Ebay Sports Ticket Sales

[Diane]

Client buys sports tickets, then sells them over Ebay for a profit. I've been putting these sales on Schedule D as a short term gain. I felt that this created an investment sale, and not a self employment transaction since he is not in the business of selling sports tickets and has a regular job. He never makes enough to create any self employment tax and it's not a regular thing, although he's done it for a few years now. What is the right way to handle these sales?

Diane

[ILLMAS]

Client buys sports tickets, then sells them over Ebay for a profit. I've been putting these sales on Schedule D as a short term gain. I felt that this created an investment sale, and not a self employment transaction since he is not in the business of selling sports tickets and has a regular job. He never makes enough to create any self employment tax and it's not a regular thing, although he's done it for a few years now. What is the right way to handle these sales?

Diane

I see this as a business because there is a cost of doing business (Ebay Fees, Shipping and Handling Fees, Paypal Fee), after you take those costs in consideration + the cost of tickets, less whatever he gets for them is his profit.

[Gail in Virginia]

If he is doing this from a profit motive, I too would see it as a business. If he does not have a profit motive (maybe he is buying the tickets to use some personally and sell the others to finance his attendance at sporting events?) then it would be a hobby, and expenses might not be deductible. And I really think he is trying to make money from the sound of what you posted.

[Diane]

Thanks for the replies. I probably will enter this on a Schedule C.

Diane

[Virtual Managed Solutions]

eBay for example:

How much money do you have to make to be considered being in business for yourself? What if you are selling on eBay as a hobby - you just love doing it, it's fun, etc etc, but you find yourself making a substantial amount every week?

[Bart]

eBay for example:

How much money do you have to make to be considered being in business for yourself? What if you are selling on eBay as a hobby - you just love doing it, it's fun, etc etc, but you find yourself making a substantial amount every week?

It is not the amount of money you make that determines if you are in business. If you have a profit motive and conduct your affairs in a businesslike manner then you are in business.

[Gail in Virginia]

And being a hobby does not mean that you don't have to report the income - it only limits the expenses that you can deduct and how you deduct them. All income, whether cash or barter, is reportable.