New 1099k rules...and how it impacts gear junkies/golfers. Is this actually a good thing? CPAs feel free to chime in (merged)

[Krt22]

2 hours ago, golffeen007 said:

I bet trading picks up 10 fold around here. 
eBay , already paying taxes with everything you sale and now having to file a 1099 to pay more tax is quite ridiculous. 

Yeah ebay is pretty much dead to me, both as a seller and a buyer. Seller has to eat the 13%, buyer basically eats that 13% due to ebay prices being inflated and now sales tax on top of it (why the heck does something used, which tax was already paid on, need to be taxed again?), the overly buyer centric "protection" policy where complete morons can get their money back, and now potential tax liability on top of all the other crap

[dmecca2]

Here's a question. If I bought a bundle of 5 clubs for, say, $500. And then sell one club for $150. Is that a loss? Or is that a $50 gain?

 

Next, if I have clubs that I bought years and years ago, but sell for over $600, how do I prove I lost money on the deal? Or do I need to pay a tax on that sale?

 

Maybe I'm not getting it, but this seems ridiculously stupid to me.

[golffeen007]

36 minutes ago, Krt22 said:

Yeah ebay is pretty much dead to me, both as a seller and a buyer. Seller has to eat the 13%, buyer basically eats that 13% due to ebay prices being inflated and now sales tax on top of it (why the heck does something used, which tax was already paid on, need to be taxed again?), the overly buyer centric "protection" policy where complete morons can get their money back, and now potential tax liability on top of all the other crap

Exactly this.

[Abh159]

27 minutes ago, dmecca2 said:

Here's a question. If I bought a bundle of 5 clubs for, say, $500. And then sell one club for $150. Is that a loss? Or is that a $50 gain?

 

Next, if I have clubs that I bought years and years ago, but sell for over $600, how do I prove I lost money on the deal? Or do I need to pay a tax on that sale?

 

Maybe I'm not getting it, but this seems ridiculously stupid to me.

 

From everything I've read, the short summary is that if you receive more than $600 in payments from venmo, paypall, zelle, etc. throughout the year then you will receive a 1099K.

 

So that answers your first question... If it's less than $600 it doesn't matter if you made a profit or not.

 

Now onto your second question...

 

It will be up to you to report whether or not you had a profit or a loss on the amount. If it is a loss then you are not taxed on it. You don't necessarily need to provide proof of a loss, but you should have the documentation showing it was a loss should you ever be audited. As far as how you would provide proof of this, I can't answer that. You would be best served speaking to an accountant or tax expert if this is a concern for you. 

 

** For those asking... Only payments via a "goods and services" type of transaction fall under this rule. Personal payments (like sending your roommate rent money) are not subject to this.

 

EDIT *** I wouldn't suggest you start buying/selling stuff using "friends and family" just pointing out the obvious loophole.

 

 

Edited January 27, 2022 by Abh159

[Krt22]

2 minutes ago, Abh159 said:

 

From everything I've read, the short summary is that if you receive more than $600 in payments from venmo, paypall, zelle, etc. throughout the year then you will receive a 1099K.

 

So that answers your first question... If it's less than $600 it doesn't matter if you made a profit or not.

 

Now onto your second question...

 

It will be up to you to report whether or not you had a profit or a loss on the amount. If it is a loss then you are not taxed on it. You don't necessarily need to provide proof of a loss, but you should have the documentation showing it was a loss should you ever be audited. As far as how you would provide proof of this, I can't answer that. You would be best served speaking to an accountant or tax expert if this is a concern for you. 

 

** For those asking... Only payments via a "goods and services" type of transaction fall under this rule. Personal payments (like sending your roommate rent money) are not subject to this.

I plan to ask my CPA what sorts of "proof" is needed, but I don't expect it to be too difficult to show you did not profit (or simply state it), especially if your 1099 is for a relatively small sum. If you get into the 10-20K range I imagine there that is where they might have more scrutiny 

 

The IRS can't expect normal folks to keep receipts of every single thing they buy and eventually sell. I imagine simply stating what the item is and it's original MSRP will be sufficient for many cases. A lot of IRS audits are fishing expeditions IMHO. It's happened to me twice now because the IRS is stupid and completely ignored the cost basis stated on the 1099.

[dmecca2]

7 minutes ago, Krt22 said:

I plan to ask my CPA what sorts of "proof" is needed, but I don't expect it to be too difficult to show you did not profit (or simply state it), especially if your 1099 is for a relatively small sum. If you get into the 10-20K range I imagine there that is where they might have more scrutiny 

 

The IRS can't expect normal folks to keep receipts of every single thing they buy and eventually sell. I imagine simply stating what the item is and it's original MSRP will be sufficient for many cases. A lot of IRS audits are fishing expeditions IMHO. It's happened to me twice now because the IRS is stupid and completely ignored the cost basis stated on the 1099.

Since many of these are "golf" purchases. Would someone simply be able to show that they had a massive net loss in the "golf" category?

