Someone help me please

[ams121989]

Hello everyone I am very inexperienced but I have been out of work for almost a year because I have anxiety as well as deal with pain. Last month I decided to see what I could invest some money in so I used some money and started buying cell phones off Craigslist. We are not talking cheap ones. I have paid out in the last month over 3400 dollars in cell phones from 300-600 a phone.

I then put these phones on eBay even though the fees are high I have made profit on every phone. Right now I have 5 phones left and after I sell them I will have total sales of close to 5000 dollars. The problem is it cost me 3500 for the phones.

Here is the problem. All I have is the Craigslist ad that I printed off before I went to buy the phone. I print them off then after they sell I print off the eBay transaction then subtract all fees and I have my remaining profit. The problem is no seller will sigh a receipt of sale. All I have is their phone number and the printed Craigslist ad. Should I give up?

In one year I could have a revinue of over 60,000 dollars but a profit of only 15000 but I am afraid that next year when I have to file and pay taxes which I have no problem they will say a Craigslist ad is not enough and I have to lay taxes on 60-80k and basically lose all profit to taxes.

Would it be a good idea to screen shot text messages saying do we agree on this price? Then print the text message and attach it to the ad? Not very experienced but just wanted to try and do something to make money that I enjoy.

[Harold Mansfield]

Sounds like the bigger problem is that you have no idea where these phones come from and you may be selling stolen property. That's probably why the sellers won't give you any identifying information or receipt.

Can you confirm that the source of the phones is legitimate? If not, I'd find a different source for used phones or another business model.
Eventually it will come back to you and legal fees will eat up your profits.

If you already know you're selling stolen phones, ebay is the wrong place to sell them, and we also can't give you any advice on how to proceed.

[ams121989]

IHey thank you for the response. I know the phones are not stollen because I run the imei before I buy them to make sure they are clear and can be activated. When I sell I also post a picture of the esn results stating its not stolen or at least not reported stolen at the time of sale. If it gets reported after I have no responsibility because it would be reported stolen after the fact that I have already bought it. Everything is 100 percent legal and I am just wondering about taxes.

Thank you for your reply :)

[Harold Mansfield]

Sales tax is state by state.
You're also responsible for the tax on the additional income.

You should read this IRS page about sales tax from internet sales and auction sites like eBay
https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Tax-Laws-and-Issues-for-Online-Auction-Sellers

[ams121989]

I know that I am responsible for the taxes I guess maybe I am not clear in whatbi am asking. Let's say at the end of the year my revenue was 80000 but the phones cost me 60000 when the IRS wants my receipts for my business inventory expense is the Craigslist ad printed off with the price going to be acceptable. No seller is willing to give a receipt. I will also have sellers phone number on ad. For instance in the last month my sales were 4800 dollars but my expenses were 3400 but all I have to prove it is Craigslist ads printed off with the number. After the sale is final on eBay I print the details and staple them together and subtract fees and then I have my remaining profit. I am just afraid the IRS will say cash sales? No receipt? You owe taxes on 85000

[turboguy]

Occasionally I buy something off Craigslist for my business. I will be buying a lawn tractor soon. I bought a snow blower in the fall. I just print off the criags list page and use that for proof. You could do the same with the email agreements. They could give you a hard time over it but I doubt very much they would as long as everything seems reasonable.

[jamesray50]

An ad is not the same thing as a receipt. A receipt shows date of purchase, item purchased, amount paid, method of payment and the seller's name. Does the ad show that?

[turboguy]

I can agree with that and in my case I am sure they would have the option of disallowing the expense. I would hope that if I have the tractor or snow blower that is in the photo in the ad it might seem logical that it was purchased. The fact that I would have declared the purchase and paid the use tax on it might be a positive. For the op if they didn't buy the evidence he had it would be a big deal. For me if they disallowed the few thousand I might or might not spend on Craigslist it isn't really important.

The copy of the email accepting the offer to buy a phone for a given price should have a little more weight than a copy of a craigslist ad since it would have the date and the amount and what the item was. It is not ideal proof but if they were in a good mood and their wife had made them happy the night before they might accept that with few questions.

