Scrap Metal

[gman]

I am getting a lot of questions about the sale of scrap metal. Prices are really good.
Most are arguing that they are paid in cash so they can get around reporting it.

Must it be sch c income?

[spanel]

LOL... under the table cash income... dont you hear it all the time??


Sch C/Cez income.


Chris


p.s. Last I checked, I get paid in cash.. dont I have to report it?

[Super Mom]

Aren't those people who get the metal supposed to report it????? I sold cans years ago and had to give my SS# for reporting!

[okie1tax]

Scrap Metal sales

If they are not in the "business" of selling scrap metal, would it not be "other income"? If that is something they do on a frequent basis, then, Yes, Schedule C.

[AJsTax]

Correct!

If they are not in the "business" of selling scrap metal, would it not be "other income"? If that is something they do on a frequent basis, then, Yes, Schedule C.

If they are not in the trade of buying and selling scrap metal then the income is the same as hobby income and goes on line 21.
I have never had anyone claim any, except a farm or something that sold a good bit of old stuff and that went the corresponding form.

[David1980]

Most are arguing that they are paid in cash so they can get around reporting it.

Then why are they telling you about it? I think the ones that are telling you are more honest than most taxpayers. Forgetting to report cash income is a pretty obvious tax break. You'd have to be an idiot to really believe it matters whether someone pays you in cash or with a check when it comes to the actual law. So my assumption is taxpayers understand that cash income isn't really tax exempt, if they bring it up they must at some level at least want to do the right thing.

That said,... Where'd the scrap metal come from?

[erchess]

Source of Scrap Metal

Why not report on D and claim a basis ranging from one dollar more than proceeds to whatever seems reasonable for what it was? I think I would disclose the fact that we have no proof of basis because the materials were purchased over the years this to that. Report a personal loss with no tax consequences and be happy. Disclose to avoid penalties. Life is good.

[spanel]

Most of these ppl are not selling metal they bought... they are dragging whatever they find and selling it at pure profit... most of them 100% I would bet.


chris

[gman]

Only Drivers License

In our area they are only asking for drivers license. No social security numbers provided.
I think prices are record high... If they purchase more than 10,000. from one individual, should they send a 1099

[Nashville]

How generated?

Scrap metal should be reported on the form for the activity that generated the scrap.

If a farmer scraps an old bush hog, this is on a 4797.

A metal processing operation generates two types of scrap 1)bad metal and 2)"kerf" which is not bad but oddly-stamped metal unusable for anything except meltdown. If the operation is a 1065,1120, Sch C, etc. report as "other income" on the appropriate form.

Personal items such as ornamental iron would be reported as "other income" on line 21. However, since ornamental iron would have a non-deductible (personal) cost, it would be hard to imagine "income" since most likely the selling price would be less than cost.

If the iron happens to be a "collectible" (i.e. the sarcophagus of King Tut) this would be a Schedule D transaction.

Items with a basis sorta leave the discussion of "scrap" metal since the concept of scrap is that the cost has already been recognized in purchased cost, and the scrap proceeds are income in total rather than a measurement of gain/loss.