2022

[Bald-N-Bassy]

Just curious if anyone has any insight on the new tax laws for 2022. Specifically the ones regarding being 1099’d if you get paid more than $600 on a platform.
i.e reverb, eBay, cashapp, venmo and even FB market.

I do a lot of online selling of my own personal gear. So am I able to write off the initial cost of the item? For instance I bought a brand new bass for $2000 and sell it for $1500. Am I able to write off the initial cost of the bass? Technically being a $500 loss.

 

[PolkaHero]

You have no tax liability if you sold an instrument for a loss.

 

[Stewie26]

You have no tax liability if you sold an instrument for a loss.

Yeah, but can he deduct the loss from profit he may have made by other sales the same year?

 

[PolkaHero]

Yeah, but can he deduct the loss from profit he may have made by other sales the same year?

Sounds like a question for a CPA. I've got an accounting background but I'm not a tax expert.

 

[T_Bone_TL]

I have no particular knowledge of what they are up to for 2022

Have to look into it, but the typical pattern seen with personal items/collectibles is tax the profit, nope, can't offset other profits with the losses, unless you can demonstrate that you are "a business buying and selling inventory" rather than "a person buying stuff, and selling your used stuff." So if you buy one for $2000 and sell it for $1000 and buy another for $1000 and sell it for $2000, they want tax on $1000 gains. If it cost you $100 in fees to sell it the one that made a profit, $900 gains. If it also cost you $100 to sell the one you took a loss on, still tax on $900 gains.

That's what I expect it will shake out as, from what I'm aware of in other bits that I've seen go by, though they don't apply to me. i.e. gambling winnings are taxable but gambling losses are not losses you can use to offset those or anything else, unless you demonstrate you are a professional gambler (a section I read most years because I have other sorts of losses some times, but that example is in the instructions for the loss lines.) And of course updated instructions for 2022 won't be available until late 2022 or early 2023.

 

[Staccato]

First, write-off is a misused term. Second, intention is very important. (Is this a business, and does it generate a profit during most tax years?) Next, is the bass for business purposes exclusively, or partially. The questions you ask offer little background information, or what you did in prior years, and the answers have to be applied to the tax code, or case law from tax court. It's not that simple.

Next, taking advice from non-tax professionals is a very slippery slope, and tax people should limit their comments to opinions and not actual advice (similar to attorneys on discussion forums).

Tell us more, and we may understand where you are, and where you intend to be with your business. You should establish every item of income, expense, assets, and liabilities in ways that will basically avoid error, suspicion, or anything else resulting in an IRS audit, if you're in the US. Plan ahead, and avoid the so-called traps.

 

[Bald-N-Bassy]

Found the answer I was looking for.
I sell on reverb a lot. Reverb will have an option to input the price you paid for the item. At the end of the year, you will only receive a 1099 if you profit over $600 on reverb. They will keep a running total based on what you input.