Ebay and Paypal Question

[Medora]

Hi All,
I haven't seen anything about this yet but I bet it applies to lots of folks. My husband regularly uses Ebay to buy and sell electronic equipment almost all for our business (i.e. computer upgrades, computer cables, monitors, etc.) Most of these are small purchases/sales, max $290. Some of it is just in and out of his Paypal account, some of it in and out of his bank account. Again, small stuff. I keep track of the stuff we buy (when he remembers to give me the receipts!) for IRS deductions.
But what about Ch. 7 forms? "Have you sold or transferred any assets in the last year?" Does this stuff qualify, and do they have ability to look at Paypal accounts? If they see a lot of Paypal debits on the bank account, is that a problem?
I told the husband he can't do any more Paypal/Ebay deals for another 6 months and he turned pale!
Feedback??

[justbroke]

But what about Ch. 7 forms? "Have you sold or transferred any assets in the last year?" Does this stuff qualify, and do they have ability to look at Paypal accounts? If they see a lot of Paypal debits on the bank account, is that a problem?

I told the husband he can't do any more Paypal/Ebay deals for another 6 months and he turned pale!
Feedback??

My simple read would be that if this is a business, then he disposed of inventory, not assets.

If this was a for profit venture, and not a hobby, then you'd report as a d/b/a (doing business as) and that you purchased and sold inventory. In the means test (Form B22A), there's a place for business income (Line 4).

Here's is where you'd put your a.) gross receipts (what you sold everything for), and then b.) your ordinary expenses (which is what you purchased the inventory for, plus other costs such as maintaining the business including, but not limited to, rents, advertising, telecomm cost, transportation costs, etc. etc.). Then subtract b from a to determine your "business income".

[endisnear]

What about if its not business inventory....like sometimes, i'll sell some old clothes, knick knacks around the house....nothing of large value.

[justbroke]

What about if its not business inventory....like sometimes, i'll sell some old clothes, knick knacks around the house....nothing of large value.

I don't believe the trustee cares about small things. If you're concerned, answer yes to the question, and then say "I sold some old clothes and knick knacks" of no real value.

The problem is, if you're using the same account for business and personal transactions... it could get muddy.

[Medora]

Thanks for the replies. So what I'm hearing is that we DO have to keep track of every little sale so that I can report it in the monthly P/L for our dba. But that the Trustee is not likely to request Paypal records, but will see the purchases on our bank statements... so every one of those purchases had better be included under either "inventory" as you suggest or our exemptions (which should be ok). If the purchase was subsequently sold, does that then count as income? It never goes back into the bank account, only into Paypal account.
Ugh, this is a bookkeeping nightmare!

[Flamingo]

Thanks for the replies. So what I'm hearing is that we DO have to keep track of every little sale so that I can report it in the monthly P/L for our dba. But that the Trustee is not likely to request Paypal records, but will see the purchases on our bank statements... so every one of those purchases had better be included under either "inventory" as you suggest or our exemptions (which should be ok). If the purchase was subsequently sold, does that then count as income? It never goes back into the bank account, only into Paypal account.
Ugh, this is a bookkeeping nightmare!

Trustees are well aware of Paypal accounts. The best thing to do is to be open and honest about everything because there is always a track to your Paypal account from one of your other accounts cause the Paypal account has to be linked to a checking account or credit card.

[jktrading]

I don't think it's as detailed as you seem to be worried about. You spend money and make money. A profit and loss dollar amount. That's all I do for my Federal and State Income Taxes, just fill in the amounts, nothing more detailed. I've been doing ebay 4-5 years.

I suppose they could "audit" you and request more details, but if you tell the truth, do not hide anything, what can they do? Call you a bad book-keeper? Plus, most information is available on paypal if they request it, and it goes back years. eBay keeps auction listing a few months, but paypal keeps everything all the way back from when you started.

I'm not sweating the small stuff , and I don't think you should either. Hopefully BK is like doing taxes, and you fill in the blanks, file, and that's it. I don't lie or hide, so why should I be worried? Same goes for you. I just filed 11/16, so here we go.

[epiphany]

If you are running a business, you are supposed to be keeping track of every little sale. You are taking the deductions but not claiming all the profits?

That aside, for purposes of your BK, you probably (and I say probably because I don't know your situation) worrying for nothing....

I have a full time ebay business but at the time of my 341, it was only small and part time. However, I have always filled out a P&L for it on my taxes.

It never occured to me to answer yes as to whether I had sold or transferred any assets as it was all inventory in the course of business and as such, accounted for.

I was asked at my 341 about my business because the trustee saw it on my tax returns. I told him that it was a small part time business. He asked me if I had listed all assets of the business on my petition and I had. I was never asked about my PayPal account or even for any bank statements.

Your mileage may vary, but if you do everything on the up and up, then you should be fine.

Like a previous poster said, you can easily retrieve purchase and sales information for anything that passed though PayPal online if need be.

Oh, and just a tip because you say that you are saving the receipts when your husband remembers to give them to you----train him to save all electronic receipts into a folder or two on your PC. You may want several depending on how you want to categorize them.

Good luck,



ep

[justbroke]

I echo what Epiphany and jktrading wrote. It's all about an open process, really. If you have nothing to hide, you are more open about sharing the details.

Besides, they're not looking for inventory related transactions... they are looking for money (i.e. profit).

[Medora]

Hi,
Thanks for all the input. I like the idea of an "electronic" folder because Hubby will more likely do that than remember to give me the scrap of paper.
Just to be clear, the Paypal/Ebay stuff is equipment FOR the business--computers and electronics, in other words, stuff we use to do our business. He knows he is going to have to list every darn thing he ever bought and still has in his office. But some of the stuff he bought he turned around and sold, either because it didn't work right for us or we upgraded, so we no longer have it.
I agree though--if we just say up front that we've bought and sold on Ebay to keep our equipment in working order, then if he wants to see receipts, he can.
Phew, you're right, I've been worrying over nothing probably!
It seems so arbitrary--sometimes trustees ask for bank statements, sometimes not; sometimes credit cards object, sometimes not...
So I end up worrying about too many things!
But thanks for the input,
Medora