Q What sales are subject to taxing?
A “All sales are subject to income tax on the amount that you sold the item over your basis,” said Al Giovetti, a certified public accountant and member of the Maryland Society of Accountants.
An item?s basis is usually what you paid for the item you sold, and any improvements you made to the sold item.
“If you do not make a profit, your sale could be classified as a hobby based on the IRS hobby loss rules,” he said.
But if the sale doesn?t classify as a hobby, it may have to be filed as a sole proprietorship business, and you will have to pay income tax on it using Form 1040, and a 502 for the state.
