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Taxes

Discussion in 'RockyTalky' started by GabeC90, Aug 9, 2019.

  1. GabeC90
    Rough_Rock

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    by GabeC90 » Aug 9, 2019
    Hello,

    If someone is trying to sell a diamond for $20,000+ In Texas.. do they have to pay state sales tax and taxes to the IRS? The buyer and seller are both confused about the process. It’s a personal sale and they are worried about how to handle the taxes.

    The seller wants to know if she has to remit sales tax and report the money received to the IRS?

    The buyer wants to know if she needs to report the money used to the IRS?

    Hopefully I explained it correctly.

    Thank you!
     
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  2. PreRaphaelite
    Brilliant_Rock

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  3. Miss Marple
    Shiny_Rock

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    by Miss Marple » Aug 9, 2019
    In general, private sales are not taxed. The information above re taxes in Texas apply to retail sales. A random person selling a pre-owned item as a one off would not be subject to those rules. If I recall correctly, the IRS also does not attempt to collect income taxes on such a sale—assuming no profit by the seller.
     
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  4. new-beginning
    Shiny_Rock

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    by new-beginning » Aug 9, 2019
    sales tax is paid to the state, not to the IRS. And yes, Texas wants the $$$. The buyer pays the taxes. If the seller is a business they probably will collect the taxes and forward. If this is a transaction between individuals, it probably is the buyer's responsibility to pay the state.
     
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  5. Karl_K
    Ideal_Rock
    Trade

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    by Karl_K » Aug 9, 2019
    If selling it for a profit about having to pay the irs:
    "Sale of personal items.If you sold an item you owned for personal use, such as a car, re-frigerator, furniture, stereo, jewelry, or silver-ware, your gain is taxable as a capital gain. Re-port it as explained in the Instructions for Schedule D (Form 1040). You can't deduct a loss.However, if you sold an item you held for in-vestment, such as gold or silver bullion, coins, or gems, any gain is taxable as a capital gain and any loss is deductible as a capital loss."

    "Example 39.You sold a painting on an on-line auction website for $100. You bought the painting for $20 at a garage sale years ago. Re-port your $80 gain as a capital gain as ex-plained in the Instructions for Schedule D (Form 1040)"

    https://www.irs.gov/pub/irs-pdf/p525.pdf
     
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  6. Karl_K
    Ideal_Rock
    Trade

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  7. Venzen007
    Shiny_Rock

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    by Venzen007 » Aug 10, 2019
    It's not on the private seller to ensure the buyer pays sales tax by collecting it for the State. Buyer pays the price he/she and the seller have agreed upon; what the buyer does after is between the State and the buyer. Private seller shouldn't be worrying about collecting sales tax.
     
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  8. MollyMalone
    Ideal_Rock

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    by MollyMalone » Aug 10, 2019
    FYI: the seller in the OP's question actually should collect, and forward, the sales tax on the sale of the diamond because the selling price is more than more than $3,000 -- the annual limit on the exemption for a private individual making a one-off sale or only occasional sales of items originally purchased for their own use or a family member's personal use. And if the sale is of an item not originally purchased for such personal use, a seller not engaged in retail sales is expected to collect and forward the sales taxes on any one of more than 2 sales in a calendar year regardless of the aggregate sales amount.
    https://texreg.sos.state.tx.us/publ...=&p_ploc=1&pg=3&p_tac=&ti=34&pt=1&ch=3&rl=316
    psst... that's not true everywhere in the US of A. See my FYI above re Texas; I know Florida and NY have similar provisions & I'd bet these three are not the only states.
     
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  9. Venzen007
    Shiny_Rock

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    by Venzen007 » Aug 10, 2019
    I read it, and yep, that's the way I read it, too. I don't agree with it, the state forcing a private citizen to act as their agent in collecting taxes from another person when they are not in the business of doing so, but who am I? :)
     
  10. Miss Marple
    Shiny_Rock

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    by Miss Marple » Aug 10, 2019
    @MollyMalone thanks for jumping in to clarify. That what I get for not reading the whole thing.

    @Venzen007 totally agree re tax collection.

    OP--looks like you've received someuseful advice here.
     
    


    



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