This is the best video I have seen in some time. A fresh perspective. A little painful to swallow, but sometimes reality is. I really appreciated your point at the end of seeing your guitar for music not money!

I have such a short attention span, but hung onto every word. Thank you for taking the time to explain all of this. You've saved me a lot worry and headaches!

Thanks for putting this video together. As an accountant and CPA, unless something changed since I retired, I think only the GAIN is subject to tax and not the entire sales price. While the sales proceeds are reportable to the IRS on Form 1099-K , only the GAIN would be taxable. You're are allowed to deduct your costs. Thus, if you purchases a guitar for $1000 and sold it a couple years later for $1500, only the $500 GAIN would be taxable. This would be reported on either Form 8949 "Sales of Capital Assets" or Schedule D "Capital Gains or Losses". However, Reverb would issue you a 1099-K for $1500, which is why it's important to keep records of all your costs when buying and selling equipment. The challenge is, if you bought your gear years ago and might not have any records of the purchase. If so, it's still possible the IRS might accept estimates of the costs if they are reasonable.

Thanks for the video. I had no idea you cannot deduct your original cost from the profits of a Reverb/Ebay sale. This is stunning and outrageous, in my opinion. I begrudgingly pay sales tax on an item that has been taxed once (or more) before, and this has been a bone of contention with me. But, not to be able to deduct your basis for an item you sell is downright criminal in my opinion. I'm glad I saw this video. I will think twice before selling anything online.

Wow, really well articulated points! Thanks!

Superb advice . You saved me a lot of headaches .

Great advice. A friend of mine is a financial consultant and once told me that guitars are a bad investment. He told me this while showing me his latest Les Paul reissue that he paid several thousands for. For me, I'm just looking to sell a couple guitars that I don't use very often to get that one guitar that would be a great backup for my Les Paul. I've always looked at a guitar as music and not money. However, I also want to get the biggest bang for the buck. The IRS seems to be the infamous turd in the punch bowl.

Thanks!

I was going to sell my Guild G-37 on Reverb, and once listed, I saw their fees about $600.00 on a possible $1,900.00 sale. I pulled the ad, and had to have Reverb delete my account in order to pull my credit card information. This was about a month ago.

I'm always getting gear from "Marty's Mega Mart and House of Blues."🤣

I love how if I sell old gear and I paid tax on I then have to pay more tax for selling it and then also the buyer is also taxed so the government now gets taxed three times

Thanks Matt, not an issue in Europe but you guys in the US pay a fraction of the taxes and gas prices we pay here. REVERB charges commission on the Seller's shipping fees, which is a cost to the Seller of course, I think that is daylight robbery, not even eBay charges commission on the postage fees of a sold item

Don't forget, in addition to your final "sold" price, Reverb also racks up the buyer's state and/or local taxes, the total shipping amount, shipping taxes, etc. and ALSO applies all of that ON TOP before processing their final evaluation fee (all compounded on top of their 7.7% selling fee). At the end of the day, the fees calculate closer to 12% (that the buyer AND seller incur) once Reverb and the State(s) get their cut. BUT WAIT!!! That's NOT including the taxation from the 1099 that you'll be paying to the IRS. I live in a state with no sales tax. However, I'vee had to pay a percentage of the buyers state tax, shipping taxes, etc. through Reverbs fee processing. We're getting hit in every which direction. Thank you for this video it was very informative taking into account the 1099 hit at the end of the day on top of the reverb fees. It's just too much to bare once you are aware and informed of the reality of it all.

With my minimal research I did read on the IRS website that you can offset the "income" amount with what you paid for an item if you sell it at a loss. You cannot , however, claim the loss as a deduction. That leads me to ask this question. Would an average person (not a business) that does the occasionally sale on reverb and is lucky enough to turn a profit, be better off to start a small business before selling their other items at a loss? That way they could claim the loss? Could they also then claim mileage and any other costs incurred to make the transaction since they are now a "business"?

Sounds like taxed 4x. You get taxed on making the money. taxed on spending money. Now taxed on reselling the thing you bought. And the buyer has to pay taxes on what they bought from you. Now I know why they need more irs agents. Moral of the story take good care of your things for a long time the government needs that money.

No more selling on Reverb. Don't have time for the headache and proving this and that just to make a quick sell. Also, they have really started sticking it to the sellers with the fees and processing fees.

