Do I need to prove 'Garage Sale' items incurred a loss
"This is what this sounds like to me: https://www.thebalance.com/having-a-garage-sale-or-yard-sale-what-to-do-first-399030 also: http://blogs.hrblock.com/2012/07/25/garage-sale-money-does-the-irs-need-to-know/ Selling a personal item at a loss is generally not a taxable event. You cannot report it as a loss, and the IRS can't tax a transaction like that. If you really want to include these as sales as part of your LLC, you'll probably have to pay tax if you list it as income. I'm just confused as to why you'd want to do that, if you know that you're selling these particular items at a loss, and you also know that you have no documentation for them. I just wouldn't report anything you sold at a loss and treat it as ""garage sale items"" separate from your business." "-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."
Even if you can afford the loss of the boat because you have other housing options available, can you also afford to lose all your possessions if the boat sinks or is stolen? All of your clothing, electronics, etc can add up to thousands of dollars easily.  A significant fraction of that amount are things you'd need to replace quickly, even if you're confident of having somewhere else to live for as long as it takes you get a new boat/apartment/etc. Unfortunately this is something that should have been determined prior to the book tour. Your tax advisor or accountant could have assisted you in making sure you collected the documentation you needed.  You are going to have to sit down with your advisor with the documentation you have and determine what you can prove. If I sell it for $50 can I write off the $50 loss. Only if you can establish that it is a normal part of your business and that you did not get $50 worth of use out of it.  That's the technical, legal argument.  As a practical matter, it's unlikely that they'll ding you for selling something after using it, as they won't know.  If they did catch you, you would be in trouble.  You can't deduct loss due to personal use.   The larger problem is that if you sell one TV for a $50 loss, they aren't going to believe that you are in the business of selling TVs.  If you sell a larger amount for a loss, then they still are unlikely to believe that you are in business.  If you sell a large amount for an overall gain, they are unlikely to notice that you took a loss on one TV.  They could only notice that if they were already auditing you, as that wouldn't be visible in your tax forms. I don't think there's much you can do. Losses from the sale of personal-use automobiles (used for pleasure, commuting, etc) are not deductible as capital losses.  See IRS Tax Topic 409, end of the first paragraph.  The expenses you incurred in owning and operating the car (insurance, fuel, maintenance, service plans, etc) are not deductible either. If you used it partly for business, then some of your expenses might be deductible; see IRS Tax Topic 510.  This includes depreciation (decline in value), but only according to a standard schedule; you don't generally just get to deduct the difference between your buying and selling price.  Also, you'd need to have records to verify your business use.  But anyway, these deductions would apply (or not) regardless of whether you sell the car. You don't get your sales tax refunded when you resell the vehicle.  That's why it's a sales tax, not a value-added tax.  Note, however, that if you do sell it, the sales tax on this new transaction will be the buyer's responsibility, not yours. You do have the option on your federal income tax return to deduct the state sales tax you paid when you bought the car; in fact, you can deduct all the sales taxes you paid in that year.  (If you have already filed your taxes for that year, you can go back and amend them.)  However, this takes the place of your state income tax deduction for the year; you can't deduct both.  See Tax Topic 503.  So this is only useful if your sales taxes for that year exceeded the state income tax you paid in that year.  Also, note that state taxes are not deductible on your state income tax return.  Again, this deduction applies whether you sell the car or not. I was not able to find any authority for the opinion you suggest. Wash sale rules should, IMHO, apply. According to the regulations, you attribute the newly purchased shares to the oldest sold shares for the purposes of the calculation of the disallowed loss and cost basis. (c) Where the amount of stock or securities acquired within the 61-day period is less than the amount of stock or securities sold or   otherwise disposed of, then the particular shares of stock or   securities the loss from the sale or other disposition of which is not   deductible shall be those with which the stock or securities acquired   are matched in accordance with the following rule: The stock or   securities acquired will be matched in accordance with the order of   their acquisition (beginning with the earliest acquisition) with an   equal number of the shares of stock or securities sold or otherwise   disposed of. You can resort to the claim that you have not, in fact, entered into the contract within 30 days, but when you gave the instructions to reinvest dividends. I don't know if such a claim will hold, but to me it sounds reasonable. This is similar to the rules re short sales (in (g) there). In this case, wash sale rules will not apply (unless you instructed to reinvest dividends within the 30 days prior to the sale). But I'd ask a tax professional if such a claim would hold, talk to a EA/CPA licensed in your state. "According to the IRS, you must have written confirmation from your broker ""or other agent"" whenever you sell shares using a method other than FIFO: Specific share identification.   If you adequately identify the shares   you sold, you can use the adjusted basis of those particular shares to   figure your gain or loss. You will adequately identify your mutual fund shares, even if you   bought the shares in different lots at various prices and times, if   you: Specify to your broker or other agent the particular shares to be sold or transferred at the time of the sale or transfer, and Receive confirmation in writing from your broker or other agent within a reasonable time of your specification of the particular   shares sold or transferred. If you don't have a stockbroker, I'm not sure how you even got the shares. If you have an actual stock certificate, then you are selling very specific shares and the purchase date corresponds to the purchase date of those shares represented on the certificate." In addition to the adjustment type in NL7's answer, there are a host of others.  If there are any adjustments, form 8949 is required, if not, the gains can be separated into short and long-term and added together to be entered on Schedule D.  