1099K

[JHOG]

CLIENT HAS ABOUT A 50K PROFIT ON SELLING SOME KIND OF CARDS. HE HAS HAD THE CARDS FOR YEARS. DOES HE HAVE TO PAY SS TAX OR CAN I CALL IT A CAPITAL GAIN??RECEIVED EBAY 1099K FOR 70K

[208Accountant]

Hi JHOG,

I could be wrong, but I would think it would depend on his intentions. Is he buying the cards as an investment or is this a business? 

I have clients that have bought real estate properties as investments in the past. They buy properties, make improvements, and sell for a gain. However, in 2022 it became apparent that they were doing this as a job, not an investment and now they are reporting their real estate "flipping" on Schedule C and may elect to file as an S-Corp in future years.  

I would ask some questions that would give you a feel for the client's intentions. Do they have other sources of income? How long is he holding the cards before he sells? Maybe it started as an investment but turns into a job? How does he pay his living expenses? How much time does he spend on this activity? These are all questions I would ask. 

[208Accountant]

I just saw that you did mention that he holds the cards for years. That does seem like an investment to me, but those other factors should be taken into consideration as well and as I mentioned, an investment activity in one year can have potential to become self-employment income in a future year. 

[TKOTaxPrep]

This is more of a tax question and not a software question, but if he is not in the business of selling collectibles (or whatever the cards were) and otherwise doesn't file a schedule C for such a 'business', then I believe it should be a simple capital gain. I think the schedule C is key.