2. misc-audio
  3. 126811-2278

Potential Tax Liability

I have a friend who inherited many electronic items including those of the audiophile variety. Through ads on this site and others, he sold about $60k worth of equipment within this year.   He is not a dealer and does not have a business, either physically or on paper.  Most of the payment transactions were made through PayPal. He is now worried about potential tax liability. Sometimes he created invoices. Sometimes the money was sent through PayPal's "Friends and Family" option. The money was transferred from PayPal to his bank account periodically. It suddenly occurred to him about possibly having a tax liability.    Made me curious too.   Would these proceeds need to be declared as income to the IRS?
kodak805
warmglowingtubesart
29 posts
 
Yes, of course he should timely file the return, and inform his preparer regarding this situation. Either he or his representative will  need to find out  what the fair market value of the electronics/audio equipment claimed on the Estate return  (due 6 months after the date of death ) was. That number will be his basis for purposes of  determining whether there was a capital gain, loss or "wash" from sales of the electronics (most probably a loss or a wash).



"It is much easier to be critical than to be correct."
                                                --Benjamin Disraeli

                                                                                         
                                                                                                            'Bye all
                                                                                                         ---Steve
drsteve
12 posts
 
Jea48 posted:
"If I remember correctly EBay... was forced by the IRS to send out a 1099-K to sellers..."
I suppose you could say that if the IRS informed eBay they should start following the law like they should, that you could say they were forced.
That's also why policemen have guns (in the USA). Governments come in two types: those who assert the right to use superior force, and governments whose members are in jail, in exile, or in graves!
I received a 1099 from Paypal one year a few years ago. I made sure I deducted Paypal fees (banking fees), shipping costs (postage and packing), original costs, etc. etc. I was just following the law ; ) !!
There is also a simplified calculating method for such issues; I think you can deduct 1/3 of "hobby" sales.
IANAL, but my opinion is this is an inheritance issue.
(I gotta go take my meds now).
willrich47
25 posts
 
Here is your $5 answer... I'll echo warmglowtubeart.

See Internal Revenue Code § 102 Gifts and Inheritances: 

General Rule – Gross income does not include the value of property acquired by gift, bequest, devise, or inheritance. 
....
See also Income Tax Regulation 1.102-1 Gifts and Inheritances. 


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