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red.scarf
Post  Post subject: Guns and Income Taxes  |  Posted: Thu Dec 29, 2011 4:48 pm

Joined: Mon Dec 26, 2011 12:03 pm
Posts: 4

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The year is almost over, and April 15th is just around the corner. So naturally, taxes are on everyone's mind. No? Just me?

Anyway, some gun-owners manage to make a bit of money on the side buying and selling guns. Since the IRS wants to track every dollar, this should be reported on your tax return. Unless you are an exceptionally honest person, or own a business, it probably is not happening. But, there are some important tax considerations for individuals who are reporting revenues or losses from income generated by buying or selling firearms.

It is most desirable to report any gun related activities as business rather than hobby. Both will have the same effect on adjusted gross income, but losses are treated differently. Hobby losses can be deducted only against income from the same activity. In other words, deductions may not exceed income. This is not the case with businesses.

To tell if your gun-related income is business or hobby, most people look back five years. If a profit was made three of those five, that is one sign that you may have a business.

However, if something walks like a duck, talks like a duck, and looks like a duck, it probably is a duck. In the case of an audit (which may happen if a Schedule C shows losses for several years in a row), the auditor will look at business records, professional development, time devoted to the business, and other factors. Firearm related businesses are under extra scrutiny because it is such a common hobby. More information may be found at the IRS website, specifically at http://www.irs.gov/newsroom/article/0,,id=169490,00.html.

As always, it is best not to take tax advise from a random person on the internet, especially since it is outdated so quickly, and more importantly because it is best to get tax advise from a professional that you know is a professional. CPA is preferable, although a certification from the IRS is great.


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