reselling gear (at a loss)... deduct or scratch from the record

mattorduncan · 28th November 2011

Hey everybody,

This is probably ridiculously optimistic, but...

I had to sell 4 or 5 pieces of gear this year to make end meet, all at a loss. My understanding is that I don't have to pay taxes on that income. But... do I still deduct anything as a business expense? Like... the money that I didn't make back by selling the items that I bought in the same year? If so, can I count eBay and paypal fees against that loss?

Just to be clear, I was going to deduct some of these purchases as business expenses, but then I had to sell them before the year was out. Can I still deduct the value lost between buying and selling?

Many thanks,
Matt

The Byre · 28th November 2011

That depends on how they were booked when you bought them. If they are a capital expense, then you have to take the already booked depreciation into account. If you are running a simple profit and loss account (which is what it sounds like) then you just book them in and book them out.

If the ebay and PP fees are not taken at source (i.e. taken off the money received), then they have to be booked separately. Otherwise, you just book the money received.

therealbigd · 30th November 2011

If you listed them as capital gains on a previous tax return, then sold them on, you'd have to pay tax on the money gained.

This is because, if you've put them on a previous tax return, they've become a business asset, not your personal property.

If you didn't have to pay tax, people would buy gear, put it on their tax return, then immediately sell it on, and make a living off the tax money gained in the process.

yosefTux · 5th February 2012

I do it the way my tax accountant tells me is least likely to raise any flags at the IRS. Yes, it depends on how it was handled on the previous year's taxes, but for a purchase and sale the same year you have your choice. In that case it depends on what the business needs it to be.

28th November 2011	#1
mattorduncan Gear interested Joined: Aug 2010 Posts: 26 Thread Starter	reselling gear (at a loss)... deduct or scratch from the record Hey everybody, This is probably ridiculously optimistic, but... I had to sell 4 or 5 pieces of gear this year to make end meet, all at a loss. My understanding is that I don't have to pay taxes on that income. But... do I still deduct anything as a business expense? Like... the money that I didn't make back by selling the items that I bought in the same year? If so, can I count eBay and paypal fees against that loss? Just to be clear, I was going to deduct some of these purchases as business expenses, but then I had to sell them before the year was out. Can I still deduct the value lost between buying and selling? Many thanks, Matt

28th November 2011	#2
The Byre Lives for gear Joined: Jan 2004 Location: Highlands of Scotland Posts: 2,019 1 Review written	That depends on how they were booked when you bought them. If they are a capital expense, then you have to take the already booked depreciation into account. If you are running a simple profit and loss account (which is what it sounds like) then you just book them in and book them out. If the ebay and PP fees are not taken at source (i.e. taken off the money received), then they have to be booked separately. Otherwise, you just book the money received. __________________ http://www.the-byre.com

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30th November 2011	#3
therealbigd 3 + infractions, forum membership suspended. Joined: Dec 2008 Location: London Posts: 2,733	If you listed them as capital gains on a previous tax return, then sold them on, you'd have to pay tax on the money gained. This is because, if you've put them on a previous tax return, they've become a business asset, not your personal property. If you didn't have to pay tax, people would buy gear, put it on their tax return, then immediately sell it on, and make a living off the tax money gained in the process.

5th February 2012	#4
yosefTux Gear addict Joined: Dec 2011 Posts: 358 1 Review written	I do it the way my tax accountant tells me is least likely to raise any flags at the IRS. Yes, it depends on how it was handled on the previous year's taxes, but for a purchase and sale the same year you have your choice. In that case it depends on what the business needs it to be.