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<p>[QUOTE=&quot;Troodon, post: 337578, member: 4626&quot;]You know I&#039;ve hear this mentioned several times, and the answer I&#039;ve come up with as to why money earned in a garage sale is not taxable is that you&#039;re selling items for much <i>less</i> than you originally paid, thus are not actually earning any profit.&nbsp; See below for the &quot;hobby rule&quot; as to why you couldn&#039;t claim the loss though...</p><p>&nbsp;</p><p><br /></p><p><br /></p><p>Not entirely true... you <i>can</i> deduct hobby expenses for selling coins.&nbsp; However if coin selling is a hobby, and not a business, you can only deduct expenses up to the total amount of earnings you claim as taxable income.&nbsp; In other words, if it&#039;s a hobby and not a business, you can not claim a net loss for the year; best you can do is break even.&nbsp; (Similar to the rule about how you can only claim as much gambling losses as winnings.)&nbsp; To actually be able to claim a net loss for the business of selling coins, that 3 year rule of attempting to make a profit (and actually earning a net profit in at least one of them) applies.</p><p><br /></p><p>Hobby expenses can include anything necessary to participate in the hobby.&nbsp; In the realm of coin collecting, you could justify things like supplies, books, and grading fees, to name a few.&nbsp; (Books may be a little iffy, you&#039;d have to establish that you bought the book primarily for the sake of participating in the hobby.)</p><p>&nbsp;</p><p><br /></p><p><br /></p><p>Amen on that.&nbsp; The only thing that will get you in more trouble than trying to hide legitimately taxable income from the IRS, is lying about it.&nbsp; (However of those 3 people only Al Capone got in trouble for tax evasion; it&#039;s what he went to jail for.&nbsp; A landmark case btw that established that even illegal income is subject to tax; Capone unsuccesfully tried to use the defense that you can not legally tax illegal income.)[/QUOTE]</p><p><br /></p>

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