I have started selling a few thrift picks on ebay. It’s going pretty good. I need to start keeping track of COGs and inventory of the picked goods, though, and probably need to enforce sales tax collection on the items, which is always a huge pain since online platforms don’t follow the destination-based sales tax rules that local municipalities and taxation districts have opted for.
At any rate. Some notes intended to guide me on this.
Personal used goods: treatable as a loss-sale, as in the instance of a garage sale where a used good is sold for a fraction of its’ new or replacement cost, and therefore not required to incur a COG line item. HOWEVER some sources say that a personal good can be converted to a sales good with a fair-market value assigned to the item at the time of the conversion, thereby changing the COG from zero to a positive number. This seems like it is most appropriate for items expected to be sold for a profit, that is, an appreciated good. Revenue from some appreciated goods can, it seems, also be treated as capital gains, which has a favorable tax structure and presumably exempts the converted goods from annualized inventory taxes.
Picked goods: items purchased for resale from a retailer, usually with sales tax associated and paid. There is a deduction for the sales tax that I forget how to account, but it’s there. The COG would be the full price including tax and then the sales tax paid would be treated as an offset somehow, possibly against federal taxes? I forget. Have to look that up again. At any rate the COG of the unit would be entered as the purchase price of the item (which is demonstrably a fair market value).
Deadstock: I have a bunch of deadstock that passed to me as personal property when I dissolved my S-Corp earlier this year in order to get out from under the annual grand-or-so in accountants and lawyers it cost to keep the licensing up. The dissolved corporation also incurred a personal loss to me of about 14k which I cannot offset personal income taxes against without keeping the corporation open. I think I can offset the losses via sale of deadstock, at least as far as I can, and therefore I don’t think I need to track COGs and inventory on these items (which already incurred their inventory taxes when owned by the corporation). I might be mistaken. At any rate the headstock will be selling for less than the cost of the items at wholesale and therefore represent a loss, so that would seem to place the goods in the least-accounted category.
A final puzzle is that while I have two eBay and PayPal IDs, one personal and one associated with my LLC, the personal eBay ID is a much more effective selling platform because it has such a large number of transactions. I think I need to convert it to the LLC ID and use the LLC ID as my personal ID from now on. I should have thought of and worked on this about a year ago, because ID changes take time to propagate and can cause record keeping confusion even at the programmatic level.