edfan[at]earthlink.net (edfan) writes:

- quote -

Anytime one sells anything for any reason, there's taxable
income if the sale price exceeds the basis. Since closet
cleaning sales are usually of personal use items being sold
for less than their purchase price, there is no taxable
income.

Phil Marti
Topeka, KS

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A topic keeps coming up in Ebay message boards: if a
collector or junkaholic decides suddenly to get smart and
save up for retirement, can they liquidate everyhing without
being taxed for the whole thing as if they'd bought it
intending to sell? Clutterbugs often congregate in Ebay and
you see them selling off everything to the walls, often at
great losses. Do people have to pay taxes over and over
again on items they have accumulated over a lifetime? If
they take advantage of Paypal to make that liquidation
faster or more convenient (for recordkeeping), do they
automatically incur the appearance of being a professional
seller, thereby triggering taxing agencies to demand they
get, for instance, a resale license or sales tax permit? Is
it advantageous for them to get such licenses and permits,
then account for it as personal property turned into
inventory - and take the losses that usually accompany such
conversions? (Collectors usually buy retail and sell
wholesale -- that's not exactly the usual route to
riches....)

The question seems to come up so regularly, it's a wonder
states have not devoted pages in their web sites to
discussing this issue but I haven't seen any yet that do.

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