How do I report this income from goods sold?

[martys1954]

Selling 4 collectible guitars on behalf of a deceased friend's family. I will get 10% of sale price. If a guitar sells for $5,000, I get $500 and forward the balance to his family. ALSO, there will likely be PayPal fees. How is this to be reported? Would that be a Schedule C and enter the $5000 as cost of goods sold minus $500 retained as commission? How do I deduct PayPal fees?

[Corrlich44]

Hi martys1954,

Interesting question...

Because you do not own the property in question, which implies have a basis cost of purchase, you will report your consignment fee of $500 in the example you provided and then offset by any other direct cost YOU INCURRED to sell the item in question.

You would only report your consignment fee of $500 as income and the PAYPAL fee as your cost of selling, unless there were other direct costs you paid.

[Corrlich44]

But, if you receive a Form 1099-MISC for a Sale amount of $5,000, you would show a gross sale of $5,000 and then report a 3rd party payment of $4,500 or less (as long as you know the other parties Federal Employer Identification Number or their SSN.

[martys1954]

THANK YOU!

[martys1954]

I am 67. I took $31,000 (gross withdrawal) from my IRA to buy a condo (primary residence).

From the gross amount I paid $6000 in Federal taxes and $2,400 in State of Nebraska taxes. 

Most of the remaining money was used as the down payment.

By year's end. I will have paid about $5,000 in mortgage interest costs + PMI. 

What is tax deductible as the result of becoming a homeowner again after 12 years as a renter?

[Corrlich44]

In your situation, the:

Personal Mortgage Interest (not used for a business within the home)

Personal Property Taxes (not used for a business within the home)

Personal Private Mortgage Insurance (PMI) (not used for a business within the home)

Any prorata portion used for a business within the home are deduction as business deduction, with any balance pushed up to your personal return as a potential itemized deduction

All the above can be used to reduce your Adjusted Gross Income ONLY IF the total of all your ITEMIZED DEDUCTIONS are greater than the STANDARD DEDUCTION on your tax return.

If the IRS gives you a larger deduction than what you are already paying, you would not claim less deductions because the amounts above were paid.

[Hal_Al]

You did not already "pay tax". What you paid was only withholding, an estimate of the tax  due. No piece of income is taxed individually. All your income, including pension plan & IRA distributions, is added together at tax filing time. The tax is calculated on that total (after adjustments, deductions, and credits). Then withholding is subtracted to determine if you owe more or get a refund.

[martys1954]

I have started a service business this month (now forming as a single member LLC).

Before the end of this year, I will probably have $1,000 invested and $0 revenue. 

I expect to invest another $3000 - $4000 in Q1 2023 and revenues to start rolling in Q2 2023.

Any guidance for this year and things to watch next year?