Comic Book Value

[Vtecsidelsol]

Hello I buy and sell comic books as a hobby.   99% of comic shops and vendors at comic cons don't give you itemized receipts.  Im assuming you only pay tax on the profit made.  How are you supposed to show the irs the amount you paid for a comic book if you're receipt from a shop or vendor doesn't list actually prices per comic book.  Example you buy 10 comics all at different prices and you just get a general receipt for $600, one of the comics is valued at $500 and you decided to sell it at $550.  How do you determine how much you owe?

[EricE_CPA]

Hi,

For items like this they are treated the same as any other personal property.

For example, if you are trying to determine the Fair Market Value of land sold on date 01/01/1979 one can look up that information at the property deeds office.

You noted that the value of one of the comics is $500.  How were you able to determine that?

If you used a method that is deemed reasonable (e.g., a comic book marketplace center where you can see what is the going rate), then you could possibly use that.

[LouiseS CPA]

Hi Vtecsidelsol,

  This is a classic inventory issue that has been solved in a couple of different ways that the IRS approves.  In this case, specific identification on each book seems to be the ideal inventory method.  If you are in a business where you buy and sell comic books, it is to your advantage to use some kind of tracking system.  That will allow you to know how much you pay on each item and can know how much to sell it for.  

  This comes back to your question on the receipts being a lump sum.   When you buy 10 books and get a $600 receipt, your inventory system should identify the date you bought it, the price paid, and the title of the book.  I suggest a column that tracks which receipt.  You can always dig this out be looking up each receipt by date.  This depends on your volume.  You may have other information that you want to keep like which store purchased or condition.   Yes, this means 10 inventory entries for that one lump purchase.  The level of detail will insure that you are making a profit.  Having a good tracking system will make you successful in your venture.  You will have to recreate the detail that went into the $600 receipt.  That is the only way to make sure that you have the values correct.  They must total $600.  Maybe keeping a copy of this detail with each of the 10 books would help you for a tracking system.  If you like books, I bet paper is more fun that computers.

  Another way to decide cost would be averaging the 10 that cost $600 or $60 each.  That method would be slightly easier but I think you would lose valuation since comic books are so unique.

  I'm including a link that shows how to enter the inventory into TurboTax.

https://ttlc.intuit.com/community/taxes/discussion/total-cost-of-inventory-purchased-where-should-i-...

  I hope that your comic book business grows and grows,

thanks for asking,

  Louise

[Opus 17]

Remember that as a hobby, your sales are capital transaction, long term capital gains if held more than 1 year and short term capital gains if held less than one year.   However, comic books are considered "collectibles" and as such, are taxed at a higher rate than other capital gains.   You need to list each item you sell on form 8949 with the purchase date, purchase price, sell date and sell price.  With personal items, capital losses are not deductible and do not offset capital gains, so if you sold 100 books with a total loss of $1000 and you sold one book with a gain of $500, you have taxible income of $500.

Going forward, keep a detailed spreadsheet.  You know the price of each even if the receipt is not itemized.  For past purchase, make your best guess and hope you aren't audited. 

[Opus 17]

If this is a hobby, then your items are not inventory and I would be careful about suggestions based on the concept of inventory.  However, if you engage in the activity with regularity and with a profit motive, you are involved in a business, and you need to follow all the business rules on reporting income and paying self-employment tax.