Shopping at LEGO or Amazon?
Please use our links: LEGO.comAmazon
As an Amazon Associate we earn from qualifying purchases.

Predictions on Discontinuing Sets and their Secondary Market Value

1159160162164165680

Comments

  • RennyRenny USAMember Posts: 1,145
    This is my first year of reselling. I am not in the $20k majors but do understand that I still need to pay taxes on any additional income. My question is how do I report it?

    Do I just present to my tax preparer one single dollar amount of my profit or am I required to provide a line by line item of everything I have sold, what I paid for it and what I sold it for? I have these records but just want to make sure I know what to provide come tax time.

    Thanks.
  • LegoFanTexasLegoFanTexas TexasMember Posts: 8,409
    Schedule C on your personal tax return:

    http://www.irs.gov/uac/Schedule-C-(Form-1040),-Profit-or-Loss-From-Business

    Instructions and the forum are right there.
    RennyFollowsCloselydougts
  • chrisdojochrisdojo Member Posts: 169
    Tax man will just want income amount and any expenses / deductions.
    Line item needs to be kept in case of an audit.

    (I am NOT a tax professional by any means)
    Renny
  • y2joshy2josh Member Posts: 2,002

    Sold Out simply means they have sold out of all their current inventory and are not taking backorders right now.

    The item is really gone when it is deleted from the web site completely. Many items have been marked as "sold out", only to return.

    So... when do you suppose that restock on Imperial Flagship is going to roll out?

    http://shop.lego.com/en-US/Imperial-Flagship-10210
  • chrisdojochrisdojo Member Posts: 169
    My issue is trying to figure out if I have to pay taxes on my [quite small] inventory / what the rules are.
  • LegoFanTexasLegoFanTexas TexasMember Posts: 8,409
    ^

    http://search2.lego.com/?q=10210&lang=2057&cc=US

    It is listed as "Retired Product", so it won't come back. If it was marked as "sold out", then it could.
  • y2joshy2josh Member Posts: 2,002
    ^Oh. I know. I was just being snarky with semantics. :D
  • LegoFanTexasLegoFanTexas TexasMember Posts: 8,409
    y2josh said:

    ^Oh. I know. I was just being snarky with semantics. :D

    Hmm, I must be in serious mode. :)
    Penkid11
  • JP3804JP3804 Member Posts: 332
    ^ It did come back for a short time last year after being listed as sold out.
  • doriansdaddoriansdad CTCMember Posts: 1,337



    So... You're a tax cheat?

    Just making sure we all understand what's what..

    We always make sure to request a 1099-K from Paypal like everyone else. With Amazon Payments we don't bother as we are simply churning funds and not producing income....but that is another story for another board.
  • BumblepantsBumblepants DFW/BGMember Posts: 7,252
    They are re-releasing the Death Star next year with a bonus FireBrigadeMarketCaféGrocerMaersk section where the interrogation room is now.
  • LegoFanTexasLegoFanTexas TexasMember Posts: 8,409
    edited December 2012

    We always make sure to request a 1099-K from Paypal like everyone else. With Amazon Payments we don't bother as we are simply churning funds and not producing income....but that is another story for another board.

    Only you and your creator know the truth, so I will simply take your word for it.

    It just annoys me to no end how many people I read complaining about taxes, of all forms. Here and on the eBay/Amazon seller forums, people complain about taxes.

    I do very well and pay more in income taxes than the average person makes, so when anyone comes out and says, "I am not paying taxes", I get annoyed.

    If people do not like the tax rates, then elect politicians who will lower them. Of course, no one then wants to hear that they will get fewer government services in return.

    It just feels like everyone wants to have their cake and eat it too.
    chrisdojoMandarineSharifa
  • doriansdaddoriansdad CTCMember Posts: 1,337
    edited December 2012

    It just feels like everyone wants to have their cake and eat it too.

    That is the American way and a fiat currency makes it completely possible.
  • y2joshy2josh Member Posts: 2,002
    edited December 2012



    We always make sure to request a 1099-K from Paypal like everyone else. With Amazon Payments we don't bother as we are simply churning funds and not producing income....but that is another story for another board.

    Only you and your creator know the truth, so I will simply take your word for it.

    It just annoys me to no end how many people I read complaining about taxes, of all forms. Here and on the eBay/Amazon seller forums, people complain about taxes.

    I do very well and pay more in income taxes than the average person makes, so when anyone comes out and says, "I am not paying taxes", I get annoyed.

