Legal Question in Tax Law in California

tax on profits from selling used goods

hello,

I have a full time job and I pay both state and federal taxes from my salary. Along with the job, I have a small venture where I buy ''used'' books and sell them on the internet at a small profit. Yearly I make around $10,000 as profits from selling used books.

How is it supposed to be treated under the tax law of the state and how much tax am i supposed to pay on this ?

Any help would be highly appreciated.

Thanks in advance,

Seeker


Asked on 7/22/02, 5:44 pm

1 Answer from Attorneys
Ken Koenen Koenen & Tokunaga, P.C.

Re: tax on profits from selling used goods

What you have extablished is a business, of which you would be the sole proprietor. Income of this sort should be reported on Schedule C of your normal tax return. If you are using a 1040EZ form to do your taxes, then you will need to switch to a normal 1040.

You determine your actual taxable income by computing the total sales, minus the cost of purchases and any returns, which gives you net sales. From that figure, you can deduct such things as postage and shipping, telephones, office rent (including a deduction for a home office), advertising, etc. This gives you a net, taxable income, which is then transferred to the apporopriate line of the tax return.

This is added to your other income, and then you figure the total tax.

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Answered on 7/22/02, 5:57 pm


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