Anything requiring an adjustment code in column F of the 8949 requires an entry in column G.   Some other example entries for column F include: (see the 8949 instructions for a complete list) **A wash sale occurs when you sell or trade stock or securities at a loss and within 30 days before or after the sale you: Buy substantially identical stock or securities, Acquire substantially identical stock or securities in a fully taxable trade, Acquire a contract or option to buy substantially identical stock or securities, or Acquire substantially identical stock for your individual retirement account (IRA) or Roth IRA. (from Pub17) 1: Gambling losses not in excess of gambling winnings can be deducted on Schedule A, line 28.  See Pub 17 (p 201).  Line 28 catches lots of deductions, and gambling losses are one of them.  See Schedule A instructions. 2: If the Mississippi state tax withheld was an income tax (which I assume it was), then it goes on Schedule A, line 5a.  In the unlikely event it was not a state or local tax on income, but some sort of excise on gambling, then it may be deductible on line 8 as another deductible tax.  It probably is not a personal property tax, which is generally levied against the value of things like cars and other movable property but not on receipts of cash; line 7 probably is not appropriate.  The most likely result, without researching Mississippi SALT, is that it was an income tax.  See Sched A Instructions for more on the differences between the types of taxes paid. Just to be clear, these statements hold if you are not engaging in poker as a profession.  If you are engaging in poker as a business, which can be difficult to establish in the IRS' eyes, then you would use Schedule C and also report business and travel expenses.  But the IRS is aware that people want to reduce their gambling income by the cost of hotels and flights to casinos, so it's a relatively high hurdle to be considered a professional poker player. First - get a professional tax consultation with a NY-licensed CPA or EA. At what point do I need to worry about collecting sales taxes for the city and state of New York? Generally, from the beginning. See here for more information on NYS sales tax.  At what point do I need to worry about record-keeping to report the income on my own taxes? From the beginning. Even before that, since you need the records to calculate the costs of production and expenses. I suggest starting recording everything, as soon as possible. What sort of business structures should I research if I want to   formalize this as less of a hobby and more of a business? You don't have to have a business structure, you can do it as a sole proprietor. If you're doing it for-profit - I suggest treating it as a business, and reporting it on your taxes as a business (Schedule C), so that you could deduct the initial losses. But the tax authorities don't like business that keep losing money, so if you're not expecting any profit in the next 3-4 years - keep it reported as a hobby (Misc income). Talk to a licensed tax professional about the differences in tax treatment and reporting. You will still be taxed on your income, and will still be liable for sales tax, whether you treat it as a hobby or as a business. Official business (for-profit activity) will require additional licenses and fees, hobby (not-for-profit activity) might not. Check with the local authorities (city/county/State). Yes. This income would be reported on schedule SE. Normally, you will not owe any tax if the amount is less than $400.  Practically, $100 in a garage sale is not why the IRS created the form SE. I wouldn't lose sleep over keeping track of small cash sales over the course of a year. However, if you have the information I'm not going to tell you not to report it. It sounds like the items shipped directly from the vendor need to be recorded into your system when the order is confirmed, that way cost of goods sold and revenue don't get lost. You'll have a record of re-orders and cancels and other such things too. If you were a business, all your assets would have a dollar value, so when you sold them you'd decrease the amount of assets by that amount and increase in cash, and if there was a profit on the sale it would go in as income, if there was loss it would count as a cost (or a loss)... so if there was a profit it would increase Equity, a loss then it would decrease Equity.  Since it's not really worthwhile doing a estimated cost for everything that you have, I'd just report it as income like you are doing and let the amount of equity increase proportionately. So, implicitly you always had roughly that amount of equity, but some of it was in the form of assets, and now you're liquidating those assets so the amount shows up in GnuCash. When you buy new things you might sell later, you could consider adding them as assets to keep track of this explicitly (but even then you have problems-- the price of things changes with time and you might not want to keep up with those price changes, it's a lot of extra work for a family budget) -- for stuff you already have it's better to treat things as you are doing and just treat the money as income-- it's easier and doesn't really change anything-- you always had that in equity, some of it was just off the books and now you are bringing it into the books. Could be. I haven't read the law or how its written nor am I a lawyer. Just saying there's usually a way around these things.   They could also make the business decision that the risk of lost sales is worth the potential lawsuit loss.   We're all just pontificating here ¯\_(ツ)_/¯ In the terms of profit, you're most likely not going to make any. The other posters had good suggestions about donating and I say the same.   The fact that you had no business insurance leads me to believe that you may just have an expensive hobby and not an actual business. Talk to your accountant/tax preparer and see what and how much loss can be deducted, although that doesn't help in the present.   This is a hard lesson to learn but I hope it sticks. **Always** have business insurance, especially in an area such as yours where hurricanes are relatively normal. It's absurdly foolish and unacceptable not to have insurance.   I hope all works out. "Well, I'd probably need to buy a lot more [Tide](http://nymag.com/news/features/tide-detergent-drugs-2013-1) to hide any purchases I don't want Uncle Sam to know about (not just drugs, either - When's the last time you paid sales tax at a yard sale?).   Other than that, I doubt it would matter much.  99.9% of my financial transactions are *already* on plastic, and I regularly keep the same ""emergency $20 bill"" in my wallet for months at a time."