General Question

Ltryptophan's avatar

What are the rules for buying and selling property for profit?

Asked by Ltryptophan (9112 points ) April 16th, 2012

I want to buy things, and sell them for profit. Just normal property at first. Not big ticket items like cars, houses, or boats (nothing with titles or that I’d need to be a licensed dealer to negotiate on a regular business.)

What do I need to do to protect myself tax-wise, and what are some good practices?

I’ve been told to keep my receipts, and the location where I bought whatever I buy. I’ve also been told to just keep a log of the transactions, so that at the end of the year I can do my taxes accordingly.

I guess I am confused as to some of the technical issues with the money. If I start with $20 and buy something that I sell for $40, does it matter if I take the taxes out right then or should I wait till the end of the year to do a lump sum capital gain form?

Observing members: 0 Composing members: 0

6 Answers

JLeslie's avatar

It depends how much money you make. If you make a lot, then you need to send money to the IRS quarterly. If you do it as a side thing, and also are working a rehular job where they take taxes out of your payroll, you can just up the amount they take out a little to cover your earnings in your side business.

All the things you mentioned about saving receipts, location are good, also log the miles you drove to get there. If you sell on Amazon, Amazon provides you with a report of what you sold, maybe even a 1099, not sure, at the end of the year for taxes.

Tropical_Willie's avatar

Look at a Schedule “C” form from the IRS, here’s the TurboTax Schedule ‘C’What-is-a-Schedule-C-IRS-form/INF14443.html Sorry for “string” after tag.

Tropical_Willie's avatar

The string for url didn’t F%&K ing work.
Look up Schedule “C” on TurboTax.com .

YARNLADY's avatar

I suggest you start saving for taxes with your first sale. You can come out ahead if you save more than you need.

Tropical_Willie's avatar

@Ltryptophan You are welcome, my wife and I have had a side business for the last twenty some odd years. We “retired” last year.

Answer this question

Login

or

Join

to answer.

This question is in the General Section. Responses must be helpful and on-topic.

Your answer will be saved while you login or join.

Have a question? Ask Fluther!

What do you know more about?
or
Knowledge Networking @ Fluther