If someone wants to be inventive there are lots of things that can be faked. Most would be caught if someone digs deep enough but in 95% of the cases there won't be an audit to catch it. I would never suggest that anyone should fake something but sometimes you can only do so much to prove a purchase or sale.

[tallen]

Do you meet with the seller in person when picking up the merchandise you are buying? Bring a printout of the ad or e-mail exchange, and have them sign, date, and write the amount paid and the word "paid cash" (assuming you are paying in cash).

[ams121989]

OK so I talked to IRS and they said its not the best proof of purchase. No can I just use those receipts you get at office depot? Does the seller have to provide address or can they just put name, price, method of payment, and sale date? Also when I pay 500 for this phone do I have to pay taxes on my purchase? I know I don't have to collect taxes unless it's in the state I live in. Wouldn't it be the seller who is responsible for the taxes since they are selling it to me?
I assume I can get a paper receipt signed and dated but how do I know its even their real name? Does it matter. I will also add their phone number to the receipt after sale.
Thank you for all help.

[Harold Mansfield]

OK so I talked to IRS and they said its not the best proof of purchase. No can I just use those receipts you get at office depot? Does the seller have to provide address or can they just put name, price, method of payment, and sale date? Also when I pay 500 for this phone do I have to pay taxes on my purchase? I know I don't have to collect taxes unless it's in the state I live in. Wouldn't it be the seller who is responsible for the taxes since they are selling it to me?
I assume I can get a paper receipt signed and dated but how do I know its even their real name? Does it matter. I will also add their phone number to the receipt after sale.
Thank you for all help.

Why didn't you ask the IRS all of this while you had them on the phone? You had the source right there.

I'm not sure many of us have had this specific problem, so I would suggest getting answers for your specific situation directly from the people who make those determinations.

[ams121989]

I tried too and she said she can't answer those questions. I bought a receipt book so if I am making my own receipt should I keep the copy and give the seller the receipt? Or should I just make a sale paper stating price I paid my name the seller name and signature with date?

[Harold Mansfield]

I tried too and she said she can't answer those questions. I bought a receipt book so if I am making my own receipt should I keep the copy and give the seller the receipt? Or should I just make a sale paper stating price I paid my name the seller name and signature with date?

That's a tough one. I'm wondering if there's something equivalent to a Kelly's Blue Book for value of electronics like that. If there is maybe recording the model number with the "blue Book" value at the date of purchase is enough to show expenses. But how do you show ownership of anything without receipts?

[ams121989]

OK so yesterday I went and met someone on Craigslist and when I bought the phone I the buyer produced a receipt stating the seller receives 500 cash for iPhone 6s plus 64gb and he signed the bottom. I also created a sale receipt stating I blank blank bought iPhone 6s 64gb phone for 500 dollars from his name. Then both of us signed. Also printed Craigslist ad with seller phone number. I can't imagine how this is not enough ? Any advice on this?

[Harold Mansfield]

OK so yesterday I went and met someone on Craigslist and when I bought the phone I the buyer produced a receipt stating the seller receives 500 cash for iPhone 6s plus 64gb and he signed the bottom. I also created a sale receipt stating I blank blank bought iPhone 6s 64gb phone for 500 dollars from his name. Then both of us signed. Also printed Craigslist ad with seller phone number. I can't imagine how this is not enough ? Any advice on this?

Yeah, that's a receipt. That's what you wanted and needed. Done.

[ams121989]

Great thanks so much. Do I have to register as a business if I am just doing this for fun? I am making money but I am doing this to keep my anxiety at bay. I have no prob if I need to do as businessmy revinue will probably be between 2000-5000 a month and my actual profit would be between 500-1500. I don't have a business name or anything like that. I just find it fun meeting people making a deal and then flipping the phone and watching eBay sales.

[Harold Mansfield]

You can run it as a sole proprietor. Just report the income.
https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Sole-Proprietorships