    If people do not like the tax rates, then elect politicians who will lower them. Of course, no one then wants to hear that they will get fewer government services in return.

    It just feels like everyone wants to have their cake and eat it too.
    Don't you NOT pay the sales tax you're technically supposed to on, let's say, purchases made through Amazon?

    Of course, I could be wrong on that. I was once. In 1995, I think. ;)
  • dragonhawkdragonhawk USMember Posts: 633
    edited December 2012
    ^ If he lives in Texas, he pays Amazon sales tax
  • gmpirategmpirate Member Posts: 1,654


    It just feels like everyone wants to have their cake and eat it too.

    That is the American way and a fiat currency makes it completely possible.
    But we can't print our own gold!
    FatMatt
  • doriansdaddoriansdad CTCMember Posts: 1,337
    ^^I think if you are buying merchandise to resell you can get a tax exempt account...I could be wrong tho...in Oregon we do not have to deal with that. Hopefully my buyers out of state are making sure to pay their state sales taxes on their purchases from me...lol.
  • mathewmathew Member Posts: 2,098
    As a serious side note, and this may have already been discussed, but wouldn't it be interesting if Lego re-released sets like IF on a limited basis much like Disney does with their "vault"? There would still be a reseller market, but just not as lucrative. I wouldn't expect Lego to do it with every set. Just ones like IF, Cafe Corner, Green Grocer etc. Unlike a lot of people on this forum, I don't necessarily think newer is better. Certain sets regardless of their time remain classic.
  • dragonhawkdragonhawk USMember Posts: 633
    edited December 2012

    ^^I think if you are buying merchandise to resell you can get a tax exempt account...

    I forgot about that. So to y2josh inquiry, does @LegoFanTexas use his tax exempt account to buy personal items (not for resale) ? ;)
  • y2joshy2josh Member Posts: 2,002
    edited December 2012
    I was actually referring to a point in time before Amazon required tax to be paid in Texas. I obviously have no idea what LFT's situation is now, I was just continuing to be snarky and 'in a mood.'
  • LegoFanTexasLegoFanTexas TexasMember Posts: 8,409
    edited December 2012

    ^ If he lives in Texas, he pays Amazon sales tax

    I buy for resale, so I'm exempt from sales tax.
  • LegoFanTexasLegoFanTexas TexasMember Posts: 8,409
    edited December 2012
    gmpirate said:

    But we can't print our own gold!

    Not yet... ;)
  • avoiceoreasonavoiceoreason Member Posts: 224
    So another tax question for those who may know...

    As an example: let's say I buy set A for $50 and sell it for $100. I make a $50 profit. Then I use that $100 of revenue (original investment + profit) to buy two Set B's at $50 each. Do I owe taxes on the $50 profit?

    I ask because I just end up rolling all of my profits into additional inventory, so I don't really net any cash, my inventory just grows.
  • FollowsCloselyFollowsClosely Member Posts: 1,162


    It's a bit of a PITA but well worth the tax savings...
    Tax savings, or tax fraud?
  • madforLEGOmadforLEGO Chicagoland USMember Posts: 10,425
    Jeez I just hope there is no test afterwards...
    Dougout
  • FollowsCloselyFollowsClosely Member Posts: 1,162

    So another tax question for those who may know...

    As an example: let's say I buy set A for $50 and sell it for $100. I make a $50 profit. Then I use that $100 of revenue (original investment + profit) to buy two Set B's at $50 each. Do I owe taxes on the $50 profit?

    I ask because I just end up rolling all of my profits into additional inventory, so I don't really net any cash, my inventory just grows.

    You owe on any profit. You have $50 in expenses and $100 in revenue. So you are taxed on $50. Its hard to keep track of, I hate tracking it more than actually paying it most days.
    chrisdojokhmellymel
  • dragonhawkdragonhawk USMember Posts: 633

    ^ If he lives in Texas, he pays Amazon sales tax

    I buy for resale, so I'm exempt from sales tax.
    And of course you do not use that tax exempt account to buy personal items from Amazon, otherwise it would be hypocritical..
  • thehockeyboythehockeyboy Member Posts: 97
    My understanding as a non-tax professional:

    All online sellers, even if you sold a single minifig for $1, are expected to report their sellings. And there is a fine line between being a hobbyist and a business.

