Ebay sales

[Roberts]

Since tax season is over, have to deal with some IRS notices.

Client was unemployed and bored so he sold about 150 car parts he had stored in the multiple garages he owns plus he sold all his and wife's collectables which ended up being about 350 items worth $30,000. The IRS wants their share. Sold everything on EBAY. It all stopped when he got a new job. (I think he sold one of his old cars on EBAY also)

Is the IRS going to want proof these were personal items he was selling and not a business? How do I prove it wasn't a business? They want a signed letter from the client stating their position - is that likely going to be good enough? I'm doubtful it will be.

[DaveO]

Maybe they would rather see it on a "C" with cost of goods sold and transaction fees that would likely result in a loss. Would that make them feel better?
This is how I would describe the choice.

[sandigi]

Did you say collectibles?

Since tax season is over, have to deal with some IRS notices.

he sold all his and wife's collectables which ended up being about 350 items worth $30,000. The IRS wants their share. Sold everything on EBAY. It all stopped when he got a new job. (I think he sold one of his old cars on EBAY also)

Is the IRS going to want proof these were personal items he was selling and not a business? How do I prove it wasn't a business? They want a signed letter from the client stating their position - is that likely going to be good enough? I'm doubtful it will be.

Collectibles sold for $30,000? Sounds like there might be a capital gain here. Was the "old car" an antique? Oh, I can hear this question my brother asked me last month echoing in my ear . . . "Why do they have to make it so complicated?"

[Burke]

Is the IRS going to want proof these were personal items he was selling and not a business? How do I prove it wasn't a business? They want a signed letter from the client stating their position - is that likely going to be good enough? I'm doubtful it will be.

First of all, I would ask if he has pictures of the items. Maybe, if he posted on Ebay. And can he document anything about when they were originally bought? Were any gifted or inherited? If he can show that they have been around for years, he might have a good case. The car parts are curious; why would he have a lot of car parts which were in still good enough condition to be sold? And he had multiple garages? Sounds like a former business closed down, in which most of them may possibly have already been deducted on a prior Schedule C? That makes his basis zero. This is a pretty big net windfall which is why the IRS is suspicious. There are people who do this for a living.

[Roberts]

The car parts are curious; why would he have a lot of car parts which were in still good enough condition to be sold? And he had multiple garages? Sounds like a former business closed down, in which most of them may possibly have already been deducted on a prior Schedule C? That makes his basis zero. This is a pretty big net windfall which is why the IRS is suspicious. There are people who do this for a living.

Have you ever met a car junky before?