Selling my Blu-ray/DVD Collection Taxes

[jackparker.2013]

I've been collecting movies on physical media since 2001. I've got over 5000 titles, and since I don't just buy mainstream titles, most of my films haven't devalued with time. I'm out of room in my spare-room for more, and thought to sell about 500 titles on eBay, but apparently the tax requirements are ridiculous now, and I've only sold 35 titles and are nearly the 2000 dollar mark. How do I deal with this come tax time? These have literally been on my shelf for 3-20 years each. I've bought them, owned them, obviously I didn't keep receipts from all those years ago.

[lacemaker3]

If you don't have receipts or records, then you need to set up a system and start estimating what the fair market value of the discs were at the time you bought them. Use your memory, do internet searches. I would recommend that you set up a spreadsheet, with title, release date, and fair market value. Start with the ones you have already sold, once they are done, go on to the rest that you are considering selling. Then, do all the rest of them, so that when they go to your family, they will have the records that will be needed.

Have the receipts is preferred, of course, but in their absence, the IRS will accept your best estimates, as long as you are consistent and don't appear to be padding the books, as it were. There's a good chance that you will never be asked for them.

Unless you are planning to operate this as a business, you can consider these to be collectibles, and you would file with a Schedule D. There are specific forms that have to be filed as well, to support the Schedule D. An accountant or a tax software can help you manage all that.

[jackparker.2013]

I am planning to move in the next year or two. Moving with a collection of my size is.... difficult, so I'm trying to sell off pieces of them.

Lots of them I'm selling off under cost, but there are a few that are OOP and I'm selling as collectibles.  Most of them are boutique labels titles (Criteron, Kino Lorber, Shout Factory) so cost more than the average.

[luckythewinner]

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@jackparker.2013 wrote:

apparently the tax requirements are ridiculous now

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There are new requirements for eBay to report your activity to the IRS, but the requirement for you to disclose your income and pay taxes has always been there.

[lacemaker3]

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@jackparker.2013 wrote:

I am planning to move in the next year or two. Moving with a collection of my size is.... difficult, so I'm trying to sell off pieces of them.

Lots of them I'm selling off under cost, but there are a few that are OOP and I'm selling as collectibles.  Most of them are boutique labels titles (Criteron, Kino Lorber, Shout Factory) so cost more than the average.

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@jackparker.2013,

In that case, you really, really want to sell all of them as collectibles. Don't write off the losses, because you don't have to.

When you are filing with a Schedule D, for capital gains and losses (income and losses from sales of investments), you can use losses from some sales (the ones that sell for less than paid) to offset the gains that you get from the ones that sell for more than your cost. That would reduce how much tax you have to pay in the end, possibly even to nothing.

With capital gains/losses, you are limited in how much losses you can use. In some cases, you can only use the losses up to the amount of the gains (reducing the taxable income from the sales to zero) but in some cases, you can use up to about $3,000 (if I remember correctly) in additional losses to reduce the amount of other income that you have to pay tax on. It's not quite as favorable tax treatment as if you were running a business, but you also don't have to pay any self-employment or social security tax, or maintain the level of business records that are needed for a business.

Check the instructions for the Schedule D, or with an accountant or tax software, for details about this. It depends on the type of collectible items, and how long you have owned them (hopefully, more than a year, I think that was the time interval that mattered).

[dbfolks166mt]

     First and foremost the $2,000 mark, or whatever it ends up being at the end of the year, is your gross revenue from which you deduct expenses like eBay fees, shipping, packing supplies, POV, COGS, etc. to get to a bottom line net income. This is what you pay income taxes on or declare a loss on. The COGS will be the biggest challenge unless you have original receipts as  lacemaker3 mentioned.

     Whether you file a schedule C or a schedule D is a tax question that would be specific to your situation each has it's pro's and con's. Your best bet would be to do some research or talk to a tax professional. I file both a schedule C and D but the schedule C is for my eBay, and other sites, selling activities. The schedule D is for other investments. 

[jackparker.2013]

I've always sold a few things throughout the year on eBay/Amazon, and made a few bucks off of it, but it's always been "my stuff" never a business. I feel like this is pushing against that, I can take all this down to a local record store and sell it, but I would get pennies for stuff that's more highly valued.

[powell-memorabilia]

IMO, fair market value is pretty easy to set with these DVD's - it is the sale price on eBay.  That is the proven fair market value.  

[nobody*s_perfect]

As advised, you should consult with a tax professional.  To prepare for that, you might read some of the very helpful pages that the IRS puts together. Rules have changed over the past few years, so be sure that the pages you'r reading are current. 

https://www.irs.gov/pub/taxpros/fs-2022-41.pdf

 https://www.irs.gov/faqs/small-business-self-employed-other-business/income-expenses/income-expenses

[lacemaker3]

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@powell-memorabilia wrote:

IMO, fair market value is pretty easy to set with these DVD's - it is the sale price on eBay.  That is the proven fair market value.  

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That is the fair market value at the present time, or the time of the eBay sale.

What @jackparker.2013 needs, is the fair market value at the time he acquired the movies.If that was 5 - 30 years ago, then eBay sales records won't be much help. You can only go back 2 years on Terapeak Research. An internet search can provide more data, though, that would be helpful.

From what he has said, it sounds like filing capital gains and losses (schedule D ) is more appropriate than filing business income/losses (Schedule C) for his situation. But either way, he needs to have some estimate of how much he paid for the items when he bought them.

Schedule C gives a better tax treatment, sometimes, but has other requirements and obligations that he may not want to have. A tax professional is the best person to advise on that.

[tabcu51]

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@jackparker.2013 wrote:

I've always sold a few things throughout the year on eBay/Amazon, and made a few bucks off of it, but it's always been "my stuff" never a business. I feel like this is pushing against that, I can take all this down to a local record store and sell it, but I would get pennies for stuff that's more highly valued.

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The fact is that most sellers by the time they do everything that is required to sell here, it's a full time job meaning they get pennies for their stuff.  The fact is ebay considers selling here a business, we as sellers generally do get top dollar for our stuff here whereas we would get far less through other channels however it should also be noted that those sellers who get top dollar have been selling here for at least a decade, have thousands of transactions to their record and are top rated.

[from_me_2_you]

Do not forget the cost (dedicated room or area) for storage of said items for all those years. If you "forget" to declare any sales and get caught, that is FRAUD. If you sell below cost and or lose money doing business, that is stupidity and makes you a "hobbiest". If the IRS does not agree with you then usually all you do is pay fees and or a penalty, which maybe deductible on your next filing. The advice on getting an accountant is well founded and that fee may also be a tax deduction.