How do I determine if sale proceeds from an asset are taxable?
"If it's fully expensed, it has zero basis. Any sale is taxable, 100%. To the ordinary income / cap gain issue raised in comment - It's a cap gain, but I believe, as with real estate, special rates apply. This is where I am out of my area of expertise, and as they say - ""Consult a professional.""" Profit = Sale price - Basis Basis = Purchase price - any depreciation taken, including expensing it.
Your question is best asked of a tax expert, not random people on the internet. Such an expert will help you ask the right questions.  For example you did not point out the country or state in which you live.  That matters.   First point is that you will not pay tax on 60K, its expensive to transact real estate, so your net proceeds will be closer to 40K.  Also you can probably the deduct the costs of improvements. You implied that you really like this rental property.  If that is the case, why would you sell...ever?  This home could be a central part of your financial independence plan.  So keep it until you die.  IIRC when it passes to your heirs, a new cost basis is formed thereby not passing the tax burden onto them. (Assuming the property is located in the US.) "In 2014 the IRS announced that it published guidance in Notice 2014-21. In that notice, the answer to the first question describes the general tax treatment of virtual currency: For federal tax purposes, virtual currency is treated as property. General tax principles applicable to property transactions apply to transactions using virtual currency. As it's property like any other, capital gains if and when you sell are taxed. As with any capital gains, you're taxed on the ""profit"" you made, that is the ""proceeds"" (how much you got when you sold) minus your ""basis"" (how much you paid to get the property that you sold). Until you sell, it's just an asset (like a house, or a share of stock, or a rare collectible card) that doesn't require any reporting. If your initial cryptocurrency acquisition was through mining, then this section of that Notice applies: Q-8: Does a taxpayer who “mines” virtual currency (for example, uses computer resources to validate Bitcoin transactions and maintain the public Bitcoin transaction ledger) realize gross income upon receipt of the virtual currency resulting from those activities? A-8: Yes, when a taxpayer successfully “mines” virtual currency, the fair market value of the virtual currency as of the date of receipt is includible in gross income. See Publication 525, Taxable and Nontaxable Income, for more information on taxable income. That is to say, when it was mined the market value of the amount generated should have been included in income (probably on either Line 21 Other Income, or on Schedule C if it's from your own business). At that point, the market value would also qualify as your basis. Though I doubt there'd be a whole lot of enforcement action for not amending your 2011 return to include $0.75. (Technically if you find a dollar bill on the street it should be included in income, but usually the government cares about bigger fish than that.) It sounds like your basis is close enough to zero that it's not worth trying to calculate a more accurate value. Since your basis couldn't be less than zero, there's no way that using zero as your basis would cause you to pay less tax than you ought, so the government won't have any objections to it.  One thing to be careful of is to document that your holdings qualify for long-term capital gains treatment (held longer than a year) if applicable. Also, as you're trading in multiple cryptocurrencies, each transaction may count as a ""sale"" of one kind followed by a ""purchase"" of the other kind, much like if you traded your Apple stock for Google stock. It's possible that ""1031 like kind exchange"" rules apply, and in June 2016 the American Institute of CPAs sent a letter asking about it (among other things), but as far as I know there's been no official IRS guidance on the matter. There are also some related questions here; see ""Do altcoin trades count as like-kind exchanges?"" and ""Assuming 1031 Doesn't Apply To Cryptocurrency Trading"". But if in fact those exchange rules do not apply and it is just considered a sale followed by a purchase, then you would need to report each exchange as a sale with that asset's basis (probably $0 for the initial one), and proceeds of the fair market value at the time, and then that same value would be the basis of the new asset you're purchasing. Using a $0 basis is how I treat my bitcoin sales, though I haven't dealt with other cryptocurrencies. As long as all the USD income is being reported when you get USD, I find it unlikely you'll run into a lot of trouble, even if you technically were supposed to report the individual transactions when they happened. Though, I'm not in charge of IRS enforcement, and I'm not aware of any high-profile cases, so it's hard to know anything for sure. Obviously, if there's a lot of money involved, you may want to involve a professional rather than random strangers on the Internet. You could also try contacting the IRS directly, as believe-it-or-not, their job is in fact helping you to comply with the tax laws correctly. Also, there are phone numbers at the end of Notice 2014-21 of people which might be able to provide further guidance, including this statement: The principal author of this notice is Keith A. Aqui of the Office of Associate Chief Counsel (Income Tax & Accounting). For further information about income tax issues addressed in this notice, please contact Mr. Aqui at (202) 317-4718" Assets with zero value, perhaps. Unless you can prove that they have resale value. Good luck with that. In other words, not worth spending time on. Is the remaining amount tax free? As in, if the amount shown (which I can sell) on etrade is $5000 then if I sell the entire shares will my bank account be increased by $5000? The stocks they sell are withholding.  