how to list cost of goods for tax purposes

[megacollection]

I'm a life long collector of antique items. For tax purposes in 2024, how do i handle this when I don't remember what I paid for items, often bought 20 to 30 years ago? I sell mainly pre owned sterling silver jewelry and collectables,  pocket and wrist watches, and misc. used and vintage items. Please inform me of what to do so I can continue to list items under the new tax rules taking affect in 2024.

[kensgiftshop]

How have you been doing the taxes?

Shouldn't be any different.

[maxine*j]

You have been selling here for several years, so just figure your Cost of Goods Sold as you always have when filing your tax returns (presumably using Schedule C, Part III). 

I don't know of any change in the tax code that would require a change in how you calculate your COGS.

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[megacollection]

Ebay is just a part time hobby for me. I havent had to pay any tax for items sold on Ebay before. I understand for 2024 if you sell over $600. I will have to file a tax return on the income. My question is what if you can't remember what was paid for an item, maybe purchased over 20 years ago and how to prove it?

[tobaccocardyahoo]

You are experiencing the reason why many honest people are opposed to receiving a 1099K, and why the 1099K requirement was inserted in law.

It is an opportunity for the government to collect and spend more tax revenue because no sane person has records of what the spent on personal property 10, 20 or 30 years ago.

Everyone is a potential IRS target.

These delays have occurred because just the 1099K's will overwhelm the IRS, and they are gearing up to handle those returns, and collect the money for imaginary profits or capital gains.

[buyselljack2016]

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@megacollection wrote:

Ebay is just a part time hobby for me. I havent had to pay filed any tax forms for items sold on Ebay before. 

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[megacollection]

Thanks for the reply. I understand and agree that everyone is an IRS target, but what do you suggest I do when I can't justify what I paid for an item, even if I did remember what I paid for it, which is impossible to do, especially at my old age.

[stainlessenginecovers]

Technically if you have a 'collection', it was a 'hobby' and you cannot write off anything- figure $0 cost.

Since you could have also just purchased these items at a Garage Sale 1 year ago, last week etc. use an 'educated ballpark' to the Cost.

If you bought a Silver Quarter (say 1963) in 1973 for instance, it would have costed me $1.25 (5x face value for sliver back then). Today, it may fetch $6-$15. 

$15 minus $1.25- so $13.75 'profit' MINUS eBay fees, Shipping materials, Shipping label and if you have an 'area' in the house that you are using for NOTHING but 'selling/packing/shipping/inventory' you can write off 'that percentage of the home (if you still make payments) but at least all- Upkeep, Property Tax, Utilities etc. 

You can research what things 'sold for' 20 years ago using google to help you with 'typical cost' along with 'ballpark/memory' (as long as it 'makes sense' when facing an auditor if you do) but..

Most importantly, see a Tax professional (HR Block etc.) to talk about 'write offs'. 

[maxine*j]

You really do need to consult a tax professional. 

The way you are selling items, based on the descriptions including the "investment" verbiage, can make them subject to the 28% capital gains tax, for example. 

No two people are in the same income tax situation, whether talking federal or state income taxes (for those who live in states with income tax).  And what you are selling, the way you are selling it, the values involved, are going to make "just a hobby" fall on deaf ears at the IRS.

You say you are elderly, so take advantage of the free tax preparation available in Michigan, which I have linked to before:

https://michiganfreetaxhelp.org/free-tax-prep-locations/

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[megacollection]

Thank-you very much. Mighty helpful.

[megacollection]

Thanks for the advice. Much appreciated.

[maxine*j]

You are welcome.  I have friends in Pennsylvania, California, and Virginia who work in free tax prep programs for seniors.  They are all themselves retired, are expert, really enjoy the required annual training to keep abreast of changes in tax law -- and the love oddball, unusual, challenging returns (as yours may be).

VITA (Volunteer Income Tax Assistance) and TCE (Tax Counseling for the Elderly) are great programs.

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