O.K. I have a question that hopefully I could get answered. If I buy an item for ( $12.00 Total Cost of Goods ) and it sells for $70, Do I pay income tax on $58 or the full $70? Thanks in advance for your help!


2 Answers

Ancient Hippy Profile
Ancient Hippy answered

You'll pay income taxes on sale price, minus the cost of the item, advertising costs and any other costs involved in selling the item.

Moga Deet Profile
Moga Deet answered

You pay tax on your profit.  If you are doing this for a business, you want to report this on a Schedule C, which will allow you to report the revenue and deduct cost of goods and associated costs.  The net carries into the calculation of your taxable income.

If this is a one-time thing, don't worry about it.  If this is a regular business, like you are making and selling furniture or something, then keep records in a business-like way and report it.  Tax prep software like Turbotax can handle a Schedule C.

Answer Question