I been collecting Pokémon cards since 1999 and have never gotten ride of any cards. I probably have over a million cards. I decided that I just have too many. I want to start selling them on eBay. Would selling them be a hobby or business. I've considered getting my business license to get cards straight from a distributor and sell on eBay. But that is straight forward as a business. What about my other cards?
Also I know as a business I need to keep track of everything I purchase and sell. If I'm selling a single card how do I report how I bought it. If I buy a booster pack for $5 and it comes with 10 cards. I pull a $500 card. Would I consider I purchased it for $5 or would I divide the $5 by 10 and say I got it for .50 Cents.
Also I don't have receipt's for all these purchases.
Another question. Would I have to keep track of what card came out of which box. Different Pokémon products have different values.
I just want to make sure I have my books done correctly. I also read somewhere that selling on eBay no matter what is considered a business. Thanks.
Selling on EBAY is a business. IRS requires that you report "gross sales". Your "cost of goods" is what you actually paid for the item. If you purchased booster pack for $5 (but split it up and sold cards individually...I would assign "cost of goods" as 50 cents each.
EBAY has "easy to read" 1-page report that shows YTD totals for (orders, returns, EBAY fees, shipping expense). Click on PAYMENTS, REPORTS (select LAST YEAR). This will be very helpful from filing your income taxes. You file income taxes as a "business" if you want to deduct expenses.
ORDERS
- Returned Merchandise
- EBAY Fees
- Shipping Expense
- Other Expenses (cost of goods, mileage, packing supplies)
When your hobby becomes a business, start looking for a new hobby.
I had a nice collection of tobacco cards, assembled with the thrill of the hunt, over a period of years.
I then bought over 10,000 cards from a retiring dealer. End of hobby. Everything became stuff, merch, or something else. Everything had a price and that price was more than I paid for it.
One morning I woke up and everything was inventory.
Thank you. That did provide some useful information. What do I do about receipt keeping? I don't have receipts from 1999. Would it be the same as a reseller who buys from a yard sale? I just don't want to get in trouble if I ever get an audit.
One huge question that would take a small book to cover in responses in this forum. You would be better served accessing the IRS reference documents that are readily available. Start with this one.
As far as expenses how you track them on your books is up to you. So in your example you could assign the $5 COGS to one card and $0 to the others or you could divide the $5 out across all 10 cards at $.50 each. The IRS does not care about the specific detail on each item sold but the total cost. If you are filing as a business most sellers would use a schedule C. The following IRS docuement can walk you through that. It also contains other links that provide additional information on specific topics.
KrazzyKats • Volunteer Community Member • Buyer/Seller since 1998
