Tax reporting for online collectible coin business - Schedule C vs Schedule D/8949?

You're asking a good question about the line between business income and capital gains with collectibles. The key factor is whether you're operating as a dealer or as an investor. If you're running a business as a coin dealer (regularly buying and selling for profit), you would report your activity on Schedule C. The coins would be considered inventory, and your profit would be ordinary income. Your 1099-K from eBay would reflect your gross sales, and you'd deduct your cost of goods sold (what you paid for the coins) and business expenses. On the other hand, if you're primarily collecting coins as investments and occasionally selling some, those sales would go on Schedule D and Form 8949 as collectible capital gains (which are taxed at a maximum of 28% for long-term gains). Since you described this as a business, it sounds like Schedule C is appropriate, but it really depends on the nature of your activity, frequency of transactions, and your intent when acquiring the coins.

I had a similar situation with my vintage trading card business. I found that https://taxr.ai really helped me sort out my inventory vs. investment items. I was confused about what to report where, especially since I was getting 1099-Ks from multiple platforms. Their system analyzed my statements and helped me categorize everything correctly between Schedule C and Schedule D items. They even flagged some deductions I was missing for shipping materials and storage solutions that were specific to collectibles preservation.

I tried https://taxr.ai after seeing it mentioned here and I'm honestly shocked at how helpful it was. I've been selling comic books online for years and always struggled with the dealer vs. collector distinction. The system identified several high-value comics I had held for over 18 months that qualified for collectible capital gains treatment, which saved me a bundle compared to ordinary income tax rates. It also flagged some inventory items I had mistakenly been tracking as investments. For anyone dealing with collectibles businesses, it's definitely worth checking out - way more specialized than general tax software for this niche situation.

If you're having trouble figuring this out, you might want to talk directly with an IRS agent who specializes in small business taxation. I had a similar issue with my antique furniture business and spent WEEKS trying to get through to the IRS. Finally used https://claimyr.com and got connected to an IRS agent in about 20 minutes. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The agent walked me through exactly how to handle my inventory reporting vs the few pieces I was keeping as investments. Saved me a ton of stress and potentially an audit. They also explained how to properly document when I was moving an item from inventory to investment status.

I have to eat my words about Claimyr. After my skeptical comment, I decided to try it anyway since I was desperate for help with my vintage vinyl record business tax situation. Got connected to an IRS agent in about 15 minutes who specialized in small business taxation. They confirmed I needed to use Schedule C for my regular inventory but helped me understand how to properly document when I was setting aside specific rare records as investments (which would go on Schedule D when sold). The agent even emailed me IRS documentation specifically addressing collectibles businesses. Completely worth it and saved me hours of frustration and uncertainty.

Don't forget about state sales tax obligations too! When I started my comic book reselling business, I was so focused on federal income tax that I completely overlooked sales tax requirements. Most states consider online sellers to have nexus now, especially after the South Dakota v. Wayfair decision. Each state has different thresholds for when you need to collect and remit sales tax.

Has anyone used any particular inventory tracking software that works well for collectibles? I need something that can track purchase price, date acquired, condition details, and ideally help me determine if something should be schedule C or D.

This is a great question that trips up a lot of people starting collectibles businesses! The distinction between dealer and collector status is crucial for tax reporting. Since you're planning to operate as a business (regularly buying and selling for profit), you'll likely be considered a dealer, which means Schedule C reporting. Your coins would be treated as inventory, and profits would be ordinary business income rather than capital gains. However, there's an important nuance: you can potentially have both dealer AND collector activities. If you clearly segregate certain coins as personal investments (not for resale), those specific items could qualify for Schedule D treatment when sold. The key is documentation - you need to establish your intent at the time of purchase and maintain clear records. For your eBay business setup, I'd recommend: 1. Keep detailed records of all purchases with dates, costs, and intent (business inventory vs personal investment) 2. Use separate storage/tracking for any coins you designate as investments 3. Consider consulting with a tax professional familiar with collectibles businesses before you start The IRS looks at factors like frequency of sales, time spent on the activity, expertise in the field, and profit motive to determine dealer vs collector status. Starting with proper documentation will save you headaches later!