# A basic question about income tax brackets **URL:** \ **Category:** Factual Questions\ **Created:** [November 27, 2024, 5:09pm UTC](https://boards.straightdope.com/t/a-basic-question-about-income-tax-brackets/1010857 "2024-11-27T17:09:59Z")\ **Posts on this page:** 16\ **Page:** 2
**Author:** ![Mighty\_Mouse](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/mighty_mouse/32/7776_2.png) [@Mighty\_Mouse](https://boards.straightdope.com/u/Mighty_Mouse)\ **Post date:** [November 28, 2024, 2:10am UTC](https://boards.straightdope.com/t/a-basic-question-about-income-tax-brackets/1010857/21 "2024-11-28T02:10:57Z")
> [@Mean\_Mr.Mustard](#): > > Fair enough. > > Now, say, I just purchased these comics last year, paid $5,000 for them. But now I need the money, so I eBay them and receive $5,000. > > Still considered income, I suppose. Still taxable, I’m sure. > > mmm No. You have a basis of $5,000, so your income is zero. ---
**Author:** ![Mean\_Mr.Mustard](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/mean_mr.mustard/32/3865_2.png) [@Mean\_Mr.Mustard](https://boards.straightdope.com/u/Mean_Mr.Mustard)\ **Post date:** [November 28, 2024, 2:24am UTC](https://boards.straightdope.com/t/a-basic-question-about-income-tax-brackets/1010857/22 "2024-11-28T02:24:51Z")
Except that eBay will 1099 me and show $5,000 in sales. And this: > [@Mighty\_Mouse](#): > > your income is zero …seems to contradict @Exapno_Mapcase’s interpretation of my previous scenario (where I got $5,000 that I did not have before). mmm ---
**Author:** ![Mighty\_Mouse](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/mighty_mouse/32/7776_2.png) [@Mighty\_Mouse](https://boards.straightdope.com/u/Mighty_Mouse)\ **Post date:** [November 28, 2024, 2:38am UTC](https://boards.straightdope.com/t/a-basic-question-about-income-tax-brackets/1010857/23 "2024-11-28T02:38:48Z")
If you have a reasonable way of estimating the fair market value of the comics when you received them, you have that as the basis that you can offset against the sale proceeds. If they were ten comics that were 25 cents each, your basis is $2.50 and your gain is $4997.50. Same as if I inherited a lot of land from my parents in the back of beyond worth $5000 and now, 40 years later, it’s adjacent to a massive multi-use development and is now worth $500,000, when I sell it my gain is $495,000. If I trade it for a 1930 Duisenberg that is worth $500,000, your gain is still $495,000. If you trade it for another lot of land, you may be able to defer the gain. I’m not sure what “similar property” to old, now valuable comic books would be. You’d need to consult a tax expert. ---
**Author:** ![Exapno\_Mapcase](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/exapno_mapcase/32/1051_2.png) [@Exapno\_Mapcase](https://boards.straightdope.com/u/Exapno_Mapcase)\ **Post date:** [November 28, 2024, 2:55am UTC](https://boards.straightdope.com/t/a-basic-question-about-income-tax-brackets/1010857/24 "2024-11-28T02:55:04Z")
> [@The\_Other\_Waldo\_Pepper](#): > > What happens if he instead trades me those comics for, say, some bottles of wine? Technically, barter is still considered income. But it’s harder to substantiate. > [@Mighty\_Mouse](#): > > No. You have a basis of $5,000, so your income is zero. You still have reportable income of $5,000. You’d have to fill out the Schedule C form for any expenses that you had. Whether the IRS would allow the deduction depends on stuff. I’d say normally it would be allowed - that’s pretty much how eBay works - but I don’t use the form so I’m not making any flat statements. ---
**Author:** ![OldOlds](https://avatars.discourse-cdn.com/v4/letter/o/a3d4f5/32.png) [@OldOlds](https://boards.straightdope.com/u/OldOlds)\ **Post date:** [November 28, 2024, 12:52pm UTC](https://boards.straightdope.com/t/a-basic-question-about-income-tax-brackets/1010857/25 "2024-11-28T12:52:03Z")
Wouldn’t those comics be capital gains? And if so, I believe mmm would get a certain amount of LT cap gains at 0%, provided his income wasn’t too high (I am NOT a tax expert; but those comics sure look like cap gains to me) ---
