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Messages - Bryan

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New to Storage Auctions? / Re: how to photograph my unit
« on: March 22, 2016, 05:17:30 AM »
If you are selling a lot of items like this, I would think that you could make more money if you took the items out one by one and photographed them, then sold them individually.  You would make more than if you sell the entire contents as one lot.  This is especially true for the art pieces that you mention.

Most of the folks you will find here are buying the whole locker through the storage company, then selling it piece-by-piece to earn a profit.  You would make the most by doing the same.

There's more than one????    ;)

Donations & Taxes / Re: Tax write off as business owner
« on: February 19, 2013, 04:18:20 AM »
Which brings us back.....

Buy a unit for $100.   Make $200 in sales.  $100 profit.

Donate the much do you write off?

Technically, you allocate the $100 cost of the items among the items you bought in the locker, in direct relation to their relative value. 

Your $100 locker has 3 items in it, one you can sell for $500, one you can sell for $300, and one you can sell for $200.  You will allocate the cost for each at $50, $30, $20.

If we're talking $100,000, then you will need to sit down and allocate the costs among the items.  If we are talking about $100, it's OK to make a good guess, or even just write off the whole $100 for the big items and make the little stuff worth $0.  Cuz at that level, if you're really going that it's not worth the time to figure it out, then it won't make that much difference anyway.

The IRS is hip to any reasonable allocation, as long as you don't use that rule to take advantage of them.


Donations & Taxes / Re: Tax write off as business owner
« on: February 19, 2013, 04:06:17 AM »
Okay. I get that.  Bad example....

Lets try....

I got 100 jerseys for $100 to sell at game.   
I sell 50 at $5/ea, $250....$150 profit
Now I got these 50 jerseys I'm not going to sell for whatever reason...end of season or something.

I donate the 50 jerseys to Goodwill.   

I already wrote off the full $100 against my $250 in sales.
What's the write off?   Nothing?  $50 cost?  $250 since that's the going resale value?

Slightly different answer than above.  But it works if you do the Schedule C correctly:

Cost of Goods Sold (COGS) is deducted at the time that the items are sold.  This is why the tax form asks for an inventory at the end of the year.

You sold 50 jerseys for $5 for $250 in gross income.
The cost of those 50 jerseys is $50.  ($1 each)
Profit on those 50 jerseys was $200.

You now have 50 jerseys left, with a cost basis of $50.
  • If you hold them for future sale, you do not deduct the cost until the year you sell them.
  • If you throw them away, or they become spoiled, you write-off (deduct) the $50 on your business form.  On Schedule C.
  • If you donate them to Goodwill, you will remove the $50 in product from your inventory.  As a sole proprietor, the jerseys will now be a personal deduction on Schedule A.
From the tax planning standpoint, you want to be deducting things on Schedule C instead of Schedule A, if you can.  A business deduction will lower your self-employment (Social Security) tax.  It also lowers your AGI, which could help you with other things on the return.  A personal deduction does neither. 

Practical solution:  Just don't tell me that you disposed of the items in front of the Goodwill store.


Donations & Taxes / Re: Donation Value Guide
« on: February 13, 2013, 12:57:17 AM »
So say I donate goods ten times this year to goodwill. Each donation is $100 of goods.  Total=$1000.

Do I need to keep records of where I got items and cost?   Or is $500+ in ONE donation trip.

Yeah, the IRS wants you to file a Form 8283 with your tax return if the TOTAL non-cash donations for the year is over $500.   Putting over $500 on the line for non-cash deductions and not including a Form 8283 guarantees a letter from the IRS looking for an explanation. 

I get some people who make that monthly trip to Goodwill or wherever.  On the Form 8283, we list each donation, but a lot of them are "clothing & household goods" or similar.

Usually, if we are talking about a typical person donating stuff, it is worth less now than what they bought it.  The IRS knows this.  So I buy a shirt for $30 at the store and wear it for a year.  Now it's out of style so I donate it.  I figure the thrift store will sell the shirt for $5, so that is the FMV and thus my deduction.  No, I don't need the receipt saying I paid $30 for the shirt.  And on the form, when it asks for WHEN I make the purchase of the 5 shirts in the bag, I will put "VARIOUS" since that is the case and it's pretty clear that my basis (what I paid) is bigger than the current FMV anyway.  (And on the line for "Method used to determine FMV" -- most of us use "Thrift Store Value" for that.)

However, if the monthly $100 donations are from the junk from a locker bought every month, then it would be appropriate to put down the date and amount of the purchase, again subject to the issues in my  other post.

And, yes, you could donate the stuff from the storage locker and put down on the form that it was stuff you originally purchased for personal use.  You could put down anything you want on the tax form.  You could inflate the value of the donation.  But I personally try to avoid the temptation to cheat on tax forms.  Just in case someone was thinking of going there.......

And can I write off donations made in my name?

