Obamacare’s Hidden Gun Control

[Guest Lester Weevils]

I am not sure how my selling something I already bought and paid for is income.

More than likely I am selling it at a loss anyway.

Sounds to me that any private sale of anything I may sell is being taxed twice now.

But then again the Big O promised no new taxes, so I must be wrong.

Hi Mike

I'm not an accountant, but I believe this is how it would work. Anyone is invited to correct my description if it is wrong.

Ferinstance if you paid $1000 for a gun then sell it for $600 and get a 1099 on the transaction-- If you itemize personal deductions, and the gun is not business property, then you would itemize a loss of $400 on the transaction. $1000 originally paid minus $600 you sold it for. Perhaps you would have to calculate depreciation that would eat up your loss.

Anyway, it is possible that you could actually reduce your tax burden by a dollar or two by claiming the loss. I'm not real familiar with itemized personal deductions, because nowadays you have to be in special circumstances to have more itemized deductions than the standard deduction, and I've never been in such special circumstances.

If you paid $1000 for the gun and sold it for $2000, then you would have to pay tax on the $1000 profit, not on the $2000 on the 1099.

If you did a lot of horsetrading on stuff, you could claim it to be a part-time business and put the loss on a schedule C where the loss would directly come off your total income, and improve your tax situation better. The problem with filling out a schedule C for business, is that IRS requires you to actually make a profit a certain percentage of years, or it might be denied as a hobby rather than a business. Also, without an FFL maybe you could get in legal trouble filing a schedule C on a gun buy/sell business. Dunno much about it.

[Guest mahahn]

Trade or business reporting only.

Report on Form 1099-MISC only when payments are made in the course of your trade or business. Personal payments are not reportable. You are engaged in a trade or business if you operate for gain or profit.

Per 1099-Misc. instructions.

[Garufa]

.

[Guest Lester Weevils]

Trade or business reporting only.

Report on Form 1099-MISC only when payments are made in the course of your trade or business. Personal payments are not reportable. You are engaged in a trade or business if you operate for gain or profit.

Per 1099-Misc. instructions.

So when Mike sells/trades his gun to the gun store, the gun store has to send Mike a 1099 now, right? The gun store starting next year has to send 1099's for amounts totaling more than $600 to his suppliers, the water company, the electric company, the phone company, the plumber or carpenter. And Mike, right?

[Oh Shoot]

Trade or business reporting only.

Report on Form 1099-MISC only when payments are made in the course of your trade or business. Personal payments are not reportable. You are engaged in a trade or business if you operate for gain or profit.

Per 1099-Misc. instructions.

Yes, that is the existing rule as far as WHO must issue 1099-misc, but not for WHAT they must issue it.

As I understand it, businesses have only been required to be issued to certain other business entities (whether company or sole proprietorship) that the biz paid money to for rents, services, parts and materials, and other specialized areas.

Now, biz will be required to report via 1099 its PURCHASES of COMPLETE PRODUCTS, whether a computer, a car, a desk, or gun, if the value is $600 or more.

And, the main addition that non-business entity INDIVIDUALS are now included in the list of who must receive a 1099 from the buyer.

Hence the added paperwork nightmare for businesses both large and small, AND the inclusion of non business entity individuals in the issuance of the 1099s, including as specifically discussed in this thread, individuals selling guns to dealers.

I can think right off of one more type of business that this will affect as directly as gun dealers, and that's antique buyer/resellers, who certainly pick up much of their stock from individuals selling off their family stuff.

- OS

[Guest mahahn]

I was just confirming that private citizens do not have to issue 1099's. Businesses, on the other hand, are screwed. When Mike sell a gun to a dealer for $600 or more the dealer will issue Mike a 1099 but if Mike sells at a loss, he can deduct the loss. Just like selling a house you only have to report the gain. If you bought a house for $200,000 and sold it for $250,000 the reportable gain is $50,000 not $250,000.

[mikegideon]

So when Mike sells/trades his gun to the gun store, the gun store has to send Mike a 1099 now, right? The gun store starting next year has to send 1099's for amounts totaling more than $600 to his suppliers, the water company, the electric company, the phone company, the plumber or carpenter. And Mike, right?

As far as i know, 1099's are for individuals.

[Oh Shoot]

So when Mike sells/trades his gun to the gun store, the gun store has to send Mike a 1099 now, right? The gun store starting next year has to send 1099's for amounts totaling more than $600 to his suppliers, the water company, the electric company, the phone company, the plumber or carpenter. And Mike, right?

Not to all of those...many outlays are exempt. And yes, of course, it's complicated...it's the IRS.

http://www.irs.gov/pub/irs-pdf/i1099msc.pdf

Of course, this is currently published rules, dunno if they will change, too.

The plumber and carpenter (assuming they are not company employees) have always been included in 1099 issuance. But never before has Mike been.

- OS

[Guest Lester Weevils]

I heard that things like phone, water and power bills would also need 1099's, but perhaps they are not products or services in the viewpoint of the new law. The specifics have apparently not been carved in stone. This link explains some of it--

Costly changes to 1099 reporting in health care law | AccountingWEB.com

If a rental car account or a hotel bill will now require a 1099, is that a 'service' but a phone bill is not a 'service'?

