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income tax implications

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I'm in Illinois. Recently I've been buying Matchbox collectible cars and reselling them, either on Ebay or at trade shows. I do not have a corporation, or business to do this. Are taxes on income from reselling theses items going to be an issue for me? Do people pay state and federal taxes on money made from Ebay or trade shows? Would I need to incorporate myself if I get into this business heavily? Some of these items are huge prices.

Your advice is greatly appreciated.
 


LdiJ

Senior Member
tygersofpantang said:
I'm in Illinois. Recently I've been buying Matchbox collectible cars and reselling them, either on Ebay or at trade shows. I do not have a corporation, or business to do this. Are taxes on income from reselling theses items going to be an issue for me? Do people pay state and federal taxes on money made from Ebay or trade shows? Would I need to incorporate myself if I get into this business heavily? Some of these items are huge prices.

Your advice is greatly appreciated.
Yes, people pay federal and state taxes on items sold on ebay and at trade shows. You would report the income and related expenses on Schedule C. It is not necessary to incorporate, you can operate as a sole proprietor business. However, if you do get into it heavily, there may be eventual advantages to incorporating.
 

abezon

Senior Member
The amounts you pay go into your cost of goods sold. You'll also need to take inventory every Dec. 31. If you're selling enough, you probably need to get a retail state ID number & collect sales taxes on in-state sales.

If you hold the cars for a significant period before offering them for sale, you might be able to report the sales on Sch. D as collectibles sales. This would avoid SE taxes.

I suggest you make an appointment now with a tax pro & find out what kind of info you need to gather & how to organize it.
 

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