Buying and Selling on eBay: Tips, Tricks, Problems & Questions

I just told them that returns have to be processed through the "Hassle Free Returns" program. I was a bit perturbed at this individual because he/she sent me two messages in the span of four hours requesting a return shipping address. The fact that someone would get all panicky at a seller not responding to an email within four hours (first email at 4:00PM, second one around 8:00PM) tells me that they aren't worth dealing with. Given that I was in a theatre in San Francisco for The Book Of Mormon when the second email with sent, I have absolutely no empathy for this person. If it wasn't for a 10% restocking fee, I would not consider the return.

I signed up for that so I wouldn't have to deal with messaging back and forth with buyers to figure out returns. It's supposed to save time, yet I find myself spending 10-15 minutes on each return just to get people to understand that that they have to go through the process. It's not rocket science.... My wife just figured out a return in less than two minutes just now.



jebarne said:

I would call that retained inventory, used for advertising. Fully deductible.

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So are COGS deducted in the year they're incurred, even if the item does not sell during that same year? Am I allowed to deduct all of the COGS sold for the items I bought in 2013 that are still in inventory come 2014? That question has been asked before with varying responses.

suited said:

So are COGS deducted in the year they're incurred, even if the item does not sell during that same year? Am I allowed to deduct all of the COGS sold for the items I bought in 2013 that are still in inventory come 2014? That question has been asked before with varying responses.

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WARNING: NOT AN ACCOUNTANT - You can deduct it all in the year incurred regardless of whether it sold or not using cash based accounting methods, which is much simpler. I believe the only time you are required to used accrual methods, which would involve valuing unsold inventory and such, is if you averaged $1MM+ in revenue for each of the last 3 years. That's why I try to keep sales to under a million a year

MJMcRibb said:

WARNING: NOT AN ACCOUNTANT - You can deduct it all in the year incurred regardless of whether it sold or not using cash based accounting methods, which is much simpler. I believe the only time you are required to used accrual methods, which would involve valuing unsold inventory and such, is if you averaged $1MM+ in revenue for each of the last 3 years. That's why I try to keep sales to under a million a year

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suited said:

So are COGS deducted in the year they're incurred, even if the item does not sell during that same year? Am I allowed to deduct all of the COGS sold for the items I bought in 2013 that are still in inventory come 2014? That question has been asked before with varying responses.

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MJ is right, I'm guessing 99.9% of us are on the cash basis for this little hobby so when cash goes out, its a cost, when cash comes in, its a revenue. Makes no difference what year you bought/sold.

Fueco said:

I just told them that returns have to be processed through the "Hassle Free Returns" program. I was a bit perturbed at this individual because he/she sent me two messages in the span of four hours requesting a return shipping address. The fact that someone would get all panicky at a seller not responding to an email within four hours (first email at 4:00PM, second one around 8:00PM) tells me that they aren't worth dealing with. Given that I was in a theatre in San Francisco for The Book Of Mormon when the second email with sent, I have absolutely no empathy for this person. If it wasn't for a 10% restocking fee, I would not consider the return.

I signed up for that so I wouldn't have to deal with messaging back and forth with buyers to figure out returns. It's supposed to save time, yet I find myself spending 10-15 minutes on each return just to get people to understand that that they have to go through the process. It's not rocket science.... My wife just figured out a return in less than two minutes just now.

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LOL, yeah it's a super simple process. I'm not sure ebay could make it any easier, other than coming door to door to see if you liked it and personally returning it for you if you didn't. Yet, several buyers have had issues with it. At first I figured the return interface was having the normal bugs and quirks.....but now I believe it is just the buyers.

On the other hand, it has worked like a breeze on 80% of my returns.

MJMcRibb said:

WARNING: NOT AN ACCOUNTANT - You can deduct it all in the year incurred regardless of whether it sold or not using cash based accounting methods, which is much simpler. I believe the only time you are required to used accrual methods, which would involve valuing unsold inventory and such, is if you averaged $1MM+ in revenue for each of the last 3 years. That's why I try to keep sales to under a million a year

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I'm certainly not either, but after reading the fules* (f@king rules) it seems to me that ATLNoob is doing it the right way.

The ways the rules are written, whether using cash or accrual, you should maintain an inventory and when you complete your schedule C, there should be a beginning and ending inventory value based on whatever valuation method you use. Probably actual cost is our best method.

As you point out, you get around a lot of this if you are under $1M in gross sales, but really what the IRS is requesting applies regardless. You may report, but you don't have to.

the rule is that you deduct the COGS for what you sell in a given year, regardless of when the item was acquired. You buy 10 things at 10, but sell 5, you take $50 in COGS and now have $50 in inventory. If 2 of those items are damaged or unusable, you can take them out of the inventory and write them off as COGS. So inventory drops to 3 items totaling $30 and COGS is now $70.

At the size most of us are on this forum, I don't think it really matters as long as there isn't any evidence that you're changing methods from year to year specifically to evade a tax obligation.

I could be wrong, I often am. the key do doing this properly seems to be keeping the item by item inventory, which it appears the easiest way is actually the way I was trying to avoid. At least GarageSale has an inventory feature so if you set up a CSV for your inputs, you can import them in bulk and then link your auction when it is created back to the item in inventory and it will pull in the specifics included in the spreadsheet.

http://www.irs.gov/publications/p538/ar02.html#en_US_201212_publink1000270702

Tweets said:

MJ is right, I'm guessing 99.9% of us are on the cash basis for this little hobby so when cash goes out, its a cost, when cash comes in, its a revenue. Makes no difference what year you bought/sold.