    As a small seller (with the spectrum, IMO, being the person who sells one item to the person who sells $20,000) its pretty easy to show loss considering the many, easy deductions. You are able to show a loss for a few years (again, the line is gray) until you have to a) stop selling or b) show a profit. If you show a loss for multiple years, then you are considered a hobbyist and have to go back and repay the deductions from all the years you sold.

    Also, if you are selling items consistently (say one a week), then you are required to collect sales tax in the state in which the item resides.

    Under $20,000 and 200 items sold, its the honor system. When the government eventually turns into a mandatory and policed requirement, eBay is dead.

    Also, the IRS has access to any accounts that earn interest. So if you sold $15,000 on ebay, didnt report it, but magically had some cash entering your savings account, you could get flagged (possible drug dealer?).

  • prevereprevere North of Bellville, East of Heartlake, South of Bricksburg, West of Ninjago City Member Posts: 2,923
    I just realized that Bricklink now has a category in Gear called "Human Toiletries". Any thoughts on these Lego towels after they EOL?
    rocao
  • FatMattFatMatt USMember Posts: 502
    From what I understand, and how I did it last year(first time as self-employed). Someone please correct me if I am wrong as I do not currently have an accountant, but plan to for the future as I am beginning to sell a lot more: In short, I take the total income I received for the year and subtract my total list of deductions. That is either the amount I pay taxes on(if figure is positive), or the amount of deductions carried over to the next year(if figure is negative).
  • LegoFanTexasLegoFanTexas TexasMember Posts: 8,409

    So another tax question for those who may know...

    As an example: let's say I buy set A for $50 and sell it for $100. I make a $50 profit. Then I use that $100 of revenue (original investment + profit) to buy two Set B's at $50 each. Do I owe taxes on the $50 profit?

    I ask because I just end up rolling all of my profits into additional inventory, so I don't really net any cash, my inventory just grows.

    Yes, you owe taxes on the $50 profit. The fact that you decided to "reinvest" those profits into new stuff does not remove the profit you earned.

    Now, if you later lose money on a set and sell it for $10 less than you paid, you can subtract that $10 loss against the $50 profit for a net $40 profit.

    Also, you can generally deduct legimiate expenses such as selling fees, gas to drive to the post office, boxes and shipping supplies, etc. If you pay yourself an actual salary (complete with payroll taxes and everything), you can deduct that as well).

    If you don't know anything about accounting, it is worth spending a few hours on the Internet doing some reading, there is a lot of free information out there to teach you the basics.

    For example, buying a $50 set is generally not an expense, it is an asset. It becomes a "cost of goods sold" (COGS) once you sell the item, but until then it is an asset.

    Knowing what an asset, expense, liablity, etc. are all key to proper accounting.

    Now, if you're just selling 5 or 10 sets a year, honestly no one cares, that is garage sale stuff. If you're selling 5 or 10 sets a week, you need to be keeping track.
  • LegoFanTexasLegoFanTexas TexasMember Posts: 8,409

    And of course you do not use that tax exempt account to buy personal items from Amazon, otherwise it would be hypocritical..

    Sure I do, but then those purchases have tax owed directly to the state.

    Against that, I can subtract sales tax I do pay on items that should be exempt. For example, my local LEGO store refuses to sell to me tax exempt, for whatever reason makes sense to them.

    So the sales tax I pay to them counters the sales tax I'm not paying online.

    Every 3 months I file a sales tax return with the State of Texas, all the tax I've collected in sales, plus all the sales tax I owe for personal purchases, less the sales tax I've paid on items that shouldn't have been taxed.
  • thorniethornie Member Posts: 245
    ^ I find it interesting and somewhat disappointing the LEGO store wont sell to you tax free given you have presented them with all the proper paperwork.
  • LegoFanTexasLegoFanTexas TexasMember Posts: 8,409
    FatMatt said:

    From what I understand, and how I did it last year(first time as self-employed). Someone please correct me if I am wrong as I do not currently have an accountant, but plan to for the future as I am beginning to sell a lot more: In short, I take the total income I received for the year and subtract my total list of deductions. That is either the amount I pay taxes on(if figure is positive), or the amount of deductions carried over to the next year(if figure is negative).

    http://en.wikipedia.org/wiki/Cost_of_goods_sold

    It is well worth your time to read that.

    Paying $50 for a set that you plan to resell later is not a deduction. It does not become one until you actually sell the set, until then it is an asset.

    Lets say you start your online business with $50. That $50 becomes a capital equity investment into your business. It can be taken out later tax free since it was an investment in the business.

