Monday, March 28, 2005


Yahoo! News - IRS May Consider EBay Sales Taxable Income
Actually, I'm quite surprised that they haven't gone after the eBay people, or the garage sale people, or Internet commerce in general. Look for legislation eventually. Lots o' tax money floating around here.

In tax law, there is no clear, bright line that separates fun from profit, or a hobby from a business. But IRS instructions make it clear that all income — a category that includes bribes, gambling winnings, kickbacks and money made in illegal activities — can be taxed.

More than 135 million people have registered to use the auction site that calls itself "the world's online marketplace." Buyers bought more than $34 billion worth of merchandise there last year.

Some people make money by cleaning out items from their closets; others use the site to run small businesses.

"When you're working on the Internet, it's kind of a gray issue," said Bart Fooden, a certified public accountant in Woodbury, N.Y., who advises small businesses and individuals. "The big issue is whether you're doing it as a business or not."

The IRS can apply a list of nine indicators that might prove whether someone's online auctions amount to a business. These indicators include evidence that the taxpayer depends on the income, acts in a businesslike manner, or puts enough time and effort into the activity to suggest a profit motive.

If someone is selling the junk that is collecting dust in a garage or basement, then that person probably is getting less than he paid for it — no profit here. But if someone is buying goods in bulk from a wholesaler and hoping to make a couple extra bucks reselling each one, then that person could have just started a profitable business, Fooden said.

Sure wish I could figure out what to sell- I would make this a business. I always wanted to be my own boss, and this is the perfect way- no direct contact with the public and no physical store to maintain. Work in my sweatpants with a cigarette hanging out of my mouth.

What to sell? Problem is finding product...