, think Sch A, itemized deductions), loss deductions (generall) are not allowed. Now, there are things such as profit presumption that must be taken into account to take a loss deduction.
So, most of you don't keep a 6 or 8 or 12 ledger book that you track your costs and income from cards???

(I'm old school) Or at least an Excel spreadsheet? Keep records for things like this. In most cases its not going to affect you even if its a dozen things a month. And if you make money doing this, more power to you.

This guysounds like he knows what he's talking bout.

Can u help the masses set up a spreadsheet to track $ in $ out?

Brad · 03-12-2010, 10:27 AM

Advice: never take accounting or tax advice from a message board (especially from the kiddies on here, lol). If you have questions about your particular circumstances, contact an accountant.

Boo · 03-12-2010, 10:28 AM

Quote:

Originally Posted by CaptainBOHICA

This guysounds like he knows what he's talking bout.

Can u help the masses set up a spreadsheet to track $ in $ out?

Sounds to me like he has too much time on his hands.

Shimey013 · 03-12-2010, 10:41 AM

I guess my reaction is too bad so sad, the IRS won't see squat from me, this is going to hurt!

CaptainBOHICA · 03-12-2010, 10:54 AM

Quote:

Originally Posted by Boo

Sounds to me like he has too much time on his hands.

or maybe found the right page on google? =X

03-11-2010, 09:57 PM	#1
blowoutcards Administrator Join Date: Jun 2007 Posts: 9,051 blowoutcards	Paypal and the future of our hobby. Paypal and the future of our hobby. March 11, 2010 at 7:48 PM -------------------------------------------------------------------------------- When this was introduced in 2008, this seemed like a long ways off, but we're less than a year away from something that could kill off certain facets of our hobby. For those of you who are unaware, it will be mandatory to report merchant card and third party payments to the IRS (via 1099-K) in 2011. This means Paypal, people. On the surface, it doesn't look like it might affect a lot of us. Surely, we are doing this as a hobby. Surely, some of us are just selling off bits of our personal collection. Surely-- However, if you read the gobbledygook the IRS has on the subject, you will find a reason to fret over this new tax law. Oh, and... Warning! I am not a lawyer or accountant! Okay, anyway, this is what I mean... "Further, section 6050W(e) provides a de minimis exception that exempts third party settlement organizations from reporting transactions with respect to a payee if the aggregate amount of such transactions does not exceed $20,000 or the aggregate number of such transactions does not exceed 200." Okay, so I agree - if you sell over twenty grand, you should report that income. Heck, if I sold more than a grand in pure profit, I would report that income. That's just being smart. Also, I am not telling you to NOT report income. What I'm worried about is those of us who don't do this as a business, but as a ! hobby. You see, the part that bothers me is the bit about 200 ! transact ions. Let's say that over the course of the year, I buy boxes of cards and sell off what I don't need. I'm not flipping - I'm not out to make money. I'm simply getting rid of the cards I don't want. One day, I buy a box of Brand X for $100, and keep all the on-card auto cards and whatever strikes my fancy. I decide to sell the low numbered patch card and some jersey cards and end up getting $250. I have to claim that $150 as profit, don't I? Profit = income, right? You just sold an error for $60 out of a .99 pack of Topps Opening Day? Look at all that income. That's gotta be reported, right? Cards are collectibles and as such are appreciated assets. Those gains must be reported, am I right? Yikes! And, it gets worse... A stay at home mom has two kids who grow out of clothes faster than she can buy them, lists all the old clothes on eBay. She doesn't really make a profit, but she sold 500 things last year, because she had 4 years of baby clothes from two! different kids (boy and girl) piled up in the closet. Since she had over 200 transactions, will she get a 1099-K? How many of you casual eBayers have over 200 transactions a year selling cards? Do you consider yourself in business? How are you group break hosts doing? How many transactions do you have per year? Is that YOUR money? Is that profit? No, but you do have well over 200 transactions for the year though. As far as anyone looking at the "books" knows, that looks like a lot of incoming money for items going out the door. What then? How will you explain that to the IRS? I just don't think any of this is good for us. It's one thing to be a dedicated seller, but quite another to be a casual eBayer who makes a few extra bucks to fund their collection. Group breaks are a whole other monster. Yes, I know income is income, but at what point do we have everything we do get micromanaged by The Man? At what point does eBay or Paypal start snitching on us! for making a little more money than they think we should? It's scary. If there are any lawyers or accountants who can help clear this up, please leave a comment. Wax Wombat!: Paypal and the future of our hobby. __________________ Sign Up For Blowout Emails To Get The Latest Hobby Info And Exclusive Savings!