    For example, if you buy a red doodad for $50 and 1 day later sell it for $100, you earned $50 gross profit (before actual expenses like selling fees.

    Lets say you turn around that same day and buy a blue doodad for $50. This does not cancel out the $50 profit, it becomes an asset you carry on the books (Quicken Business and Quickbooks will do this for you easily) until you sell it.

    Lets say you sell that blue doodad the following day for $100. You subtract the $50 COGS (cost of good sold) against the $100 and you have another $50 gross profit.

    So you now have $200 of reportable income and $100 of gross profit. Lets say you have $50 in selling expenses (fees, gas, etc.). So you actually owe income taxes on $50.

    This is what accounting software does for you, but you can do it on paper with a pencil if you really wanted to. The software will keep track of your inventory, your profits, and all your expenses. This is by far easier if you open a separate bank account and keep all business expenses in another bank account.

    That does not require a "company or LLC", you can just open another personal bank account and report it all as personal income as a "sole-proprietor".

    Do keep in mind that any profit is self-employed income so on your personal tax return you likely will owe self-employment tax. This is where you get to discover that you were paid more than you thought you were by your prior employer because they were covering half of your FICA taxes for you. :) (15.3% of your profit goes to this before regular income taxes come out)

    ---------------

    Please note, I'm not a CPA nor do I play one on TV, but I have spent a lot of money on them over the years and have owned a business for 15+ years and paid a whole pile of taxes in the process. Fun stuff indeed! :)
    FatMattchrisdojo
  • LegoFanTexasLegoFanTexas TexasMember Posts: 8,409
    thornie said:

    ^ I find it interesting and somewhat disappointing the LEGO store wont sell to you tax free given you have presented them with all the proper paperwork.

    Yep, I brought them the state form and even a copy of my sales tax permit, they were not interested.

    But that is their choice I suppose, I can't find anything in the law that says they have to take it.

    I just keep my receipts and deduct it, so in the end I'm not paying it anyway.
  • avoiceoreasonavoiceoreason Member Posts: 224
    Thanks to all for the tax info. I am well versed in assets and liabilities, incomes statements vs. balance sheets, etc. What I didn't know was whether there was some set of rules I was unaware of for "hobby income" vs. straight up business income. Sounds like pretty much any profit is taxed as though you were a business owner. Never even thought to consider FICA tax.
  • littlepuppilittlepuppi Member Posts: 181
    Guys, this is really ot....

    On topic, are we serious ds is retiring! It's not on my radar at the moment due to the fact I thought it had another twelve months...

    Thanks in advance

    Lp
  • CrazyaddictCrazyaddict Member Posts: 35

    ^ If he lives in Texas, he pays Amazon sales tax

    I buy for resale, so I'm exempt from sales tax.
    And of course you do not use that tax exempt account to buy personal items from Amazon, otherwise it would be hypocritical..
    of course not! you would open the set and build it and write it off as a business expense (damaged inventory). since it is now $0 value, you can take it as personal goods without incurring tax on personal level or business level. ;) (no, i don't mean any of you gents are doing this, just pointing out the obvious).
  • gmpirategmpirate Member Posts: 1,654
    Keeping track and figuring actual profit is actually not as difficult as it seems. Using EBay as an example, take your 1099 with total sales and subtract "all" your expenses/purchases for the year/tax period. Then add your remaining inventory to net the income you owe taxes on. Download your transaction history and just keep it on file.

    I.e. If you made $1000 in sales and had $750 in purchases and expenses you would net $250. Say you have $200 in inventory left over. Add that to your netted $250 and you will owe taxes based on $450 -- not $250.

    This is why LFT has properly called your inventory of Lego an asset. They do not become expenses until they are sold.
  • richoricho Member Posts: 3,830
    I still don't quite understand how profit & tax records would handle people who part out sets for profit.
  • gmpirategmpirate Member Posts: 1,654
    ^ there is no difference. Total income + inventory - expenses = income you will be taxed on.
  • chrisdojochrisdojo Member Posts: 169
    edited December 2012
    @richo
    My guess would be take a $50 set, divide it by the number of parts, say 500. Cost per part is $0.10.
  • dragonhawkdragonhawk USMember Posts: 633

    And of course you do not use that tax exempt account to buy personal items from Amazon, otherwise it would be hypocritical..

    Sure I do, but then those purchases have tax owed directly to the state.