Dunno. Just asking.

"Beginning in 2012, under a little discussed mandate of the health care reform legislation, businesses will be required to report all payments in excess of $600 for services or merchandise to the Internal Revenue Service on a Form 1099.

“Under the new law, businesses will be required to send a 1099 to other businesses for virtually all purchases,” said Chris Hesse, director of taxation at CPA firm LeMaster DanielsPLLC in Washington state, as quoted by Chris Edwards in a Cato Institute blog.

“And for the first time, 1099s are to be sent to corporations,” Hesse said. “This is a huge new imposition on American business, costing the private economy much more than any additional tax that the IRS might collect as a result.”"

Edited July 26, 2010 by Lester Weevils

[Oh Shoot]

As far as i know, 1099's are for individuals.

No, not at all.

While services are performed by individuals, they of course can be part of a larger company, in which case the 1099 is issued to the company.

Top of head, law firms, plumbing company, web hoster, construction company. Complicated, of course.

http://www.irs.gov/pub/irs-pdf/i1099msc.pdf

Fish related services figure in heavily, of all things.

- OS

[Guest strelcevina]

Doctor office is a Private business.

for routine yearly check up they charge anywhere from 300-600$.

so having a extra paperwork could show how they ripping off insurance companies for additional dollars.

you know like contractors, let me fix your roof for 3K of your money, or 5K of insurances money.

[Oh Shoot]

Doctor office is a Private business.

for routine yearly check up they charge anywhere from 300-600$.

so having a extra paperwork could show how they ripping off insurance companies for additional dollars.

you know like contractors, let me fix your roof for 3K of your money, or 5K of insurances money.

Actually, as far as medical services, it's almost always the opposite.

They charge YOU (much) more if paying out of pocket than the insurance company allows them to charge.

Some docs may give a somewhat proportional discount if paying yourself, but not all.

That's why even though my insurance doesn't pay a dime till I hit 8500 in a year, I make them run the insurance, and then get the magical "writeoff' lesser price on my final bill.

- OS

[eapking]

All U.S. company's Accounts Payable departments are having a good freak out right now. Used to be you only had to cut a 1099 for an unincorprated U.S. business receiving payments in excess of $600 per year. The new law says you must cut a 1099 for any U.S. entity being paid in excess of $600 for their services. Buy stock in companies printing/supplying 1099 and W9 forms. I think the first 1099's to anyone over $600 will be cut in January of 2012.

[Guest jackdm3]

I was just confirming that private citizens do not have to issue 1099's. Businesses, on the other hand, are screwed. When Mike sell a gun to a dealer for $600 or more the dealer will issue Mike a 1099 but if Mike sells at a loss, he can deduct the loss. Just like selling a house you only have to report the gain. If you bought a house for $200,000 and sold it for $250,000 the reportable gain is $50,000 not $250,000.

Wanna help you here. If you lived in the home for at least 2 of the last 5 years of a house that you sold, you owe no taxes on that $50,000 gain.

This is 50k out of the 250k allowed per person or the 500k allowed per couple. The limit may increase later this year or in a few years.

[Guest mahahn]

http://www.irs.gov/pub/irs-drop/n-10-51.pdf

Let your opinion be heard.

[Guest Lester Weevils]

The only opinion/sugggestion I can think of-- "Do not enforce the new law." But somehow the IRS probably does not have that option.

It is puzzling why the IRS couldn't do that, though. Seems perfectly OK when the feds refuse to enforce immigration law, or election law.

Edited July 28, 2010 by Lester Weevils

[Guest 6.8 AR]

The IRS may become the new "Federal police". That will be his control

on the economy and us. It fits his agenda

[K191145]

that would get you around the 600 beans thing, but that is not the point. What if you want to buy my four wheeler?

It is not about guns. It is about the .gov becoming more and more intrusive on our lives.

If I wanted to buy your 4 weeler, I'll buy it buy individual parts like building your own AR. The only difference is I don't believe there's nothing that says those parts have to be disassembled. Buy the tires, then the engine, then the seat etc. etc.

[Guest Lester Weevils]

If I wanted to buy your 4 weeler, I'll buy it buy individual parts like building your own AR. The only difference is I don't believe there's nothing that says those parts have to be disassembled. Buy the tires, then the engine, then the seat etc. etc.

Hi K191145

Dunno if you would be bound by this law for a personal buy from Mike. The law hasn't been 'interpreted' yet, where nameless bureaucrats expand a couple of paragraphs of law into thousands of pages of regulation. That link mahahn posted, was the IRS requesting suggestions on how to write the regulations.

However, if the law requires you to send Mike a 1099 on his four wheeler (as it apparently would for a business), then buying it in individual pieces would not be a legal dodge. Business will have to send 1099 for any supplier where the yearly total exceeds $600. So if I foolishly buy $12 of paper from Staples every week, rather than buying $624 of paper once a year, I have to send Staples a 1099 for $624 regardless of whether it was 52 little card debits or one big check.

Edited July 29, 2010 by Lester Weevils