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tax-doctor
tax-doctor, Tax Preparer
Category: Tax
Satisfied Customers: 637
Experience:  Federal, State and local income tax preparation
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I did an estate sale for someone. It netted $5500. I made $1650

Resolved Question:

I did an estate sale for someone. It netted $5500. I made $1650 commission plus I also collected sales tax. On schedule C which figure do I enter as gross receipts? The net amount? The commission amount? Do I include the sales tax I reported and paid.? I paid some friends each $200 to help me. Should I have sent them each a 1099? Can i claim their payments as business expenses if I haven't?
I will never do another estate sale.
Submitted: 1 year ago.
Category: Tax
Expert:  tax-doctor replied 1 year ago.

tax-doctor :

hello, my name is XXXXX XXXXX I'll be happy to walk you through the process

Customer:

Thank you. Did you read and/or understand my question?

tax-doctor :

got it

tax-doctor :

1st off everything begins with "gross" and then all expenses, fees, salaries etc are deducted within sch C

Customer:

I declared the full 5500 on the sales tax together with my usual small amount from my mini-mall sales. But I only received the $1650 from the sale less advertizing and my friends' payments.

Customer:

so gross is full sale amount plus mini-mall sales

Customer:

is the amount I gave to the family of the estate an actual expense?

tax-doctor :

yes and yes amts pd to family is a deduction and a 1099 is only required if more then 600

tax-doctor :

yes, full amt (gross) then deduct mini-mall fees, sales tax, the 200 per, etc

Customer:

I'm using turbo tax and it asked if I had issued 1099s and I said no. Will it give me the option of listing the payments?

Customer:

Should I list both sources of income separately?

tax-doctor :

absolutely

tax-doctor :

no combine all

Customer:

So both in comes are gross. Sales tax and mall fees and amount I paid to the customer etc are expenses. If the amount I paid to my friends comes to 750. is that a problem being over $600?

tax-doctor :

not if less than 600 per person - fyi...a deduction for you equals potentially taxable income to you helpers and remember to pay the state the sales tax collected

tax-doctor :

and yes that right all gross less all exps including monies paid to helpers

Customer:

I have paid the sales tax. My helpers were all social security people and I hired them to help them out. I would rather not deduct them and pay income tax on the money than get them into trouble. I have one other unrelated question. Do I need to sign off and on again or can I ask you? You have helped me immeasurably so far. If I asked you the question and you couldn't point me in the right direction, just say so - it's fine.

tax-doctor :

yes if i can - go ahead and ask

tax-doctor :

oh boy, must be a long one

Customer:

We filed bankruptcy in 2006. We hired a CPA (nameless of course) who settled with the IRS for over twice as much as we owed. We were terrified and just said OK and signed the papers. We're making monthly payments which uncannily take exactly every spare penny. He says it a;; dies after ten years which doesn't make sense because every monthly fine and interest that accrues each seems to have its own ten year life. All things considered, I have been considering gathering everything up and going to talk to the IRS myself. Is it a stupid idea?

tax-doctor :

No, I'd suggest speaking to another CPA or even better a tax attorney/CPA of which there are many. They usually charge 250 to seat down and discuss general situation and then it would be up to you if you wanted to hire them to assist you further.

Customer:

Thank you. You have been great. I'll go now. That's exactly what I will do - in another town so I don't get anyone into trouble. Thank you again.

tax-doctor :

you're welcome!

tax-doctor, Tax Preparer
Category: Tax
Satisfied Customers: 637
Experience: Federal, State and local income tax preparation
tax-doctor and 6 other Tax Specialists are ready to help you

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