Save all your receipts! Biden's garage sales tax kicks in next year.

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akugami

Diamond Member
Feb 14, 2005
5,766
2,017
136
If you can somehow prove what your costs were, for example, say the purse or handbag was released in 1990, and the retail price was $250 for it, and now sell it for $600, you're only on the hook for the additional $350.

Seems like the OP knows he's going to get hit, and that he has multiple high priced items he wants to unload. I mean, good for you, for investing in usable items that retain or increase in value.

I mean, I get it. It sucks. No one wants to pay extra taxes, but you were always supposed to report these gains. That part of the law never changed.
 

manly

Lifer
Jan 25, 2000
11,234
2,299
136
If you can somehow prove what your costs were, for example, say the purse or handbag was released in 1990, and the retail price was $250 for it, and now sell it for $600, you're only on the hook for the additional $350.

Seems like the OP knows he's going to get hit, and that he has multiple high priced items he wants to unload. I mean, good for you, for investing in usable items that retain or increase in value.

I mean, I get it. It sucks. No one wants to pay extra taxes, but you were always supposed to report these gains. That part of the law never changed.
The chances of the IRS going after OP's wife for selling a few handbags is between slim and none. They barely have the resources to go after the big tax cheats, esp. since the GOP constantly wants to reduce their enforcement efforts. Gotta protect millionaires jerb creators!
 

dullard

Elite Member
May 21, 2001
25,137
3,540
126
Appreciate the positive contribution and suggestion. None of the stuff I wanted to unload has any piece of paper associated with it. I was negotiating with my wife about this. She has tons of pricey purse she collected over the years(decades) and I have numerous audio equipment over the decades also worth a bit. We're both near retirement and need to downsize and each want to get rid of the other's stuff. We toyed around with maybe unloading on ebay as vintage purse holds their value really well. Pretty much any single piece of item we sale will probably go past that $600 limit and at this point that's enough reason for neither of us to sale anything. Maybe some of her more recent purchase within the previous 5 years she might be able to call CS and get a receipt...just not worth the effort at this point. If the burden of proof is on the IRS auditors....maybe. We'll wait a few more years and see how the IRS goes after people before selling.
Again, the tax is ONLY on the profits. If you sold those for over $600 did you actually have profits? If not, then you owe $0 in taxes. Very few people have paper receipts from years ago. Even if you did, the ink may have faded beyond recognition. That is why the IRS doesn't require receipts. The IRS requires fair market value estimations.

Suppose your wife bought a pricey purse years ago for somewhere around $100 but can't actually remember and has no receipt. Suppose she sells it on Ebay for $800 and got a 1099. You would profit roughly $700 on that sale. It is a long term capital gain with a tax rate of 0% if you as a couple make less than $94,050. Your tax is 0% * $700 = $0.

Or lets suppose your income is above that $94,050 limit, but below $583,750, then your long term capital gains tax rate is 15%. So you owe 15% * $700 = $105 in long term capital gains taxes.

Point 1) You would give up $700 in profit to avoid $105 in tax? Seems counterintuitive to do so.

Point 2) Suppose that purse was actually $80 when she bought it and not $100. You don't have the receipt, so you can't prove it's actual cost. Now the long term capital gain is $720 and the tax is 15% * $720 = $108. The difference is a grand total of $3 from what was estimated of $105. The tax tables themselves go up in intervals of ~$11, see the image below of the 2023 tax table. The IRS doesn't care about differences that small, below accuracies of what even the tax table requires. Thus, slight differences in estimates of the value of the purse is totally meaningless. All you have to do is make a reasonable attempt to be accurate. Or in the very worst case scenario extreme, if the IRS thinks she magically got these pricey collectable purses for free, the whole tax due is $120 and you'd owe $15 more. How many hundreds / thousands of dollars would the IRS spend hunting you down for that $15? Hint, they don't.


Point 3) If you do multiple sales, you probably underestimate some and overestimate some fair market values. Thus, your small inaccuracies are a wash. That is, unless you are purposely estimating incorrectly.

Point 4) You owe that tax on a sale whether or not you got the 1099. The 1099 just helps the IRS flag there is a potential for profit on pricey items.
 
Last edited:
Nov 17, 2019
11,092
6,623
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^^^^^ Point of order:

"The 1099 just helps the IRS flag there is a potential for profit on pricey items."

More like, The 1099 just helps us with our record keeping to file accordingly.
 

nakedfrog

No Lifer
Apr 3, 2001
58,315
12,540
136
Appreciate the positive contribution and suggestion. None of the stuff I wanted to unload has any piece of paper associated with it. I was negotiating with my wife about this. She has tons of pricey purse she collected over the years(decades) and I have numerous audio equipment over the decades also worth a bit. We're both near retirement and need to downsize and each want to get rid of the other's stuff. We toyed around with maybe unloading on ebay as vintage purse holds their value really well. Pretty much any single piece of item we sale will probably go past that $600 limit and at this point that's enough reason for neither of us to sale anything. Maybe some of her more recent purchase within the previous 5 years she might be able to call CS and get a receipt...just not worth the effort at this point. If the burden of proof is on the IRS auditors....maybe. We'll wait a few more years and see how the IRS goes after people before selling.
But... why? If you're super scared they'll come down on you like a sledgehammer, just take the profits and put them in an interest bearing account for a few years until you're comfortable that the big bad wolf isn't going to blow your house down over a small percentage of the profit you've made from selling the things.
 

MtnMan

Diamond Member
Jul 27, 2004
8,788
7,922
136

Starting next year, ebay and facebook market will send you a 1099 when you sale over $600 for a given year. So don't throw away your receipts or start retreiving them from your trash bin/can. That $2,000 gaming machine you built 2 years ago will be a tax liability if you sale it on the use market for over $600. You'll need those receipts to prove to the IRS you sold it for less than the purchase price to avoid a tax bill. A little extra work for those who like to trade used goods but a small price to pay as Biden goes after those billionaires.
All while republicans work to ensure that billionaires can use their billion-dollar yachts and private jets as a tax deduction. Your outrage is laughable, and clearly misguided.
 

APU_Fusion

Senior member
Dec 16, 2013
888
1,359
136
It is astounding to me that people scream about taxes like this thread but are strangely silent on the wealthy tax bracket to income and the amount they actually pay. Shakes head. It is like all the rubes in America want low taxes on the wealthy because they know they will be wealthy someday but actually won’t.
 

brycejones

Lifer
Oct 18, 2005
26,355
24,439
136
Think of all the MAGAites loosing their shit when they realize their Trump NFT's won't earn them untold wealth...
But Trump said when he became president only his nfts and money with his picture will be legal tender.
 
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