| Author | Message | ||
| glocke
Senior Member Username: glocke Post Number: 917 Registered: 9-2002 |
So I am in the process of selling most of what I own that is music related, basses, guitars, amps, and probably at some point my "library" of music and method books. So far this year I have easily sold, and deposited the proceeds into my bank, at least 15k worth of gear. This was all a combination of cash, wire transfers, checks and paypal. I just got done reading this page from the IRS: id=148821%2C00.html,http://www.irs.gov/businesses/small/article/0,,id=148821,00.html Anyone have any idea how this effects those of who sell expensive instruments? (Message edited by glocke on September 20, 2011) | ||
| lbpesq
Senior Member Username: lbpesq Post Number: 4943 Registered: 7-2004 |
Gregory: The link doesn't appear to be working. I get an IRS page that says: "The requested page does not exist. Please check your URL." Bill, tgo | ||
| davehouck
Moderator Username: davehouck Post Number: 10384 Registered: 5-2002 |
Greg; your link doesn't work, so I don't specifically know what it is that you read that you are asking about. However, I do have significant knowledge on the topic. I am a CPA, and have over two decades of experience providing income tax compliance services to individuals and their closely held businesses. This issue is more easily explained over the phone than in an exchange of messages; and if you wish, I'll be happy to talk with you about it. | ||
| glocke
Senior Member Username: glocke Post Number: 918 Registered: 9-2002 |
hmmm...lets try this: " /www.irs.gov/businesses/small/article/0,,id=148821,00.html " It is the IRS FAQ on form 8300 which requires reporting of cash transactions (bank deposits also?) >10k to the IRS. With all of the gear and other miscellaneous possessions I have sold this year I am afraid I may end up with issues from the IRS (the very last thing I need at this point). Dave, I will send you my number via email. (Message edited by glocke on September 21, 2011) | ||
| billostech
Intermediate Member Username: billostech Post Number: 184 Registered: 1-2011 |
Greg, I worked for the IRS for 13 years. I am not much of a tax regulations guy but 7 of those years, I worked with a division that handled cash transactions of this type. It was called the Currency and Banking Reporting Division at that time. The CBRS (Currency and Banking Reporting System) was created primarily to catch drug dealers, money launderers and the like trying to dispose of money obtained by illegal means. A point of interest: If you remember the sitcom "Cheers", the bar it was actually filmed in was owned by guys who were among the first to be busted by the CBRS. As far as the rules go, it is what it is. I am sure a good CPA can help you through this. | ||
| lbpesq
Senior Member Username: lbpesq Post Number: 4944 Registered: 7-2004 |
The 8300 form must be filed if the transaction or transactions totalling in excess of $10K are related in that they are part of the same deal with the same buyer. If you sell a bunch of stuff to a bunch of different people, and no one person gives you more than $10K, there is no requirement to file an 8300 form, even if the money you receive from the different parties exceeds $10K when all added up. Bill, tgo | ||
| davehouck
Moderator Username: davehouck Post Number: 10386 Registered: 5-2002 |
Greg; I read through the information at the link, and I feel certain it does not apply to your situation. But if you would like to discuss further over the phone I would be happy to. As Bill W. mentioned, this is "primarily to catch drug dealers, money launderers and the like trying to dispose of money obtained by illegal means". When you read through the filing requirements in the FAQ that you cited, the important phrase to note is "trade or business"; and unless I've misunderstood your situation, you are not in the "trade or business" of selling musical instruments. You do not purchase musical instruments for the purpose of reselling them at a profit to others. It is my understanding that you are selling personal items. Still, anytime someone comes to your door with a briefcase with more than $10,000 of cash in it that they would like to exchange for something you own, you run the risk of becoming part of a police investigation; and at that point you might wish to consult with a lawyer. (Message edited by davehouck on September 21, 2011) | ||
| davehouck
Moderator Username: davehouck Post Number: 10387 Registered: 5-2002 |
I see that Bill P. has addressed this question too. I think it prudent to give much weight to anything Bill suggests. (Message edited by davehouck on September 21, 2011) | ||
| dfung60
Senior Member Username: dfung60 Post Number: 514 Registered: 5-2002 |
Greg- You're almost certainly not going to have problems. As many have mentioned here, the citation you were concerned about is mostly about large "mysterious transfers" that are often a sign of illicit cash in the process of being laundered. If you are selling equipment, you ought to create a receipt for the person you're selling the gear to with their name and contact info, keep documentation of the stuff (like the ads that you sold them with). I don't think you'll get much government hassle with this level of documentation. Now, if you were receiving payment in cash with informal receipts and no contact information, you're getting into the "mysterious transactions" territory where you don't want to be. Nobody's mentioned that there may be tax implications for all this depending on whether music is reportable income for you. If music is your profession and your Alembic is part of your livelihood, then you were entitled to treat the cost of buying and maintaining your equipment as a business expense. When you sell the instrument you are supposed to report profits on the sale of your gear as business profits. If you had bought a $5000 bass and expensed it (used it to cancel out $5000 of business profits), then sold it for $3000, then the $3000 is business profit and taxable - unless you spend it on a new bass, etc. If you're liquidating a business and had expensed everything, it's possible you'll get questioned on this, but it will probably need to be a much greater level than $10 or $20K. For civilians (people who don't make money playing their instruments, or hobbyists), the profit from selling your instrument is taxable as well, but I think somebody actually has to not lose money on a sale like this before anybody pays tax. :-) Actually, there are a lot of guys who sold their 70's Strat that they happened to hold on to for 25 years for a profit, but this is in the noise as far as the IRS is concerned. The CPAs may correct me here, but I believe that Uncle Sam would like a cut of a profit on a sale that you report, but if you take a loss (99.9%), it's all yours. David Fung | ||
| lbpesq
Senior Member Username: lbpesq Post Number: 4945 Registered: 7-2004 |
The IRS 8300 form is mandatory, not just for "drug dealers" and "money launderers". It requires you to identify the person who gave you the over $10K in currency and supply the IRS with that person's social security number. In the above situation, as I understand it, no one person is giving over $10K. Under such circumstances, no 8300 form is required to be filed. (I deal with this all the time in my practice. It's why I don't take amounts in excess of $10K in cash and require a check instead). Bill, tgo | ||
| xlrogue6
Intermediate Member Username: xlrogue6 Post Number: 188 Registered: 8-2002 |
Anyone who has in excess of $10K in cash who needs somewhere to dispose of it can head right over here. Plus, I'm really close to the Mothership so you can take a factory tour while you're in the area--but be sure to come by my place first! | ||
| billostech
Intermediate Member Username: billostech Post Number: 187 Registered: 1-2011 |
I second that one Kent!!! |
