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.
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?
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The Federal Inheritance Tax Threshold is $625,000.Consistent with earlier comments in the thread there is no such thing as a Federal Inheritance Tax, meaning that heirs do not have to pay Federal tax on their inheritance. There is a Federal Estate Tax, which is unified with the Gift Tax. The current Estate Tax threshold is $5.45 million, as I mentioned earlier. (See "Which Estates Must File" on page 2 of "Instructions for Form 706" at the IRS website. Also, as stated on page 1 of that document, "the basic exclusion amount is $5,450,000" ). The threshold was $625,000 in 1998. You inherited a rare Amplifier that was appraised at $20,000 at the time of inheritance. Some Audiophile on Audiogon purchased it for $25,000. You are required to pay Income Tax on the $5,000 profit.To be precise, I believe that the tax on the $5,000 would be levied based on long-term capital gains rates, not on ordinary income rates. Regards, -- Al |
prpixel Do you live in NE, IA, KY, PA, NJ or DE? If not, then you’re good. NJ officially killed it’s Inheritance/Estate tax on November 1, 2016. It’s real easy to find out, just Google "inheritance tax (state)"No, NJ has not ended the inheritance tax. You’re completely mistaken. The state did repeal the estate tax. But the estate tax and the inheritance tax are two different things. If you sell an item for more than the appraised value, or last purchase value, then you are required to pay Income Tax on the profitThat is also completely mistaken. You might be liable for capital gains tax, but not income tax. Again, they are two different things, and are taxed at different rates. Arguably, if buying and selling audio equipment was your livelihood, you would be liable for income tax. But in that case, your calculation of "profit" is faulty, because the earner would deduct from what you call "profit" all of his expenses: the cost of listing the ad, rent, phone, insurance, and so on. |
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