Obsolete Inventory...a term you may want to know for 202216530
 Masculinity takes a holiday.
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EbayMafia private msg quote post Address this user | |
| If you are going to be selling in 2022, it may be useful to understand the idea of obsolete inventory and bring it up if you are discussing with a Tax Professional. I don't believe you have to actually dispose of the inventory in order to declare it obsolete and use the expense of that inventory as an offset against your profits. This may be particularly useful for slabbing mistakes that you are not likely to ever sell. Also would probably be useful for the new comic purchases that don't seem likely to ever reach a value that would cause you to go through the logistics of selling them. Those 10 boxes of drek bought off the rack over the last 20 years may be useful as an expense to offset taxable profits. There are some details to know...if you ever sell this inventory after declaring it obsolete it will be 100% taxable as profit. You may also need to segregate the inventory that has been marked as obsolete, or label the boxes as such. You also should be cautious about triggering a "past years" audit by suddenly doing things on your taxes that you have never done before. I'm concerned that even the reporting of sales alone could cause this. Some things to think about and explore as we head into 2022. | ||
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 The apple sauce and pudding were the best part...
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Bronte private msg quote post Address this user | |
| Nice euphemism for, I f$%^^$÷ up and I gotta take a loss either way.... | ||
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Masculinity takes a holiday.
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EbayMafia private msg quote post Address this user | |
Quote:Originally Posted by Bronte @Bronte In my case yes, If I'm declaring inventory obsolete it probably means that I made a slabbing mistake and would be writing off inventory (and slabbing costs) on books that wouldn't be worth the additional cost and time to sell and ship. But in the case of people with a weekly pull list on new books it might be different. If you buy 500 new comic books a year, it's possible that the taxable profit that you make from slabbing and selling 5 of them may be legitimately offset by the cost of the 495 that never achieved any value. Not so much a screw up as just spreading the profit of a few nuggets over the cost of many dregs. Or let's say you buy 10 copies of a book and 2 of them are eventually nice enough to slab and sell. If you don't sell the other 8 copies, they were probably a legitimate cost of business in finding the two that made money. I've done that with MCS...bought 10 raw copies of a modern book in hopes of getting 2 or 3 that could be pressed to a 9.8. |
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The apple sauce and pudding were the best part...
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Bronte private msg quote post Address this user | |
| I wonder what happens if that screw up becomes a key later on. For example, I held onto 100 copies of Spider-man 2099 number 1 since they came out. It has only been the past couple of years it was worth slabbing. Prior to that I considered it a waste of money. |
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 COLLECTOR
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dielinfinite private msg quote post Address this user | |
@Bronte Quote:Originally Posted by EbayMafia |
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The apple sauce and pudding were the best part...
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Bronte private msg quote post Address this user | |
| @dielinfinite Thank you. Apparently I need to work on my reading comprehension and get some sleep.... |
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Masculinity takes a holiday.
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EbayMafia private msg quote post Address this user | |
Quote:Originally Posted by Bronte Quote: Originally Posted by dielinfinite Yeah, basically you are just reducing it's tax basis cost to zero by declaring it to have no value and taking the loss this year. If you do get value for it down the road, even if you sold all 100 copies for $50 in 10 years, technically that $50 would be 100% profit and all taxable. |
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 past performance is no guarantee of future actions.
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KatKomics private msg quote post Address this user | |
| if going the 'obsolete' route it is best to have a written policy and follow it - that way if you get audited you just aren't making BS up on the spot. Label/tag everything, don't want to count obsolete inventory as normal inventory by mistake. You can make schedules too if you like - i.e. stock older than XX months is 10% obsolete provision, older than XX months 30% etc. that way you have % of a loss you can claim along the way - i.e. you have 10 of some issue - well realistically XX months/years in you will only sell 2 of them - no need to carry full value of all - can take the "loss" on the other 8 over time without having to label as obsolete or destroy etc....if they all sell it's no biggie - just adjusts the balance of the provision for obsolete. not saying there is a way to cheat the obsolete system but....100% obsolete - written off -now you need to dispose/destroy (or keep as personal) - these aren't controlled items so no "proof" of destruction- just recycled - and you could sell at a yard sale or somewhere for pennies on the dollar and still come out ahead as you have taken the full loss so any money at all is a positive. |
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past performance is no guarantee of future actions.