[Carolina Golfer 2]

2 hours ago, Krt22 said:

10% aint gonna cut it 🤪

I know, I was just throwing a number up for fun.   I got my 1099 today as well.   Not sure I want to put that number out publicy 🙂

 

[Abh159]

17 minutes ago, dmecca2 said:

Since many of these are "golf" purchases. Would someone simply be able to show that they had a massive net loss in the "golf" category?

 

Golf category? I'm not sure what you mean by that...

 

If it's specific to buying/selling and payments received via the methods mentioned in this thread, I would advise you to speak to whoever does your taxes each year. If you do your own taxes, then at least spend a few dollars to get a definitive answer from a CPA or Tax Accountant on the matter.

 

As informative as this thread is regarding the basic information around the new law, I wouldn't rely on an open internet golf forum to provide you with sufficient legal advice regarding your taxes.

[GooseHook]

6 hours ago, bladehunter said:

It’s a pretty useless rule in my opinion.  Any business using PayPal deposits to their bank eventually, or they’re spending direct from pay pal.  Guess what. Theyre certainly claiming that spending as deductions. So they surely are counting the deposits too otherwise the red flags would be a flying.  So the aim here has to be to pinch the individual.  Not businesses.  
 

 

good news is.  This will drive up cash use , thus helping the paper currency to survive. 
 

 

 

 

I'd rather have a localized BST section with cash and local pickup than deal with the blockchain. People are gonna be on here trading NFTs for driver shafts 🙃

[Krt22]

1 hour ago, Abh159 said:

 

Golf category? I'm not sure what you mean by that...

 

If it's specific to buying/selling and payments received via the methods mentioned in this thread, I would advise you to speak to whoever does your taxes each year. If you do your own taxes, then at least spend a few dollars to get a definitive answer from a CPA or Tax Accountant on the matter.

 

As informative as this thread is regarding the basic information around the new law, I wouldn't rely on an open internet golf forum to provide you with sufficient legal advice regarding your taxes.

Agreed. I like to educate myself on the manners, but ultimately will rely on my CPA for final guidance

[bladehunter]

1 hour ago, GooseHook said:

 

 

I'd rather have a localized BST section with cash and local pickup than deal with the blockchain. People are gonna be on here trading NFTs for driver shafts 🙃

Agree with that idea for sure. 

[brew4eagle]

3 hours ago, Abh159 said:

 

** For those asking... Only payments via a "goods and services" type of transaction fall under this rule. Personal payments (like sending your roommate rent money) are not subject to this.

 

 

With the caveat that I have dumb friends that sent me $ for greens fees, bar tabs, etc and accidentally used G/S.  So I have to account for those as well since they're on the 1099K

[BirdieBob]

10 hours ago, golffeen007 said:

I bet trading picks up 10 fold around here. 
eBay , already paying taxes with everything you sale and now having to file a 1099 to pay more tax is quite ridiculous. 

 

But if you use Paypal and receive over $600/year then they will be sending you the 1099.

[TwistedSister]

On 1/15/2022 at 9:23 AM, brew4eagle said:

That's not "club ho'in" imo, that's "flipping".  Agree that flippers (those buying things to simply sell for a profit) should be subject to taxes on those profits.

Anyone who makes a profit should pay taxes on the profit.

[brew4eagle]

10 minutes ago, dhacker56 said:

Anyone who makes a profit should pay taxes on the profit.

So long as that profit is subject to tax

[rainkingjr]

Time to start organizing regional golf equipment swap meets.. Every month during peak season would work. Biggest benefit would be seeing what you're buying in person.

[GooseHook]

7 hours ago, rainkingjr said:

Time to start organizing regional golf equipment swap meets.. Every month during peak season would work. Biggest benefit would be seeing what you're buying in person.

 

That's a common thing in some hobbies and an awesome idea. The MD/DC guys have been doing our shady parking lot meetups for a long time due to proximity and the number of rounds everyone played together. 

[dcmidnight]

Its a terrible rule.

 

But at the end of the day, I griped a lot about nothing...it didn't take too long to go through.

 

I downloaded my 1099 statement from Paypal as well as my monthly line by line statements. I'm probably worse off than most, my 1099 was into 5 figures and hundreds of total Paypal transactions (of all kinds) to sift through on my Paypal sheets.

 

Truth is, it took my no more than two hours to break everything down in a spreadsheet.

 

Gambling wins also end up in there if you get paid out by a sportsbook. So that transaction ends up on your 1099K from Paypal. This is odd because I always track these separately and file the win/loss amount - so I dont love how they are mixed together. But thats fine, honestly at the end of the day this might be easier.

 

Seems completely random sometimes what makes it from your line by line transactions into the 1099K. But if you are reasonably good with Excel - this will not take you long at all. I had a couple of refunds from companies that "transferred" into the 1099 somehow but I broke that out.