    Against that, I can subtract sales tax I do pay on items that should be exempt. For example, my local LEGO store refuses to sell to me tax exempt, for whatever reason makes sense to them.

    So the sales tax I pay to them counters the sales tax I'm not paying online.

    Every 3 months I file a sales tax return with the State of Texas, all the tax I've collected in sales, plus all the sales tax I owe for personal purchases, less the sales tax I've paid on items that shouldn't have been taxed.
    I was trying to be sarcastic, but that is good insight on taxes due on personal vs business. I was under the impression one had to have 2 of everything (credit cards, online shopping accounts, etc) to be on up and up.
  • UKtsumiUKtsumi Member Posts: 629

    Guys, this is really ot....

    On topic, are we serious ds is retiring! It's not on my radar at the moment due to the fact I thought it had another twelve months...

    Thanks in advance

    Lp

    Oh yes its going next week , everyone pick one up while you can.... ;)
  • dragonhawkdragonhawk USMember Posts: 633


    ...
    This is what accounting software does for you, but you can do it on paper with a pencil if you really wanted to. The software will keep track of your inventory, your profits, and all your expenses. This is by far easier if you open a separate bank account and keep all business expenses in another bank account.

    ...

    LFT and others,

    Any recommendation on accounting and/or inventory management software ?
  • richoricho Member Posts: 3,830
    gmpirate said:

    ^ there is no difference. Total income + inventory - expenses = income you will be taxed on.

    that makes no sense, as you might be taxing yourself on piece sales that are less than the cost of the set (expenses). It makes even less sense if you plan to only part, part out the set, if that makes sense.

    Lets say a set cost £50, and you sold 17% of the set for £20, what would you treat as profit?

    This complication is one of the main reasons I have never set up a bricklink store to sell off the huge amount of spare parts I have knocking about. It's a total minefield.
  • cloaked7cloaked7 Member Posts: 1,448
    Interesting stuff, to a point. Course, doing all the bookkeeping isn't fun.

    To make it more interesting. Say you buy 2 blue widgets. One cost you $90 and one $120. Then, you sell one of them for $200. You just stacked them in the corner, so you don't know if you sold the first one or second one. That's where your method of inventory comes in. LIFO or FIFO. Last In First Out or First In First Out. :-) Oh yeah, and that is just 2 methods of inventory, there are more.

    You get in to the big leagues and you accure and depreciate too. Like depreciate the cost of your computer over 3 years, instead of absorbing the cost in the year you bought it. All those debits and credits.
  • CCCCCC UKMember Posts: 20,203
    ^ There is also the difficultly with what parts are worth. If you buy a set with an expensive piece in (say the new goblin set), sell the minifigures to yourself based on, for example, cost per part and sell the rest to someone else, you will make a loss on that one set. So you claim that back from other sales where you make a profit. Of course, it is not legit, but very difficult for anyone to prove wrong-doing.
  • richoricho Member Posts: 3,830
    edited December 2012
    Also, imagine if you parted out the Death Star with its xxxx parts. It might take you 10 years to sell them all. I just don't understand whether you pay tax from the world go, or whether you pay once you sell enough parts to cover the original outlay.

    I fancy having a bricklink store one day, but there is no way I would do it already being a higher rate tax payer. Maybe its a back up bit of fun if ever I change jobs.

    Having said all that, I get the impression that a huge amount of UK bricklink stores are not registered as businesses with HMRC, even though it is a legal requirement to do so within 90 days of starting a business, which is exactly what an online shop is, no matter what size.
  • dougtsdougts Oregon, USAMember Posts: 4,129
    ^^ My money is on


    If people do not like the tax rates, then elect politicians who will lower them. Of course, no one then wants to hear that they will get fewer government services in return.

    It just feels like everyone wants to have their cake and eat it too.

    Not exactly true. there are plenty of people who would happily take fewer government services along with lower taxes - myself included.

    FollowsCloselypharmjodRTOufjason
Sign In or Register to comment.

Shopping at LEGO.com or Amazon?

Please use our links: LEGO.com Amazon

Recent discussions Categories Privacy Policy Brickset.com

Howdy, Stranger!

It looks like you're new here. Sign in or register to get started.

Brickset.com is a participant in the Amazon Services LLC Associates Program, the Amazon.com.ca, Inc. Associates Program and the Amazon EU Associates Programme, which are affiliate advertising programs designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.

As an Amazon Associate we earn from qualifying purchases.