Thank you so much for addressing this but I am confused. So if you have the receipts from the original sale you can use that as a deduction? Or is that not true? If you cannot use the original receipt as a deduction what's the point of having it?

Hi Blues Lawyer. What happens if I buy a used guitar from a private seller who lives near me and a couple years later I sell it on reverb. Paid $4700. from private seller and sell it for$5500. On reverb. Profit of $800. I get the 1099 from reverb. I get a hand written receipt from person I originally bought it from. Is that good enough for my tax person so I don't have to pay taxes on the full $5500. And the profit of 800 dollars?? Is that good enough for the IRS??

There's no reason a "flipper" should not be taxed on profits. This is why this rule was made. Folks decry the loss of brick and mortar guitar stores, without considering that they pay tax on all of their profits. I bought a guitar for $400 because it was non-functioning. I fixed it and sold it for $1100. If you think you can't make a profit doing this, even if you pay an honest income tax on your profits, you're not cut out for flipping. Technically, there is a tax law for garage sales. If your sales exceed a threshold amount (I believe it's $600), you're required to report the income and pay taxes on the profit. The inflation numbers are not accurately applied, either. To wit: if $1200 in 2005 is worth $1800 in 2020, it means you have had 15 years to invest that $600 and earn dividends. It's not like you're actually "out" $600. That's like saying the $30K I paid for my house in 1985 is worth $90,000 now, and if I sold my house for $85,000 I would be losing money. (p.s.: "profit" on the sale of a home is excluded from income tax ONCE. You cannot make the same claim for subsequent sales). As others have noted, I think if you have reputable proof of your cost basis, you would pay tax only on the profit portion of the sale.

Which politicians pushed this forward?

Seems crazy that the initial cost of the guitar is not allowed as the cost basis.

what about sells that are refunded to the buyer? those are included on 1099k, but it doesnt make sense they would be taxable..?

The guy who mowed my neighbors yard charged $50 every week and had a lot of customers in the neighborhood he said he did very well with his business because he had so many customers He said he was once in the army and considered himself a patriot and loves this country, but when I talked to him about the new tax laws he said he had no plans on paying taxes on the income he makes with his yard service lol

Tax question, so we can be taxed for the 1099-K if a single transaction was $600.00 or more? Or will I be taxed if throughout the year I sold several guitars that grossed more than $600.00? My Reverb account currently says in the last 12 months I have sold $2,876. I haven’t looked to see how many of those transactions were in 2021.

I stopped selling over both Ebay & Reverb because of new tax laws and if everyone would have done the very same ?

Thanks for the video. Sorry, I didn’t get. So if I sold a guitar for $2k and didn’t make profit, do I still pay taxes on the sale?

The IRS blows...

This doesn't sound right . I was always able to deduct my state professional licence fee . Packing material , postage and Cost of goods sold seem legit to me . Yes you need receipts .

I've never lost money on a guitar. I've always sold them for at least as much as I paid for them.

Can I pay these taxes before tax season?

This sucks, I remember getting notifications for this crap from eBay and Reverb.

In one your videos (appearance on Guitar Max) was that a Gibson The Paul model behind you? And if so what year? A friend had one, it was a great guitar?

I completely disgaree on the taxable income part, that's no where near correct. This is not the way the information was represented when proposed to online selling platforms, at least not reverb. The way REVERB explained it was if you "make" which means "profit" off a sale, THAT is taxable income. But if you break even or take a loss, that is not taxable income. No way in hell is that the case.

So we’re being double taxed. We earned in the money from our paycheck and paid taxes on that money. We take what’s left and buy $1000 guitar. We turn around and sell that $1000 guitar for $1000 on reverb and get taxed again. How was that not stealing? How is that ethical or moral???

if I'm selling on reverb as an LLC, are reverb fees a write off?

I hope certain voters see how certain people when elected had a certain type of affect on the economy (higer regulations) and maybe will see that when other people were elected, they had less of an effect(less taxes and regulations).

The IRS doesn't have the "gold" THEY have the guns and will you use them on you. Don't twist the facts buddy.

Damn. This sucks.

Are you actually a tax lawyer? What do you mean you "can't deduct the expense cost against the item that you profit off of?" This is 100% DEAD WRONG. Do you have any idea how many landlords would be FUCKED if they couldn't deduct expenses or calculate depreciation into their asset against their rental income? Wtf are you talking about...

How many people know which political party made this possible? Thanks Biden!

Trump 2024🇺🇸