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KatKomics private msg quote post Address this user | |
Quote:Originally Posted by EbayMafia take the loss and sell - no tax!!! don't know about LCS around you but around here there is a lot of cash business - no records - if you take the loss then sell for cash to your lcs everyone wins -lcs says they bought it off a guy from the street- paid say half the selling price - you get half the price but also the full loss - untraceable. No lcs..pawn shop would work too |
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HAmistoso private msg quote post Address this user | |
| Also of note: you can go obsolete on the last day of the tax year - after you know your profit for that tax year. | ||
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Masculinity takes a holiday.
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EbayMafia private msg quote post Address this user | |
Quote:Originally Posted by KatKomics @KatKomics I think the first priority always has to be "don't get audited". Which means don't get too greedy. For people reporting comic sales for the first time in 2022, I would write down very little. A big write down would indicate that maybe you've been selling for some time. I think 2023, the second year of reporting comic sales, would be a more appropriate time for taking a bigger write down. |
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past performance is no guarantee of future actions.
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KatKomics private msg quote post Address this user | |
Quote:Originally Posted by WMorse true - add it to your written policy...something like - year end inventory is reviewed to current market trends/values (so now you can write off your GPA membership etc.) adjustments made. You can 'revalue' your stock - that movie release was bad and the book is now worth $50 instead of the $500 and you have a stack that you now can't sell - take the loss Sounds like you guys basically need a separate bank account to track all purchases/sales and run your hobby as a business now - keep all your grading invoices so you can prove the "cost" of the items you are writing off what a mess - thank god they are closing the lucrative tax holes of the masses while the 1% can make millions and pay less than you will (real $$ not even a %) on a few hundred bucks of comics!!! |
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Masculinity takes a holiday.
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EbayMafia private msg quote post Address this user | |
Quote:Originally Posted by KatKomics Well the masses don't get the privilege of writing the tax codes...or having it written by friends that we paid good money for. On the other hand, I don't feel like the government is exactly robbing me with no value in return. They're always finding a way to save that for people who can't vote yet. |
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past performance is no guarantee of future actions.
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KatKomics private msg quote post Address this user | |
Quote:Originally Posted by EbayMafia yeah....2023/2024..you could then say you have a few years experience under your belt and are better able to identify potential obsolete inventory and sales trends etc. |
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past performance is no guarantee of future actions.
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KatKomics private msg quote post Address this user | |
| lol...what are your rules on hobby farms and taxes?? pretty sure up here you can have unlimited losses to deduct from all income sources and can carry forward the losses for a crazy time period - maybe you all need to see what qualifies. I wan to say zoning?? - keep a bee hive and sell some honey - you are now a hobby farm with unlimited losses to apply against your comic profits!!! Maybe you are already a hobby farm!! my old boss had a few chickens on her property - just gave away the eggs (too many for her family) that is now a "loss" - all the feed is an expense etc. etc. - she would have kept the chickens anyway and now she could have a few hundred bucks loss per year to offset any other things. Need a new lawn mower?? farm expense!! think you need to show a profit in like 1 of every 4 years though to be a going concern |
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Masculinity takes a holiday.
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EbayMafia private msg quote post Address this user | |
Quote:Originally Posted by KatKomics lol, as the hour grow late, you've drifted from helpful advice to unhelpful advice. Assume most of us are not that sophisticated. There will be no chicken farms to offset our selling of comic books. |
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 I'm waiting.... (tapping fingers).Splotches is gettin old! |
Nuffsaid111 private msg quote post Address this user | |
| It's gonna be one helluva a year from a tax perspective next year. And then the year after, a wonderful deluge of audits from those that "triggered" an audit for some reason. Not something I am going to be a part of. It's back to the dark ages for me |
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HAmistoso private msg quote post Address this user | |
Quote:Originally Posted by EbayMafia The best part is they just conjure up trillions out of thin air anyways! Why pay taxes if it's all just a print-a-thon? Fun Fact of the Day: there was no income tax until 1913 and things were doing just fine. Industrial Revolution? |
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 If the viagra is working you should be well over a 9.8.
