Posted: 2/4/2007 1:12:26 PM EDT
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In 2006 I sold two guns from my personal collection and deposited the money into my bank account. Do I have to report this to the IRS as income from my hobby? |
I'm not an expert, but from the way my brother was talking while taking a tax class for his accounting degree, Yes. He made it seem like if you found $100 in the street, you had to report it.  I personally wouldn't, I have a hard enough time doing my taxes as it is. ETA: The information in this post is worth exactly what you paid for it. 
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only if you have a business operating as that. (and you had losses and gains from that business) it's not income because a. you didn't get them for free (it's only the difference between buying and selling) b. you aren't running a business. I'm not an accountant. use your own judgement. |
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For me it's a difference of $500 on my refund. Maybe I'll call the IRS tomorrow and ask them. The last thing I want is to get audited and have to explain where the income came from. Since they were both for more than $500, I think that the bank automatically reports that to the IRS right? |
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If anything you would have to claim the difference between what you bought them for and what you sold them for. If you bought one for $400 and sold it for $500 that is $100 of income that you got. Just because you make a deposit in your account doesn't mean anything. Maybe you just moved that money over from another bank account. Maybe you let someone borrow the money a couple years ago and they paid you back. There are a million reasons why you could put money in your bank account. Personally I wouldn't worry about it. I just did my taxes today using Turbo Tax and it didn't ask me any questions about selling small personal items. |
Take the sale price of the guns and then subtract what you originally paid for them, along with all of the costs of storing and preserving them. The space in the safe wasn't free, electricity for environmental controls, preservative lubricants, and most importantly your time to do all this. I think your "sale" now has a net loss and and your taxes should be lower! 
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I know at one time it was down to deposits of $900 because they were trying to catch money launderers. I thought that they dropped it down to $500 to try and catch terrorists. |
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Yes, you are supposed to report the gain, if any...per the IRS: "Sale of personal items. If you sold an item you owned for personal use, such as a car, refrigerator, furniture, stereo, jewelry, or silverware, your gain is taxable as a capital gain. Report it on Schedule D (Form 1040). You cannot deduct a loss. However, if you sold an item you held for investment, such as gold or silver bullion, coins, or gems, any gain is taxable as a capital gain and any loss is deductible as a capital loss. Example. You sold a painting on an online auction website for $100. You bought the painting for $20 at a garage sale years ago. Report your $80 gain as a capital gain on Schedule D (Form 1040). " It is, of course, your choice to make. |