mam98031 • Volunteer Community Member • Buyer/Seller since 1999
Yes. as @nobody*s_perfect said. You can claim the entire cost and the entire sale, so a small loss. Make sure you keep you receipt of purchase for your records.
@silverstatetreasureboxes wrote:That is a simple but good question. Poster @mam98031 brings up a good point with printing a copy of your purchases on ebay and filing them away.
Also don't forget a pad of paper in vehicle for when your buying inventory in the wild to write purchase prices/ dates/ miles down.
Excellent advice. I always carry a little notebook with me in my purse.
Inventory costs are the expenses associated with purchasing, storing, and managing inventory. They include the cost of the item itself, as well as the costs of holding and maintaining it until it's sold.
@greenmagicpub wrote:Thank you for your help. This is all new jargon to me as I never considered myself a business, but I guess I am in the eyes of the IRS.
On Schedule C, it asks for the amount of my inventory at the start of the year, so I should include the cost of the doll and anything else I owned before 2024 that I sold in 2024.
What if I purchased something in the middle of 2024 and sold it in 2024. That would not be included in my inventory at the beginning of 2024, correct?
Just keep in mind, whether or not you consider yourself a business IS NOT the deciding factor if your income is taxable. It simply doesn't matter. If you sell for a profit, you need to report the income. It is just that simple.
I don't do the inventory thing on taxes. I use straight Cash Accounting. If I pay for the inventory during 2024, it is written off as an expense for that year. When I buy shipping supplies, office supplies, etc. The costs for those purchases are written off in the year I paid for them. That is via cash or credit card. On the credit card, it is written off in the month that the charge appears on my credit card.
For me, Cash accounting is so much easier. For others they prefer Accrual account. You need to pick a method and them be consistent in future years. So what you pick will follow you in years to come. IRS does NOT want you changing up your accounting methods. You can do it of course, but it could cause you issues with IRS that was unnecessary.
https://www.investopedia.com/terms/c/cashbasis.asp
https://www.bench.co/blog/accounting/cash-vs-accrual-accounting
@redlinear wrote:What if.......
If you bought it 15 years ago for $130. Set it on a shelf as "decor". Have no receipt (I mean, it has been 15 years....)
And you sold it on eBay last year for $50.
AND.....You sold quite a bit of stuff on eBay (in a business sense for profit) last year also.
Then, you pretty much have to claim that $50 as profit.
This isn't correct info. IRS allows for sellers in this pickle to use FMV [fair market value] as their record of the expense of the item. If you need more info on this, just ask.
