Season Tickets cost basis

[bu11durm]

I have a season ticket package for an NHL team. Each package is 40 regular season game and 2 pre-season games for one price.

The box office uses surge pricing for non-package purchases, meaning that the same seat costs different prices for different games. For example, the more popular the opponent, the higher the price and the more preferable day of the week, the higher the price.

The result is that I have sold some seats way below box office price but above the average ticket price in the package.

Is the cost basis strictly (price of package + fees) / number of games

or can the surge pricing be taken into effect somehow?

[NCperson]

@bu11durm - first the broader question

did you buy these tickets for personal use, as part of a business, as a hobby to buy / sell tickets? 

it may help others who respond to understand your motives.....

[bu11durm]

for personal use or to sell? a bit of both.

I would have bought a partial season package for personal use. But then, I upgraded to a much larger package (full season) for some of the other benefits but with the full intention that a good portion of the tickets would be sold (hopefully for a profit).

[NCperson]

if this is a hobby. the income is taxable and the expenses are not deductible.

suggest reading these links: 

https://www.irs.gov/faqs/small-business-self-employed-other-business/income-expenses/income-expenses

https://www.irs.gov/newsroom/tips-for-taxpayers-who-make-money-from-a-hobby

[bu11durm]

Based on those links, I would think this should be classified as a business.

• the sole purpose of buying the additional tickets was to sell them at profit
• records are being kept
• additional tickets have been purchased solely for the intent of selling
• profits have been made in the past

what's more, there's no logical sense to calling this a hobby. When one buys collectibles (i.e. baseball cards), there is a value to collecting and owning the cards which is what we call a hobby. There is no extra value in holding these tickets to be sold other than profit.

So if it gets counted as a business, then any thoughts on the cost-basis question?

[NCperson]

@bu11durm  personal opinion only; I can't back this up from the IRS website.

You bought all the tickets at the same time. 

presumably there is a 'face value' printed on the ticket.  That is part of your accounting refcords. 

That is your cost basis; if you were given a discount for buying all 40 tickets at once the same discount is applied to each and every ticket.

the fact that the market value of some tickets increased (the team later increased the price for the better games) has no bearing on your cost basis.