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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 oregonpapa

oregonpapa's avatar
oregonpapa
4,867 posts
 
Hopefully you don't live in California like I do. We have one simple form for the transaction you're involved in. 

1. Enter how much you profit you made here:  $ ________. 

2. Write a check for the amount on line one and send it in. 
oregonpapa's avatar
oregonpapa
4,867 posts
 
^^^  Steve ...

This is one of the reasons I like this site so much. Usually one can find expertise in what ever subject one may be interested in besides audio. Also, there are folks like yourself who are here willing to be of help.

After spending 40 years as a Realtor in the Southern California market, I learned long ago not to give tax advise to my clients. 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
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