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 1 response by kennythekey

I believe, you have to inherit over 5 million before you owe any inheritance tax to the Feds. And, there are only a handful of states that collect inheritance tax at all. You'll have to look up the exact information because it changes.

What may be important to determine, is the value of the audio gear at the time you inherited it. This would be the basis value to figure out if you owe taxes or not, but only when you sell it, so did you have a profit or loss from the sale? I realize this is your friend's equipment. So, if your friend's equipment was valued at $65K when he inherited it. If he sold it later for $60K, he would have no tax owed.

However, he should ask his accountant about this stuff, because I'm not an accountant.
Kenny