Accounting question

[booksnstuff_8]

When I’m reselling DVDs I bought on eBay, do I count the taxes and shipping I paid in the total purchase price or just the price I paid for them that was listed?

For example:

I bought Movie A for $19

but shipping and taxes were $9

The purchase price listed was $10.

When I resell, do I list for more than $10 or $19?

[jdbelt1960]

Technically the seller pays for the shipping so as a buyer you may pay $10 for an item with $9 shipping charge. It may have only cost $6 shipping to the seller but as a buyer your cost is $19. To resell pricing now as a seller you want to recoup at least $19 regardless of combination shipping and handling fees or item price. The goal of reselling is to get more than you paid so hopefully instead of $10 you can get $15- $20. But now you must pay and charge a shipping fee which may be more or less than $9. 

[monica-sells]

@jdbelt1960  is correct...

Your COG in both cases is the TOTAL cost of the acquisition.

If you PAID OUT $19, that is your COG so you base your sale price on that number.

[bigtexasyardsale]

Assuming your state allows this, if you are buying for resale you should not include the sales tax you paid in your COGS and instead file a claim for a sales tax refund with your state.

[luckythewinner]

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@booksnstuff_8 wrote:

When I’m reselling DVDs I bought on eBay, do I count the taxes and shipping I paid in the total purchase price or just the price I paid for them that was listed?

For example:

I bought Movie A for $19

but shipping and taxes were $9

The purchase price listed was $10.

When I resell, do I list for more than $10 or $19?

---

You will have to explain what you mean by "do I count". 

When you list it, you can set the price to whatever you want. 

But from a tax reporting perspective, your cost of goods sold was $19. 

[tobaccocardyahoo]

Most DVDs, purchased for your own use, will not sell at a price which will allow you to profit.

A very few will allow you to make a very nice profit.

Many DVDs you purchased may never sell.

[stainlessenginecovers]

Totally depends 3 things:

1.) do you want to profit

2.) are you ok with losing money (because you watched it so you're ok with that)

3.) what do others sell that same title and condition for? No point in trying to sell something for $20 shipped when all other sellers are $10

[stephenmorgan]

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@booksnstuff_8 wrote:

When I’m reselling DVDs I bought on eBay, do I count the taxes and shipping I paid in the total purchase price or just the price I paid for them that was listed?

For example:

I bought Movie A for $19

but shipping and taxes were $9

The purchase price listed was $10.

When I resell, do I list for more than $10 or $19?

---

You list it for what you want to sell it for.  Not everything sold on eBay has to make a profit.  Sometimes it is a matter of getting some of the money you paid for the item back.  If you sell it for less than what you paid then there will be no Income Tax on it.

[onefootflipper]

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@bigtexasyardsale wrote:

Assuming your state allows this, if you are buying for resale you should not include the sales tax you paid in your COGS and instead file a claim for a sales tax refund with your state.

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It is far simpler to get an ebay account set up as a tax exempt buyer account in the first place than jumping through state hoops that may or may not work in any given state. 

Fact is if you are buying lots of items for resale and paying sales tax then you are doing it wrong, you should be registered with your state to not pay the sales tax in the first place.

[bigtexasyardsale]

I have to jump through those hoops anyway due to purchases outside of ebay.

Sometimes paying sales tax is unavoidable.  I always bring the proper documentation for the exemption but its not always an option, in which case see above.

There is no "registration" in Texas for not paying sales tax in the first place.  You either convince the seller you are buying from to not charge you (there is a state form for that), or you pay and then file for a refund later.

If eBay has a seller designation that exempts you from them collecting sales tax, I'm interested.  Can you please point me towards more information on how to do this?

[dhbookds]

@bigtexasyardsale 

Check it out here:

https://www.ebay.com/help/buying/paying-items/paying-tax-ebay-purchases?id=4771

[kibble-net]

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@booksnstuff_8 wrote:

When I resell, do I list for more than $10 or $19?

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Not sure if this is actually an accounting question, or a pricing question.  Based on how it was worded, I'm going to go out on a limb and assume the latter.

The price you will resell the DVDs for depends not on what you paid, but on what the market will bear. You want to look at both current and completed listings to determine this.

[ryry-jj]

That would be an audit waiting to happen. The only way I'd file for a refund is if I had a resale permit and on some purchases I was charged sales tax for whatever reason, then yes, I'd file for a refund.   But without a resale permit, I'm not hoisting that red flag

If they are selling a lot to justify a resale permit, I'd go that route, otherwise I'd figure it into my COGS

[bigtexasyardsale]

Thanks!  I'll take care of this today.

[bsb_gold_and_pawn]

This may sound nitpicky but for accounting purposes it's actually his cost that goes to inventory, not COGS.

It doesn't become COGS until he actually resells it (at which point it would be a credit to inventory and debit to COGS).

I realize for your tax return, you can just put it in COGS and not keep track of inventory if you are using the cash method though, that's just not GAAP