Question

Basketball Tickets and Sports Cards

Forum|Forum|3 years ago
August 31, 2022
2 replies
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Hello,

I resell some of my professional basketball tickets I own and already have the 1099K details. Additionally I sell online collectible cards. For each, am I reporting on the net sales or income?

Example: Cost of the tickets for a game are $200 a seat and I sell for $400 a seat. Gross sales were $800, but income was $400. What am I being taxed on?

Laura_CPA

Dear Joshalee,

Hope you are having a good day 🙂! The 1099K reports gross income only, you'll report that income and any related expenses under a Schedule C (if you are in it with the intent to make a profit). To use your example, you'd report $400 as gross receipt and the cost of the ticket of $200 as an expense, net profit of $200 (will be subject to self-employment tax).

However, if you are not in it to make a profit, then this would be considered a hobby. You'd report your 1099K income on Schedule I, Line 8 of your 1040 tax return (the income will not be subject to self-employment tax). Unfortunately, under the new Tax Reform, you cannot deduct any expenses.

Hope this helps you! Please let us know if you need any further information.

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John-H2021

Hello Joshalee,

There are 2 ways to report the income.

1. If it is a hobby then the income is reported on schedule 1 for the full amount of the 1099 no expenses allowed to be taken

2. If it is a business the it would be reported on a schedule C (self employed income). Yu would report the 1099 as income and then deduct the expenses you have againist making that income.

Here are a few helpful links

https://turbotax.intuit.com/tax-tips/small-business-taxes/when-the-irs-classifies-your-business-as-a-hobby/L5NClTTtK

https://turbotax.intuit.com/tax-tips/self-employment-taxes/4-tax-tips-for-money-making-hobbies/L89qz1GNj

https://turbotax.intuit.com/tax-tips/self-employment-taxes/beginners-tax-guide-for-the-self-employed/L2HLojrj5

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J

Jefflatta

I'm in a similar situation with reselling some of the football tickets that are part of my season ticket package for games I can't go to.

- What is the distinction that determines whether it is a hobby or a business? Do they just take my word for it, or is there an income threshold or something concrete I can reference?

- To clarify - if it's a hobby and not a business, does that mean I don't get taxed on the money from reselling the tickets at all?

John-H2021

For it to be considered a business the IRS looks for the following

The IRS expects that if you start a business, you intend to make money at it. If you don't, your business might be a hobby. To determine if your business is a hobby, the IRS looks at numerous factors, including the following:

Do you put in the necessary time and effort to turn a profit?
Have you made a profit in this activity in the past, or can you expect to make one in the future?
Do you have the necessary knowledge to succeed in this field?
Do you depend on income from this activity?
Are your losses beyond your control?

These are just some considerations that may, or may not, apply in determining if you have a business or a hobby in the eyes of the IRS.

If it is a hobby then you need to report the total income as other income on schedule 1 with no expenses allowed

Beginning in 2018, the IRS doesn't allow you to deduct hobby expenses from hobby income. you must claim all hobby income and are not permitted to reduce that income by any expenses.

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