Have a Tax Question? Ask a Tax Expert
Hi and welcome to our site!You need to do your best to determine your cost basis.For items you purchased - the cost basis is your purchase price.For items you obtained as a gift - the cost basis is the lesser of donor's basis and the fair market value at the time of giftFor inherited assets - the basis is the fair market value at the time the decedent passed away.That is your responsibility to determine the basis.If you are not able to support your basis - do the best to estimate it - but there would be a risk that in case of the audit - the IRS agent might disagree with your determination and that might result additional tax liability.
Even little things like a key chain or a stuffed animal
If the item has the price still on it will a photo work?
Same rules apply. That is for your interest to establish the basis. The price tag might be helpful if there is nothing else - so I suggest to keep a photos as you will sell items.However - absence of actual receipts will always be a risk.
The price tag MIGHT indicate what you might be paid for the item - but that may not be a proof what amount was actually paid. So - if you have no other supporting documents - that could be helpful - but would not provide a replacement for actual receipts.
So how do people who buy abandon storage lockers attribute costs?
They must keep and maintain business records - which are established daily - all transactions including cash transactions, inventory items, etc.I may not say that all are very accurate with their business records and that all are honest with reporting their sale transactions and income.But in case of the audit - absence of business records might create issues.
What are Garage Sale rules
Same rules if you are conducting Garage Sales as business activity.If you are selling individual items for less than you are paid - there is no business motive. In this case - you are not required to keep any records and would not report these sales on the tax return.
Thank you so much!
You are welcome.