If I were to sell trading cards I have been collecting for the past three years at a net loss, do I report that as income? Do I have to prove that it is net loss? If so, is there any way to do that without the receipts?
A sale of collectible items should be reported on your tax return. Any gain or loss is determined by the difference between the amount for which they are sold and the amount(s) which were paid for them when purchased. Records of both the sale and purchase must be kept to support the amounts reported. If no records exist for the purchase of the collectibles, then the basis for them is zero, and the proceeds received are taxed in their entirety. The transaction should also be identified as one entered for profit. Losses from hobby transactions are not deductible.
You should consult with a CPA when preparing your tax return for the year of the sale to receive advice specific to your situation.
For more resources, check out PICPA’s Money & Life Tips, Ask a CPA, or CPA Locator.
Answered by: William R. Lazor, CPA, is a partner/shareholder with Kronick Kalada Berdy & Company PC in Kingston, Pa.