So let's say you had $7000 of stock and they sold $2000 for taxes.  That leaves you with $5000.  But the actual taxes paid might be more or less than $2000.  They go in the same bucket as the rest of your withholding.  If too much is withheld, you get a refund.  Too little and you owe them.  Way too little and you have to pay penalties.   At the end of the year, you will show $7000 as income and $2000 as withheld for taxes from that transaction.  You may also have a capital gain if the stock increases in price.  They do not generally withhold on stock sales, as they don't necessarily know what was your gain and what was your loss.  You usually have to handle that yourself.   The main point that I wanted to make is that the sale is not tax free.  It's just that you already had tax withheld.  It may or may not be enough. This doesn't sound very legal to me. Real estate losses cannot generally be deducted unless you have other real estate income. So the only case when this would work is when that person has bunch of other buildings that do produce income, and he reduces that income, for tax purposes, by deducting the expenses/depreciation/taxes for the buildings that do not. However, depreciation doesn't really reduce taxes, only defers them to the sale. As mhoran_psprep said - all the rest of the expenses will be minimal. "-Alain Wertheimer I'm a hobbyist... Most (probably all) of those older items were sold both prior to my establishing the LLC This is a hobby of yours, this is not your business. You purchased all of these goods for your pleasure, not for their future profit. The later items that you bought after your LLC was establish served both purposes (perks of doing what you love).  How should I go about reporting this income for the items I don't have records for how much I purchased them for?  There's nothing you can do. As noted above, these items (if you were to testify in court against the IRS). ""Losses from the sale of personal-use property, such as your home or car, aren't tax deductible."" Source Do I need to indicate 100% of the income because I can't prove that I sold it at a loss? Yes, if you do not have previous records you must claim a 100% capital gain. Source Addition: As JoeTaxpayer has mentioned in the comments, the second source I posted is for stocks and bonds.  So at year begin of 2016, I started selling what I didn't need on eBay and on various forums [January - September]. Because you are not in the business of doing this, you do not need to explain the cost; but you do need to report the income as Gross Income on your 1040. Yes, if you bought a TV three years ago for a $100 and sold it for $50, the IRS would recognize you earning $50.  As these are all personal items, they can not be deducted; regardless of gain or loss. Source Later in the year 2016 (October), I started an LLC (October - December) If these are items that you did not record early in the process of your LLC, then it is reported as a 100% gain as you can not prove any business expenses or costs to acquire associated with it.  Source Refer to above answer.  Refer to above answer.  Conclusion Again, this is a income tax question that is split between business and personal use items. This is not a question of other's assessment of the value of the asset. It is solely based on the instruments of the IRS and their assessment of gains and losses from businesses. As OP does not have the necessary documents to prove otherwise, a cost basis of $0 must be assumed; thus you have a 100% gain on sale." Capital gains taxes for a year are calculated on sales of assets that take place during that year.  So if you sell some stock in 2016, you will report those gains/losses on your 2016 tax return. "A nondividend distribution is typically a return of capital; in other words, you're getting money back that you've contributed previously (and thus would have been taxed upon in previous years when those funds were first remunerated to you). Nondividend distributions are nontaxable, so they do not represent income from capital gains, but do effect your cost basis when determining the capital gain/loss once that capital gain/loss is realized. As an example, publicly-traded real estate investment trusts (REITs) generally distribute a return of capital back to shareholders throughout the year as a nondividend distribution. This is a return of a portion of the shareholder's original capital investment, not a share of the REITs profits, so it is simply getting a portion of your original investment back, and thus, is not income being received (I like to refer to it as ""new income"" to differentiate). However, the return of capital does change the cost basis of the original investment, so if one were to then sell the shares of the REIT (in this example), the basis of the original investment has to be adjusted by the nondividend distributions received over the course of ownership (in other words, the cost basis will be reduced when the shares are sold). I'm wondering if the OP could give us some additional information about his/her S-Corp. What type of business is it? In the course of its business and trade activity, does it buy and sell securities (stocks, etc.)