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xkonk private msg quote post Address this user | |
| Fun actual fact: the first income tax in the US was created by Lincoln in 1861. Years later it was declared unconstitutional, and then that was made irrelevant in 1913 by the 16th amendment. Property has been taxed backed to colonial days. Tax evasion started shortly after the first tax was implemented. People probably have a faint memory of learning about the Whiskey Rebellion, a tax revolt that George Washington ended in 1794. Across the 2010s, the US lost an estimated $400 billion per year to tax evasion. |
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HAmistoso private msg quote post Address this user | |
| Indeed @xkonk. The ratification of the 16th amendment in 1913 established Congress's right to impose a Federal income tax. Previous attempts of an income tax were deemed unconstitutional by the Supreme Court. Why was this time different? An interesting history indeed... |
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 Collector*
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Towmater private msg quote post Address this user | |
| My advise is and will always be... 1) Talk with a tax professional. 2) Have them do your taxes. 3) Report everything you are supposed to report. In other words, be 100% truthful. 4) Pay the taxes that you owe. |
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 I've spent years perfecting my brand of assholery.
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DrWatson private msg quote post Address this user | |
| Obsolete inventory refers to inventory that is at the end of its product life cycle. This inventory has not been sold or used for a long period of time and is not expected to be sold in the future. I doubt this would apply to comic books as they do not become functionally obsolete or have an expiration date. |
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 Collector
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Reelgee private msg quote post Address this user | |
| Wow you guys just made my brain shut down. this is alot of information i'm gonna have to read this few times.mean while,whats drek???? Thanks for all the intel | ||
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Masculinity takes a holiday.
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EbayMafia private msg quote post Address this user | |
Quote:Originally Posted by DrWatson The same could be said of clothing, but I believe the write downs in that industry would be fairly regular and significant. |
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I've spent years perfecting my brand of assholery.
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DrWatson private msg quote post Address this user | |
| It's grasping at straws at best. | ||
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past performance is no guarantee of future actions.
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KatKomics private msg quote post Address this user | |
Quote:Originally Posted by DrWatson you can still obsolete something if the sales forecast is zero and you haven't hit your expiration date etc. I work in alcohol and this happens all the time - refreshment flavour isn't the hit you thought - minimum run size was say 10,000 cases - you have 5,000 cases and it's September - you aren't going to sell many more of that summer refreshment - we obsolete because it's either taking up storage space, we might be paying for outside storage or maybe it's delisted and you have no place to sell it (although there is the chance you can sell for pennies on the dollar to some all inclusive resort!!) Although comics don't have an end life, if they are taking up too much space and have little to no chance of selling then disposal/obsoleting may be the only option left - difference with comics is there is the off chance that 30yrs later something happens with that book and now it will sell...though pretty sure my Ralph Snart run will never be worth anything!!!!! If you have a massive storage facility (Chuck @ Milehigh) then sure...hang onto everything forever - if they are going to tax you on a hobby - once you realize it can't be sold - take the loss and either dispose or move to PC that isn't part of "inventory" and will never be sold |
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past performance is no guarantee of future actions.
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KatKomics private msg quote post Address this user | |
| pretty sure the best plan is to sell nothing ever - die and leave it to your kids/estate etc. - they have it valued at the time of death and pay the probate/estate tax (1% in my area) that is the new cost/tax base - then sell the whole collection in one shot to someone and have no gain - therefore no tax -maybe even a loss after broker fees etc. if they go the auction it all off at once route. | ||
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HAmistoso private msg quote post Address this user | |
| Well if all investments are going to be taxed... I'd rather take my chances with some pretty paper etc. over a 10 year U.S. Treasury yielding under 2%. Especially if the published inflation rate is over 6%! Who is buying? | ||
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HAmistoso private msg quote post Address this user | |
| Maybe that's why Wall Street is getting involved in the collectables industry? BOOO CGC! | ||
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