coin hobby vs business

I bought coins in 2005 and sold them on ebay in 2006. Some were short term some held a little over a year. This is considered a hobby for irs purposes as I didn't expect to make a profit unless I held them for 4 or 5 years. I was forced to sell them Due to medical problem and had to raise cash. My question is this. What hobby deductions are you allowed to take. IRS has advised me I have to list the info on schedule D. Can I take the cost of grading services,pay pall and Ebay listing fees as an expense to determine my cost basis.:headbang:

 

Log in or Sign up to hide this ad.

Best person to ask would, of course, be a tax advisor. Seeing how I don tthink any of us are, my shot is that it would depend on how much you made from the sale. Are we talking selling a few odds and ends or proof sets or are we talking 1933 Double eagles?

If we are talking minimal profit from what you paid for the coins verses what you made off of the coins, I dont think anything shoudl be required to be reported.

 

All costs of the purchases, plus slab fees, listing costs (Ebay) et cetera are additions to you cost basis, deduct from the selling price and the net is your gain.
Yes, it is a Schedule D item (items) but you can only list gains, not losses. Hobby losses are not deductible, but gains are reportable.
Sorry.
Good luck.

 

And welcome!

 

If you file a schedule SE (self-employed) and speciify your occupation as 'coin dealer' then I think you can take losses as well as profits.

 

Tom:
post deleted by me.

 

I think this is true, and if doing this include a schedule C "Profit or loss from business or profession".
Now you also could qualify for a deduction for office in home. The office in home includes heat and electric use. You deduct a percentage of your actual bills. You can deduct a percentage of your phone bill and a percentage of health insurance, homeowners insurance, property tax, ect. You can actually end up with a zero tax owed by thinking of all the things you can claim.
They want you to have a seperate room just for your office. In 22 years of running a contracting business from home, I never was audited and nobody ever came to check if I had an office.
All this you can do yourself if you get the free tax guides. You can claim a total loss for about the first three years. I am not an accountant, but did my own business taxes for 21 years. The first year in business, I went to an accountant. I then copied all his forms and did it myself from then on.

 

All profits from coin sales are taxable regardless if its a hobby or a business. It's income and should be treated as such.

The home office deduction is a red herring. Look into it carefully and get professional advice. Claiming a home office/home business is often a red flag for an audit. That is something that nobody needs.

I wonder if all those 20th anniversary silver/gold profiteers will claim their winnings ....lol. Coin collecting is ripe for an investigation. It will come in time. Just be ready with good record keeping.

 

Andrew:
No comment. But I agree, be careful!

 

That's a cryin' shame. Here in New England we just buy, sell, trade...whatever.
Cash is exchanged. No sales tax charged. I think it will kill the small time hobby if government steps in.
Cripes, we are not dealing drugs.

So the best answer is to barter, no cash exchanged?

 

Victor:
post deleted by me.

 

heres a question. How much money would you have to make from your coin sales if you did sell them to concider them income. I mean if you only sold a few of your coins say 5000 bucks worth would that really be called income? By this i mean say you spent 4000 for them and had them for about 5 years and sold them and ended up getting 5000 for them. thats only a 1000 dollars you would have made. Would you really need to have to deal with the IRS for only a grand? Of course in talking about from a coin collectors prospective not a dealer.

 

From the coin dealers' perspectives,

post edited by me.

 

No I'm not saying proceeds. At least not immediate. What I meant is this:
I am now in the process of putting together a XF (or whatever I can get) collection of Walkers.
So somebody has a nice 1921 he will trade for. Instead of me paying $300 cash, he accepts my trade of a dozen Morgan Dollars. No profits, no cash, I get a 1921 Walker.
Now somewhere down the road if I sell my collection for cash, then yes, that could be reportable.
But if I trade my coin collection for a 21 foot speedboat, the proceeds are stalled again.
Did you see the special on TV about the guy who traded a paper clip for a house? Yes, a true story.
He started with a paper clip. Traded it for a purple paper clip. Traded that for a ball point pen. Traded that for an antique fountain pen. Traded that for a Tiffany lamp. On and on he traded and ended up with a house.

 

OK, now things are really confusing. You traded a dozen Morgan Dollars -- $12 -- for a 1921 Walker -- 50¢ . . .

was that a $12 sale or a 50¢ sale?

 

Yup, saw that story

post deleted, by me.

 

It it a hypothetical trade. Not a sale. Trading is not selling.
A dozen pints of Capt. Morgan Rum for a piece of eight, matey.

 

The whole idea is to avoid a sale. An even trade is not a sale. The above was hypothetical.
Like a dozen quarts of Capt. Morgan Rum for a piece of eight matey :smile

 

Well to me it is all a crock of baloney anyway. Because I'd never report anything like that.
What I was hypothetically projecting was an even trade. Something like one or two CC Morgans mixed into that dozen. What fool would trade $3 Morgans for a $300 coin anyway?

 

Sheesh, never mind!
(Oh, and what was your social security number again? -- Just kidding, but still, forget everything that I said.)\