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Thats the way I'm going to do for 2013 anyway. Not sure going forward until I talk to my accountant when he is back.

Here's a fun one:

I sold a Loro Piana shirt a while back. In my newbness, I didn't realize it was a woman's shirt and listed it as a Men's.

The buyer informed me and I immediately apologized and owned up to my mistake offering return with shipping paid both ways by me. The buyer then proceeds to file a claim through eBay.

I respond telling him that the claim wasn't necessary as I was offering the return already but whatever. I send him a prepaid return label to send the item back.

He then escalates the case to ebay. EBay rules that the buyer must send the item back for a full refund.

A month goes by and the label still hadn't been activated yet. EBay closes the case and refunds the customer AND he keeps the item. Fortunately they don't take the money from me though.

Even though I got paid, I'm still upset that ebay puts up with this behavior and even rewards it. It's the principle. THE PRINCIPLE.

/rant



MJMcRibb said:

WARNING: NOT AN ACCOUNTANT -  You can deduct it all in the year incurred regardless of whether it sold or not using cash based accounting methods, which is much simpler. I believe the only time you are required to used accrual methods, which would involve valuing unsold inventory and such, is if you averaged $1MM+ in revenue for each of the last 3 years. That's why I try to keep sales to under a million a year   

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Well, if true, this will make this much easier for me. The only reason I would need to know what I paid for an item is if I had to value my inventory at the end of the year, which would be a pain **********. I no longer write down what I paid for things anymore (I save the receipts, obviously). 99% of the time, my cost has no bearing on how I price my items, because I'm going to try to sell each item for the highest amount possible - regardless of what I paid for it.

I am having an accountant do my taxes, so he'll know what to do. I am just really hoping I don't have to value my inventory.

Fueco, how did u like Book of Mormon?

I saw it earlier this year when visiting Chicago in February. It's over the top, but could not stop laughing.

Snoogz said:

Fueco, how did u like Book of Mormon?

I saw it earlier this year when visiting Chicago in February. It's over the top, but could not stop laughing.

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Oh, I loved it... This was only my third "Broadway play" (the others being Wicked and Spamalot).

I generally dig the sense of humor from Matt Parker and Trey Stone. This was no exception.

I decided I'm going to give the whole "buy it now or make offer" thing for this next round of postings. I let so many nice things go for so little, I think it's time to try this approach! Any advice for doing this, or is it pretty straight forward?

Thanks!

jebarne said:

I'm certainly not either, but after reading the fules* (f@king rules) it seems to me that ATLNoob is doing it the right way.

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If I am, it's news to me, and purely by accident...earlier this year I had to clean up a 5 year tax mess that involved the Fed IRS as well as three separate state departments of revenue, so I figured more is better when it comes to keeping records for this eBay stuff.

joshmick said:

I decided I'm going to give the whole "buy it now or make offer" thing for this next round of postings. I let so many nice things go for so little, I think it's time to try this approach! Any advice for doing this, or is it pretty straight forward?

Thanks!

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It's pretty straight-forward, though you might tweak it a bit depending on the item and whether it sells or not. For example, if you have a year-round item, you might list it for a 30-day listing, whereas if you have a seasonal or of-the-moment item you might go 10 days so as not to get "stuck" having it listed for 30 days and dropping the BIN to make it look more attractive over that 30 days. I find I get most of my views in the first few days (presumably from people's saved searches) and it drops off after that unless it's a hot item. You can set the auto-accept on a best offer if you like, to automatically accept and/or reject offers at a certain dollar amount - this saves you from getting pissed off at low-ballers, but you never get notified if someone offers just a penny less than you would have accepted automatically, so it's a good idea to eyeball the item every so often to see if anyone came really close, and if so, reach out and offer it to them at that price or meet halfway etc. I usually set the auto-accept/reject but sometimes I leave a gap between those two prices, or don't set it at all, just to see what might happen. I did a bunch of 30-day items and some sold right off, the rest languished for that 30 days and I'm re-listing them at 10 days, or sending them to auction at $9.99 if they've been here too long. It's fun to do $9.99 auctions on items you know will do well, but if it's a nice item in a rare size (39 Short high-end blazer or whatever) it'll probably sell for $9.99 and you might be better served listing it as BIN/OBO for 30 days to allow someone to finally come across it. Also, you might not think start/end days & times make a difference on BIN items, but it does - still schedule to end on a Sunday around 8 or 9pm ET if you can (pay the extra dime per item to schedule a bunch of them ahead of time - you can spend a leisurely week setting them all up and let them fire off at once while you're at night church or whatever you do Sunday night; more listings bring more views to all your items).
This is all theoretical, based on personal observance and my own experiences - I'm sure others will chime in with their preferences.
Good luck and have fun!

Thanks for that, ATLnoob. That was super informative!

+1 on ending your BIN/OBOs on a Sunday evening. I'm normally not busy at that time, and since I don't set the auto accept/reject I'm able to review offers I receive during the final hours of the listing.