03-11-2010, 10:56 PM	#3
IndySportsCards Member Join Date: Dec 2008 Location: EO 13848 Posts: 41,661 braco0 IndySportsCards	The government is good at taking the fun out of life. I'll just quit using Paypal and stop selling cards online. I don't make any money at it and I definitely don't want to be turned into an accountant to do so. __________________ Most people would rather be in the majority, than be right.

03-11-2010, 11:00 PM	#4
pskell02 Moderator Join Date: Dec 2007 Location: North Hollywood, CA Posts: 21,773 pskell02 pskell02	I've been thinking about this for a while now. I think my new approach is going to be to only accept checks/MO's for personal deals on here. Stop using ebay completely and migrate everything over to COMC. Just pay the quicker processing on the hot cards and new releases. As far as group breaks go, going to have to start doing that all on a check's and MO's. This may more or less kill group breaks as it will take a lot more trust in the breaker with no PayPal type protection __________________ Click here to be notified when I post a new group break

03-11-2010, 11:05 PM	#5
ramsey13 Member Join Date: Jul 2009 Location: Tennessee Posts: 1,161 maxi2224 ramsey13	Wonder where COMC fits into this? __________________ Chiefs “Winning isn't everything, but it beats anything that comes in second.” --Paul "Bear" Bryant

03-11-2010, 11:31 PM	#7
beaverman3001 Member Join Date: Nov 2009 Location: Jax. FL Posts: 1,030 frightencards	Well, assuming you are taking a lose from the original box purchase I would imagine that would make the transaction exempt, since there was no profit. If someone is making profit on boxes after a full year of busting and breaks 200 transactions, they are stupidly lucky. __________________ IG: FrightenCards Randy Johnson super collector

03-11-2010, 10:20 PM	#2
kajshack Member Join Date: Nov 2009 Location: California Posts: 4,486	Well, I'm not an accountant, but it looks like those of us who flip are going to have to keep receipts and records. This will be awesome because if the IRS considers me to be a business then I can report my losses, and I don't come anywhere close to making a profit buying and selling cards.

03-11-2010, 11:23 PM	#6
hairysasquatch Member Join Date: Dec 2008 Location: In the Woods, Central NY Posts: 29,471	[QUOTE=pskell02;497914]I've been thinking about this for a while now. I think my new approach is going to be to only accept checks/MO's for personal deals on here. Stop using ebay completely and migrate everything over to COMC. Just pay the quicker processing on the hot cards and new releases. I am interested to hear what the difference(s) between selling on COMC and ebay would be - you're still going to make money, right? How will you be able to sidestep the tax provisions?

03-11-2010, 11:41 PM	#8
armyatc22 Banned Join Date: Jan 2009 Location: Who knows Posts: 22,041 armyatc22	isnt there another way to collect money for GB's....I rememeber one of my friends using a google account i think for payments cause of paypal shutting down accounts like 8 months ago...

03-11-2010, 11:51 PM	#9
cruiserdaddy7 Member Join Date: Jul 2007 Posts: 15,166 Cruiserdaddy7	For the IRS to get report you need BOTH 200 transaction AND 20k in sales in any given year. Its not one of the two, but both so that should help alot of people. The main thing I think people wont like is Paypal wanting your SSN to do business now.

