Would I Owe Federal Taxes?
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- dusty
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Would I Owe Federal Taxes?
If I have a Yard Sale and I sell a bunch of Shopsmith and old computer parts that I have out in the shed (parts harvested from upgrades), would I owe the Federal Government taxes on the proceeds. If yes, at what rate?
I just watched a short blurb on CNN that would indicate YES.
I just watched a short blurb on CNN that would indicate YES.
"Making Sawdust Safely"
Dusty
Sent from my Dell XPS using Firefox.
Dusty
Sent from my Dell XPS using Firefox.
Did you use the cost of these parts in a for profit business to reduce taxable income? Is your Shopsmith and computer items part of the "Cost of Goods Sold" in a for profit business?
If the answer is yes, it is taxable. The rate it is taxed may be at the ordinary income tax rate, or it could be at the capital gains tax rate. Depending on how long the item was kept, and how it was classified when you used it as a deduction.
If you are using the items sold in a hobby. I wouldn't worry about it.
I am not a tax accountant or attorney, so my advice should be not be used as fact.
If the answer is yes, it is taxable. The rate it is taxed may be at the ordinary income tax rate, or it could be at the capital gains tax rate. Depending on how long the item was kept, and how it was classified when you used it as a deduction.
If you are using the items sold in a hobby. I wouldn't worry about it.
I am not a tax accountant or attorney, so my advice should be not be used as fact.
Jerry
Harrison, AR
Shopsmith Mk V 520
SPT's: jointer, band saw
Harrison, AR
Shopsmith Mk V 520
SPT's: jointer, band saw
- dusty
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- Location: Tucson (Wildcat Country), Arizona
Is the question really "What is income"?
Example 1:
Grandpa gave me an old Disston saw. If I sell it for $50, is that income. I paid nothing but received $50.
Example 2:
I bought a Craftsman circular saw. I paid $80 it for and hardly ever used it. I did not like it. It felt uncomfortable to hold and was too heavy. I sold it for $20. Is that a $60 loss that can be used to offset income?
BTW Nothing that I have ever done in my shop was done for profit. In fact, I have never sold anything that I built.
Example 1:
Grandpa gave me an old Disston saw. If I sell it for $50, is that income. I paid nothing but received $50.
Example 2:
I bought a Craftsman circular saw. I paid $80 it for and hardly ever used it. I did not like it. It felt uncomfortable to hold and was too heavy. I sold it for $20. Is that a $60 loss that can be used to offset income?
BTW Nothing that I have ever done in my shop was done for profit. In fact, I have never sold anything that I built.
"Making Sawdust Safely"
Dusty
Sent from my Dell XPS using Firefox.
Dusty
Sent from my Dell XPS using Firefox.
As an individual tax payer and not a business operator, you have no operating costs or expenses to claim, I think. If you have "income", it is taxable. All that need be done is learn how to determine income.
If you won the lottery today, that is definitely income. Pay up. The Treasury needs your money.
If you received Food Stamps and Unemployment checks, those are income, I think. If you sold the band saw box that you made last week, the sold price is income, I think.
If you won the lottery today, that is definitely income. Pay up. The Treasury needs your money.
If you received Food Stamps and Unemployment checks, those are income, I think. If you sold the band saw box that you made last week, the sold price is income, I think.
MarkFive510
Dusty, in my pre-retirement life I taught tax law, and I can answer your questions.dusty wrote:Is the question really "What is income"?
Example 1:
Grandpa gave me an old Disston saw. If I sell it for $50, is that income. I paid nothing but received $50.
Example 2:
I bought a Craftsman circular saw. I paid $80 it for and hardly ever used it. I did not like it. It felt uncomfortable to hold and was too heavy. I sold it for $20. Is that a $60 loss that can be used to offset income?
BTW Nothing that I have ever done in my shop was done for profit. In fact, I have never sold anything that I built.
Example 1: your tax basis in the Disston saw is equal to your grandpa's tax basis (what he paid for it). To determine your gain or loss, compare the $50 you received for the Disston with your tax basis. If sold at a gain, the gain is subject to tax. If sold at a loss, it is a non-deductible personal loss. It is like selling your personal residence: sell at a gain, the gain (in excess of any exclusion, which now is $250,000 or $500,000 if married filing jointly and some other requirements are satisfied) is subject to tax; sell at a loss, and it is a non-deductible personal loss.
Example 2: Non-deductible personal loss.
Hank
- dusty
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- Joined: Wed Nov 22, 2006 6:52 am
- Location: Tucson (Wildcat Country), Arizona
[quote="hjlssfor1"]Dusty, in my pre-retirement life I taught tax law, and I can answer your questions.
Example 1: your tax basis in the Disston saw is equal to your grandpa's tax basis (what he paid for it). To determine your gain or loss, compare the $50 you received for the Disston with your tax basis. If sold at a gain, the gain is subject to tax. If sold at a loss, it is a non-deductible personal loss. It is like selling your personal residence: sell at a gain, the gain (in excess of any exclusion, which now is $250,000 or $500,000 if married filing jointly and some other requirements are satisfied) is subject to tax]
Hmmm. Does the fact that these are "non-deductible" personal losses essentially mean that they have no impact at all on my taxable monies?
Example 1: your tax basis in the Disston saw is equal to your grandpa's tax basis (what he paid for it). To determine your gain or loss, compare the $50 you received for the Disston with your tax basis. If sold at a gain, the gain is subject to tax. If sold at a loss, it is a non-deductible personal loss. It is like selling your personal residence: sell at a gain, the gain (in excess of any exclusion, which now is $250,000 or $500,000 if married filing jointly and some other requirements are satisfied) is subject to tax]
Hmmm. Does the fact that these are "non-deductible" personal losses essentially mean that they have no impact at all on my taxable monies?
"Making Sawdust Safely"
Dusty
Sent from my Dell XPS using Firefox.
Dusty
Sent from my Dell XPS using Firefox.
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- Location: Concord, Ca.
Dusty,
I would not worry about it! Folks that have weekly yard sales are the ones that should be concerned. Many cities limit the number of sales, or require a permit. They are the ones that are running a business for profit.
A yard sale once in a while is not going to attract attention, nor will anybody be knocking on your door collecting unpaid taxes. Trying to figure out how much one paid for a screwdriver, a bowl, a scoop way back when is just nerve wacking! Have fun with your yard sale!
John
FlashbacPT
I would not worry about it! Folks that have weekly yard sales are the ones that should be concerned. Many cities limit the number of sales, or require a permit. They are the ones that are running a business for profit.
A yard sale once in a while is not going to attract attention, nor will anybody be knocking on your door collecting unpaid taxes. Trying to figure out how much one paid for a screwdriver, a bowl, a scoop way back when is just nerve wacking! Have fun with your yard sale!
John
FlashbacPT