Potential Tax Liability


I have a friend who inherited many electronic items including those of the audiophile variety. Through ads on this site and others, he sold about $60k worth of equipment within this year.   He is not a dealer and does not have a business, either physically or on paper.  Most of the payment transactions were made through PayPal. He is now worried about potential tax liability. Sometimes he created invoices. Sometimes the money was sent through PayPal's "Friends and Family" option. The money was transferred from PayPal to his bank account periodically. It suddenly occurred to him about possibly having a tax liability.    Made me curious too.   Would these proceeds need to be declared as income to the IRS?
kodak805

Showing 2 responses by czarivey

Oregonpapa made interesting conclusions:

I used to keep up with the tax code as it pertains to residential real estate, including rental properties and such. BUT, the changes to the tax code started coming so rapidly, I just couldn’t keep up with it anymore. Now, the tax code exceeds 77,000 pages and contains over 9 million words.

For a Realtor (or anyone else) to give tax advise to a client is just opening up one’s self to a law suit. Anymore, I just refer my clients to their CPA or to their tax attorney. Knock on wood ... 40 years and never been sued.

Take care Steve ... and thank you.

Frank

https://www.youtube.com/watch?v=Nn_Zln_4pA8

Who’s going to read 77k pages? Instead of that more-likely it will be driven by common sense and the common sense is that it’s a USED product not new. If it’s used than tax had already been paid and double-jeopardy will make no sense.

If you get 1099 -- it’s a very flexible form allows you to wriggle your spending and earning to the point you can even claim losses out of this sale endeavor. All you have to do is to bring this form via TurboTax and fill-in

ALL of your expenses towards this form including gas, airplane tickets(if any mak’em business trip and include your wife and family members as well), shipping labels, shipping materials(hey they can be more expensive than unit itself) Check out UPS packaging services that sell you large corrugated boxes for over $100 each!
There are sooo many items you can claim claim and claim as losses that will overlap these measurable $60k TWICE.


Well, Steve, Yes if only get down to Bill of Rights as a stereotype, "Double Jeopardy" applies to prosecutions and punishments only, but if you get out of stereotypes and look around farther and broad, than such meaning easily fall onto the common sense I've mentioned.