 

Honestly, this was much easier to deal with than I initially thought. As far as Ebay goes, I got down to $1700 or so over 10 Ebay transactions. The last thing I will do is go into my ebay record and find what these were for but I know I didnt make any money off them.

Edited January 28, 2022 by dcmidnight

[dcmidnight]

OK so that part took about 20 minutes. Scrolled through ebay and my BST pms. Made a simple chart with the transaction, date, amount and a note with what club it was and approximately how much it originally cost.

 

Putting the approximate cost is good enough for me and I bet my guess is within a few bucks. Honestly I dont think the IRS is going to come after me for the receipts in how much it cost but if they do, I'm sure I could go back onto my Amex card to find it.

 

So...meh. Obviously it would be easier to not do this but it was not too bad. And for 95% of people they probably have way less to dig through.

 

 

Edited January 28, 2022 by dcmidnight

[TwistedSister]

11 hours ago, brew4eagle said:

So long as that profit is subject to tax

And what profit is not subject to tax?

[brew4eagle]

1 hour ago, dhacker56 said:

And what profit is not subject to tax?

Not a tax expert, but I assume there are many profits that can be balanced against losses/expenditures and thus avoid taxes.  That's how the super wealthy get wealthier and end up with close to zero tax liability.

[TwistedSister]

1 minute ago, brew4eagle said:

Not a tax expert, but I assume there are many profits that can be balanced against losses/expenditures and thus avoid taxes.  That's how the super wealthy get wealthier and end up with close to zero tax liability.

And profits from "flipping" clubs are gonna be offset with what losses?

[bladehunter]

41 minutes ago, dhacker56 said:

And profits from "flipping" clubs are gonna be offset with what losses?

The purchase price.   The gas to go pick it up , shipping costs ( boxes tape , pens ) the home office I built to manage this 1099, the lunches where I discussed golf club sales , golf membership where I marketed my bst ads , and on and on.  😂.  If we split this out to an LLC we can make them pay us more back from our primary jobs. 

Edited January 28, 2022 by bladehunter

[Krt22]

14 hours ago, BirdieBob said:

 

But if you use Paypal and receive over $600/year then they will be sending you the 1099.

It's any 3rd party payment processor. Paypal, ebay, venmo (G&S), stockX. I am guessing etsy and other places as well

[brew4eagle]

1 hour ago, dhacker56 said:

And profits from "flipping" clubs are gonna be offset with what losses?

Again, "flipping" and the vast majority of club sales are 2 different things.  Also, I was mainly pointing out how your statement, "Anyone who makes a profit should pay taxes on the profit." was way too broad and not true in many instances in real life.

[dcmidnight]

1 hour ago, dhacker56 said:

And profits from "flipping" clubs are gonna be offset with what losses?

 

If a guy makes $200 flipping a pair of shoes but loses $2,000 on the rest of his sales - well I'm not too good at math but that seems to me to not be a profitable venture for him.

[TwistedSister]

11 minutes ago, brew4eagle said:

Again, "flipping" and the vast majority of club sales are 2 different things.  Also, I was mainly pointing out how your statement, "Anyone who makes a profit should pay taxes on the profit." was way too broad and not true in many instances in real life.

If one makes a profit one should pay taxes on it.  Profit means sales price minus purchase price and all costs. Otherwise it is not a profit.

[GooseHook]

You'd have to flip quite a bit of Scotty merch to turn a profit buying and selling golf stuff on forums. IMO this is more targeted at scammer/scalper types. Personally I'd love to see some of the GPU scalpers out there get audited. 

 

The only annoying part of this new rule is how other cash apps will be reporting transactions. I feel bad for people who might have to run into issues where Venmo/Zelle  has been used for restaurant bills, rent, etc. Like @dcmidnightsaid, it's easy to make a simple Excel file and double check things in your eBay and credit card statements. 

[Krt22]

4 hours ago, dcmidnight said:

OK so that part took about 20 minutes. Scrolled through ebay and my BST pms. Made a simple chart with the transaction, date, amount and a note with what club it was and approximately how much it originally cost.

 

Putting the approximate cost is good enough for me and I bet my guess is within a few bucks. Honestly I dont think the IRS is going to come after me for the receipts in how much it cost but if they do, I'm sure I could go back onto my Amex card to find it.

 

So...meh. Obviously it would be easier to not do this but it was not too bad. And for 95% of people they probably have way less to dig through.

 

 

I'm curious what a tax attorney would think if the IRS came after someone saying they "profited" selling used goods, to the point where they demanded receipts of goods bought well before the new change.  Buying consumer goods and selling them later is not like running a business or selling securities, so expecting the same level of record keeping would be absurd (and curious if it would even be legal). 

[brew4eagle]

2 hours ago, dhacker56 said:

If one makes a profit one should pay taxes on it.  Profit means sales price minus purchase price and all costs. Otherwise it is not a profit.

One can make a profit on a sale of an item, and not necessarily have to pay tax on the profit of the sale of that item.  That's the last I'll comment on this, it's not rocket science.