"Tax time and selling figures" Topic

When selling off some of your collection is the income taxable?

I'm not talking about being a vendor, just cleaning out some of the lead pile.

It depends on how much you make doing it. Income below a certain amount is a hobby not a business and is not subject to taxes.

Hooray free internet legal advice!

Or, see:

Accountant Forums: US income taxes on sales of personal items
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Hobby or business? Taxes either way
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Great now TMP has been flagged by the IRS and will be coming after me for my extra $100 USD a year.

Remember, it depends on your tax basis in the figures--you have to make a profit for it to be taxable. I would think your basis would be the lead cost at time of purchase maybe PLUS the investment of time in labor painting the figures, because you improved the item.

Terrament and others are correct. You only pay capital gains when you sell it for MORE than you bought it for. So… when selling minis' be sure not just to consider the cost of the figure but how long it took you to paint them. Multiply that by your average hourly pay rate or equivalent and add that to it. you will not be able to deduct any loss from your taxes (without being a business) but it should help insulate you from any other taxes.

Uh, no accountant, but if you buy 10 fgures for $10 USD, paint them, and then sell them for $40 USD, you have made a gross profit of $30 USD which is potentially taxable as income. It doesn't mattter that it took you time to do it (or how much time) any more than it takes your time to do your job at work, or for an artist to paint a mural!

Obviously a formal business can deduct overhead expenses from that gross profit.

In my case not only did I sell the figures, but I also used the proceeds to buy more figures.

Anything that adds value to the figures, such as painting them, is an expense that increases the cost basis of the figure. In Gonsalvos example, the $10 USD is his raw material cost and the $30 USD is contribution margin. From that, deduct the added value of painting the figure and deduct that from the $30. USD That is your gross margin.

Did anybody else here notice the striking similarities between tax instructions and wargame rules, or is it just me?

True Gonsalvo

but the person was noting he would be selling them for less than they bought them, so if he sold the figures for less than the $40 USD that's not a profit.

Did anybody else here notice the striking similarities between tax instructions and wargame rules, or is it just me?

Why do you think I specialise in international taxation? ;-)

The links from Greywing covered what I wanted to.

FYI, your own labor for painting isn't deductible. If you paid to have them painted that cost is.

Now paint and brushes or other supplies are allowable.

Glad I dont have to do my own taxes

There is no similarity between wargame rules and tax rules. Wargame rules have at least a passing chance of making sense.

FYI, your own labor for painting isn't deductible. If you paid to have them painted that cost is.

Now paint and brushes or other supplies are allowable.

Time is not deductible under any code I'm familiar with; US, UK, Eire, French, German, Danish, Icelandic, Isreali, Japanese and Korean being the main ones I've deal with over the last 30 years.

As to the supplies, that depends. Assuming you are a US resident, if you are doing it as hobby the income will be reported on line 21 of the Federal 1040. The costs are reported on Sch A, line 21, but subject to the cutoff of 2% AGI on line 26.

If you are carrying the business with a view to profit, you would complete Sch C, and possible be liable to addition SE Tax.

The IRS has very specific rules on what constitutes business and hobby income.

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Time wouldn't be a deductible allowance – that's what pay is – buying your time.