? Does it sell assets or business property? Does it own interests in other corporations or partnerships (sales of those interests are one form of capital gain). Long-term capital gains are taxed at rates lower than ordinary income, but the IRS has very specific rules as to what constitutes a capital gain (loss). I hate to answer a question with a question, but we need a little more information before we can weigh-in on whether you have actual capital gains or losses in the course of your S-Corporation trade." "Is this legal? Why not? But you might have trouble deducting losses on your taxes, especially if you sell to someone related to you in some way (which is indeed what you're doing). See the added portion below regarding dealing with ""related person"" (which a sibling is). The state of Maryland has a transfer/recordation tax of 1.5% for each, the buyer and seller. Would this be computed on the appraised or sale value? You should check with the State. In California property taxes are assessed based on sale value, but if the sale value is bogus the assessors have the right to recalculate. Since you're selling to family, the assessors will likely to intervene and set a more close to ""fair market"" value on the transaction, but again - check the local law. Will this pose any problem if the buyer needs financing? Likely, banks will be suspicious.Since you're giving a discount to your sibling, it will likely not cause a problem for financing. If it was an unrelated person getting such a discount, it would likely to have raised some questions. Would I be able to deduct a capital loss on my tax return? As I said - it may be a problem. If the transaction is between related people - likely not. Otherwise - not sure. Check with a professional tax adviser (EA or CPA licensed in Maryland). You mentioned in the comment that the buyer is a sibling. IRS Publication 544 has a list of what is considered ""related person"", and that includes siblings. So the short answer is NO, you will not be able to deduct the loss. The tax treatment is not trivial in this case, and I suggest to have a professional tax adviser guide you on how to proceed. Here's the definition of ""related person"" from the IRS pub. 544: Members of a family, including only brothers, sisters, half-brothers, half-sisters, spouse, ancestors (parents, grandparents,   etc.), and lineal descendants (children, grandchildren, etc.). An individual and a corporation if the individual directly or indirectly owns more than 50% in value of the outstanding stock of the   corporation. Two corporations that are members of the same controlled group as defined in section 267(f) of the Internal Revenue Code. A trust fiduciary and a corporation if the trust or the grantor of the trust directly or indirectly owns more than 50% in value of the   outstanding stock of the corporation. A grantor and fiduciary, and the fiduciary and beneficiary, of any trust. Fiduciaries of two different trusts, and the fiduciary and beneficiary of two different trusts, if the same person is the grantor   of both trusts. A tax-exempt educational or charitable organization and a person who directly or indirectly controls the organization, or a member of   that person's family. A corporation and a partnership if the same persons own more than 50% in value of the outstanding stock of the corporation and more than   50% of the capital interest or profits interest in the partnership. Two S corporations if the same persons own more than 50% in value of the outstanding stock of each corporation. Two corporations, one of which is an S corporation, if the same persons own more than 50% in value of the outstanding stock of each   corporation. An executor and a beneficiary of an estate unless the sale or exchange is in satisfaction of a pecuniary bequest. Two partnerships if the same persons directly or indirectly own more than 50% of the capital interests or profits interests in both   partnerships. A person and a partnership if the person directly or indirectly owns more than 50% of the capital interest or profits interest in the   partnership." Simply transferring money you own from overseas to Canada will not mean you need to pay tax on it. However if you sell property at a profit - I.e. sell it for more than you paid for it - you may have to pay tax on any gains. This is true whether or not you transfer the money to Canada. Calculating the amount is quite complicated. You might consider getting a tax expert. You pay taxes on capital gains when you realize your gains by selling the investment property.  Also, in the US, taxes on capital gains are computed at special rates depending on your current income level, and so when you realize your gains two years from now, you will pay taxes on the gains at the special rate then applicable to your income level for the year of sale. Remember also that the US Congress  can change the tax laws at any time between now and the time you sell your stocks, and so the rates you are looking at now may have changed too. For reporting purposes, I would treat the purchase and sale of gold like a purchase and sale of a stock. The place to do so is Schedule D. (And if it's the wrong form, but you reported it, there is might not be a penalty, whereas there is a penalty for NOT reporting.) The long term gain would be at capital gains rates. The short term gain would be at ordinary income rates. And if you have two coins bought at two different times, you get to choose which one to report (as long as you report the OTHER one when you sell the second coin). The question seems to be from the point of view actual sales and not its impact on one's taxation. In case you just want to sell, why brokers will respond differently each times. Either there may be issues with ownership and/or the company whose shares it is? In case you feel that the issues lies with brok "Yes, you're correct and yes they will. Note that it will be considered as ""sale"" with gains being taxable income to you." The article speaks about how pieces of the pie have shrunk. I'm also curious to know if the pie's growth has maintained or shrunk as well. All the women starting full time jobs from the 60's would have to have some impact on the overall salaries. That's inevitable.   And how have the demographics changed in the top 5%? Could a divergence there justify a portion of the diverging rates?