Nope.  The person who actually made the donation deducts the donation, since it was their money.  Unless they give you the money and you make the donation.  But you kinda knew that, didn't you??  ;D

Suggestion Center / Re: I Suggest...
« on: February 11, 2013, 11:49:39 PM »
The plans with unlimited space are notoriously slow, since you are sharing a server with often thousands of other sites that the provider is hosting.  However, it doesn't seem like the forum is doing enough traffic (yet!) for that to be much of a concern.

One amateur observation I have is that (looking at the bar in the lower left corner of the screen) every time I click on a new page, that social media gizmo on the left spends a lot of time loading stuff from Facebook and Twitter.  I don't know enough about it to know how that can be fixed, but there is a couple of second time penalty there every time a page loads to get that thing loaded.

Of course, it is good to be hooked up to social media.....

ROI is an interesting concept, in that there is the return on our money, but also the return on our time.

Yes, If I make a dollar on a lot that I purchase, it is much better than losing money on the transaction.

On the other hand, if I wake up this morning and go to work and don't make $150 today, then arguably it might have been a good day to stay in bed. 

Of course, it's hard to generalize like that since I don't know whether there is anything good to buy at the auction today, and we can't buy and sell the same day usually.  And..... some days you make a thousand and some you make nothing.  But it's not worth my time to do this if I can't make more than pocket change doing it over the long haul.

Yeah, but now that I'm semi-retired, I CAN go to the auction just cuz it's fun, right?   ;D

If you buy a coffin the same year you die, can you write it off on your taxes?   :D

The Federal Code specifically lists funeral expenses as NOT being medical expenses.  But you knew that!  :)   :D

Donations & Taxes / Re: Donation Value Guide
« on: February 11, 2013, 10:32:56 PM »
Anyone know about charitable donations 'carry over' rule with he IRS?

I'm reading it as; you can deduct up to 50% of your Adjusted Gross Income (AGI).  If I donate goods equaling >50% of my AGI, I can carry over donation value into following year.

So in 2011 I made $100,000.   I allowed to deduct up to $50,000 in donations.
I donate $75,000 in goods.  So I write off $50k on 2011 taxes.  Then 'carry forward' $25,000 to write off on 2012 taxes?

And donations can be deducted anytime ("carried over") in any of the following five years?

Yes, it is true that the max that you can deduct is 1/2 of AGI.  And yes, the remainder does carry over to the following year.  There is actually a line for that on the tax form. 

(And, in 18 years of preparing income tax returns for people, I think I put something on that line about half a dozen times.  It is not very frequent, and all but two of those times, it involved someone who had an unusually low income for just one year.  And one was a senile old lady who just gave away most of her belongings to her church one year.)

Anyway, the bigger issue is the documentation you have to do to make a donation of goods that large.  For donations of a few hundred dollars or less, the IRS will pretty much just take your word for it.  Plus, one of those blank receipts that Goodwill or SA or St Vinnies gives you.  For donations totaling over $500, they want more documents.  They will want to know where and when you got the items, and what means you used to value them.  And, for donations totaling over $20,000 (unless they changed that number recently) they will want you to get an appraisal of the items and what they are worth. 

One other thing you (and others who are reading and make smaller donations) will want to keep in mind.  The deduction is limited to the LOWER of the BASIS or of the FAIR MARKET VALUE of the items donated.  Example: You purchase a locker for $100 and find that the only unmarked box in the unit contains $1500 worth of tools.  You decide to donate the tools to charity.  Your deduction is limited to the $100 that you paid for the tools (your basis) and not the $1500 FMV. 

Also, for those looking in, you cannot make a double deduction.  On your Schedule C form for the business, you count the sale price of the goods you sell as income.  You deduct from that what you paid for the lockers, as well as your business expenses.  Here's where the double deduction comes in:  If you already deducted the whole cost of your purchased lockers on your business form, your tax basis in the items donated from that locker is now zero, and you cannot deduct their cost again when you donate them to charity.  So, yes, I take a lot of stuff to my local St Vincent dePaul for "recycling".  But I can't generally deduct that on my Schedule A because I have already deducted the cost of those items when I deducted the cost of the storage locker purchase on my Schedule C. 

(And yes, as someone who has one Schedule C for an accounting business and another smaller one for a business buying stuff at auctions and selling it on eBay, I have been audited on that issue.  Good record keeping is worth its weight in gold when that happens!)

So, yes, you can do the carryover.  But I would probably worry more about having your other ducks in a row. 


The Lounge / Re: Income Tax Returns
« on: February 03, 2013, 04:57:51 AM »
I'm a retired tax accountant.

If someone files online or goes to the tax prep office, and the form is e-filed, it takes 6-13 days for the direct deposit refund to end up in their account.  Getting a physical check in the mail takes another week.  The range in days is that the deposit is always made on Friday from the IRS.  (It actually happens sometime late Wednesday afternoon, but they don't tell anybody that in case they or the bank get a few hours or a day behind.)

Also, because of the infamous tax changes made by Congress on January 2 (extending tax cuts and such) the IRS won't be ready to accept returns until January 30 this year.  So the earliest tax refunds will start coming in about Valentine's Day this year.  Unless they get one of those "next-day" loans. 

Probably more than you wanted to know......

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