Is it time to sell? What you need to know.
There are a number of factors to consider for tax purposes when you are thinking of selling an asset. What is the selling price? Will there be any costs to sell the asset? What is the tax basis of the asset? What are the tax ramifications?
The main tax ramification is that you will have additional income gain for the amount of the sale. This is true whether you are selling a block of stock you purchased years ago for an investment, your personal vehicle, collected items (model trains, etc.) or old books and records which have been sitting around for years. Every sale is potentially a taxable sale with reporting requirements.
If you are selling on one or more common exchanges i.e. Etsy, eBay, Facebook Marketplace, Poshmark, Amazon or others, you may be issued a 1099 from the buyer for the gross proceeds of the sale. This will not reflect any fees for the platform. It will also not report the resulting gain from the sale to you, the IRS or anyone else. You are the only one with this information to compute the gain.
Sales of assets may be business income or personal income depending upon the facts and circumstances. They may carry a self-employment tax burden as well as an income tax burden.
When you’re trying to determine the tax basis of selling a given asset, many factors may come into play. How did you acquire it? Was it a purchase? A gift? Inheritance? Did you manufacture it? Were there any casualty losses? Have you made any improvements? Each of these circumstances affect the basis of an asset.
Please contact Ian Valdivia or Marion Thompson before you sell an asset for details of how the sale will affect you.