Capt. Curl, "reporting income" should include the fact that the seller thinks he made a profit, am I OK so far? If the Service will accept a statement of profit, shouldn't they also accept a statement of expenses and initial cost? Should I include the profit from a lawn tractor that I sold in front of my house at a price higher than I paid for it? I think the original poster is asking whether anyone from the Service will come after us under present law if we sell a bunch of guns at an auction house. Now we know you are an attorney and may decide not to reply, but I hope you do.
I am disappointed that we have not heard a reply from one poster who thinks we should give up to the Service, taxes on anything we sell at whatever profit. He may have been joking.
Ok Bill, your persistence pays off.
The Internal Revenue Code is long and involved. On top of that, it is explained and expanded by even more voluminous Treasury Regulations. I studied income tax, but I do not claim to be an expert. Nor am I an accountant. One thing I learned long ago was that, rather than researching the tax code or regulations, the easiest way to get an answer usually starts with an IRS Publication. Publication 17 is relatively comprehensive in its explanations of tax concepts and requirements. You can access it from the IRS website at this link:
Publication 17 What you are interested in can be found in Part Three, Gains and Losses, Chapter 14, Sale of Property (beginning on page 104). The table of contents contains hyperlinks that make it easy to access each chapter.
The specific information you seek begins on page 108 down in the bottom right corner under the heading, "Personal Use Property". I will leave it to you to read fully the matters discussed, but I will quote this part:
"Property held for personal use only, rather than
for investment, is a capital asset, and you must
report a gain from its sale as a capital gain.
However, you cant deduct a loss from selling
personal use property."So I stand by the statement I made in my post above. The letter of the law requires reporting income from the sale of your guns; and yes, even your lawnmower. No joke!
The degree to which there is compliance with this obligation raises questions outside the legal requirement. I suggest you consult your tax advisor or legal advisor for specific advice tailored to your personal situation.
As always, my best to you and Linda.
Curl
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