• Skip to content
  • Skip to primary sidebar

Header Right

  • Home
  • About
  • Contact

Do You Sell Online? Know Your Tax Obligations

May 11, 2018 by Dana Lee CPA LLC Team

Many people today are turning to internet as a way to connect with potential buyers for all kinds of things, like clothing, electronics, cars, antiques, collectibles, and even used household items. Depending on the situation, you could have tax obligations if you sell online.

Is It a Business?

The IRS draws a distinction between what it calls “the Internet equivalent of an occasional garage or yard sale” and an “online auction seller business.”

Example.

Richard is moving and decides to sell online a plant stand and a snow blower he won’t need anymore through an online auction site. He sells the items for less than what he originally paid for them. Richard’s “losses” are not deductible because he sold “personal use” items, and he need not report his sales for tax purposes.

In contrast, an individual who has recurring sales and purchases items for resale with the intention of making a profit may be operating an online auction seller business.

Example.

Maria routinely scours the city where she lives looking for bargains on handmade jewelry and scarves. She puts her weekly finds up for sale on an Internet auction site, hoping to make a profit. Maria has started an online auction business and needs to report her business income and expenses on her tax return.

Selling Appreciated Assets

Online auction sales of art, antiques, collectibles, or other assets for more than they cost result in reportable gains. Depending on the specific situation, the gains would be considered either business income or capital gains.

Selling Depreciated Business Assets

If you sell online depreciated business assets you might have ordinary gains or capital gains, depending on the situation. You will need to include Form 4797, Sales of Business Property with your tax return.

Connect with us today for all the latest and most current tax rules and regulations.

Filed Under: Tax Regulations

Primary Sidebar

Search

Archive

  • May 2022
  • December 2021
  • November 2021
  • September 2021
  • July 2021
  • June 2021
  • February 2021
  • January 2021
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017

Categories

  • Business
  • Hurricane Harvey
  • QuickBooks
  • S Corporation
  • State
  • Tax Regulations

Copyright © 2018 · http://www.danaleecpa.com/blog