03-11-2010, 11:58 PM	#10
lionsrule54 Member Join Date: Sep 2009 Posts: 812	so would you only have to file if you have 200 transactions and over $20,000 in sales?

03-12-2010, 12:11 AM	#12
cruiserdaddy7 Member Join Date: Jul 2007 Posts: 15,166 Cruiserdaddy7	Yes, you need both 200 items and 20k in sales. If you only hit one then you are safe. Regardless, I dont see myself wanting the shady company of Paypal having too much personal information.

03-12-2010, 08:00 AM	#15
ter Member Join Date: Aug 2007 Posts: 136 thadrobison	It is never a good idea for companies like Paypal, ebay, to have more personal info about members. You guys are assuming that no employee (or ex-employee) would ever want that type of info let alone being able to pass all transactions on to the IRS.

03-12-2010, 08:03 AM	#16
iluvfish2 Moderator Join Date: Jul 2007 Location: Lansing, Michigan Posts: 26,644 iluvfish2 iluvfish2	Guys some things to quickly rememmber here: # 1 - ANY hobby where you profit more than $600 in a year is required to file taxes (aka claim that income). Problem here is that it means you kinda need to keep track of your records. Total PITA trust me. Did it for my business last year (also the reason I got my business license). Figuring I'm going to loose money the next five years and if I dont then I'll continue the business, but at that point I've tried and have a solid record to stand behind if I'm ever autidited. # 2 - Pat..just an FYI you dont want checks..they are trackable just like an online payment. Thats an easy check by someone. But for group breaks thats easy to show you didnt profit or even if you lost. Most of the breaks you've done are at minimal profit (or loss). Makes a quick and easy submission if your ever asked for it. # 3 - COMC. I'm not sure how this works. Personally I think if you cash out and exceed the 600 limit over the course of the year, I'd expect you'd get a 1099. Easy to counter this as you've got fees you paid for listings and/or storage fees if needed. As for the cards, I'm not sure those really factor in since its kind of a trade (purchases they are not required to send any forms to you....otherwise blowout would be sending every one of us them # 4-..disclaimer..I'm not a tax accountant and while I have filed my taxes every year and done them to the best of my abilities, I pray every day that the taxes I have submitted were done correctly __________________ Blowouts Resident Wade Boggs Super Collector

03-12-2010, 08:52 AM	#18
mma138 Member Join Date: Jan 2008 Posts: 10,914	i do buy quite a bit. but i realy dont sell that much. i have never made any where close to 20 ,ooo so i guess i have nothing to be worried about. __________________ from part's unknown

03-12-2010, 09:53 AM	#20
collegefbfan Member Join Date: Apr 2009 Posts: 81	I'm guessing most everyone on here who buys cases, boxes, cards and sells the extras, hits, etc probably falls under the Hobby Income (Side Business income) section of the IRS tax code. Its like dog breeding or keeping bees for honey. In general, hobby expenses are deductible only up to the income from the activity(certain limits apply, think Sch A, itemized deductions), loss deductions (generall) are not allowed. Now, there are things such as profit presumption that must be taken into account to take a loss deduction. So, most of you don't keep a 6 or 8 or 12 ledger book that you track your costs and income from cards??? (I'm old school) Or at least an Excel spreadsheet? Keep records for things like this. In most cases its not going to affect you even if its a dozen things a month. And if you make money doing this, more power to you. __________________ Hockey and football, especially in their college uniforms. I love busting cases.

03-12-2010, 10:27 AM	#22
Brad Member Join Date: Jul 2007 Location: MKE Posts: 3,945	Advice: never take accounting or tax advice from a message board (especially from the kiddies on here, lol). If you have questions about your particular circumstances, contact an accountant.

03-12-2010, 10:41 AM	#24
Shimey013 Member Join Date: Dec 2009 Location: Harrisburg, PA Posts: 376 bwsportzcards	I guess my reaction is too bad so sad, the IRS won't see squat from me, this is going to hurt!