**Author:** ![Mighty\_Mouse](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/mighty_mouse/32/7776_2.png) [@Mighty\_Mouse](https://boards.straightdope.com/u/Mighty_Mouse)\ **Post date:** [November 28, 2024, 3:07pm UTC](https://boards.straightdope.com/t/a-basic-question-about-income-tax-brackets/1010857/26 "2024-11-28T15:07:32Z")
Only if their total TAXABLE income is below $90k for married filing jointly or $48k for single. Otherwise the rate is 15%. Note that Gross Income is often tens of thousands higher than Taxable Income. ---
**Author:** ![OldOlds](https://avatars.discourse-cdn.com/v4/letter/o/a3d4f5/32.png) [@OldOlds](https://boards.straightdope.com/u/OldOlds)\ **Post date:** [November 28, 2024, 3:41pm UTC](https://boards.straightdope.com/t/a-basic-question-about-income-tax-brackets/1010857/27 "2024-11-28T15:41:51Z")
But, in that case, even if they were LTCG at 15% and he’s married joint \>90k, the marginal rate for him on income is 22%. So he’s still saving by reporting them as LTCG. Unless I’m wrong that an asset which increases in value and is sold is in fact CG? ---
**Author:** ![Munch](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/munch/32/5281_2.png) [@Munch](https://boards.straightdope.com/u/Munch)\ **Post date:** [November 28, 2024, 3:51pm UTC](https://boards.straightdope.com/t/a-basic-question-about-income-tax-brackets/1010857/28 "2024-11-28T15:51:16Z")
> [@Mean\_Mr.Mustard](#): > > My question: Is this 5k really considered _income_? That I have to pay _taxes_ on? It’s considered a capital gain, which is a form of income taxed at a capital gain rate. > [@Mean\_Mr.Mustard](#): > > I paid $5,000 for them. But now I need the money, so I eBay them and receive $5,000. The capital gain there is $0. > [@Mean\_Mr.Mustard](#): > > Except that eBay will 1099 me and show $5,000 in sales. Then you show your receipt that you paid $5000 for them (or just report that expense on Schedule C), and it’s a wash. ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [November 28, 2024, 8:05pm UTC](https://boards.straightdope.com/t/a-basic-question-about-income-tax-brackets/1010857/29 "2024-11-28T20:05:56Z")
> [@Exapno\_Mapcase](#): > > Did you get $5,000? Yes. Is that $5,000 you didn’t have before? Yes. Then it’s taxable income. Nothing insane about it. Not quite, there is a “gift basis”. It would be small. > [@The\_Other\_Waldo\_Pepper](#): > > What happens if he instead trades me those comics for, say, some bottles of wine? Bartering is income. > [@Mean\_Mr.Mustard](#): > > Now, say, I just purchased these comics last year, paid $5,000 for them. But now I need the money, so I eBay them and receive $5,000. > > Still considered income, I suppose. Still taxable, I’m sure. Yes, but with a cost basis of $5000, and thus no taxable income. Generally if you sell of household items (like at a garage sale) for less than their basis, you do not have to report that income. > [@Mean\_Mr.Mustard](#): > > seems to contradict @Exapno_Mapcase’s interpretation of my previous scenario (where I got $5,000 that I did not have before). But you did have it before. Last year when you bought them. ---
**Author:** ![Chronos](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/chronos/32/134_2.png) [@Chronos](https://boards.straightdope.com/u/Chronos)\ **Post date:** [November 28, 2024, 8:16pm UTC](https://boards.straightdope.com/t/a-basic-question-about-income-tax-brackets/1010857/30 "2024-11-28T20:16:31Z")
> [@Schnitte](#): > > Otherwise, it would frequently happen that an increase in gross income reduces your net income. It’s odd that everyone complains about tax brackets doing this, when they don’t, but there’s another place where the law does have this effect, but nobody complains about it. Many safety-net programs have a hard cutoff, where if your income is below that cutoff, you get the full benefit, but if it’s above, you get nothing. Worse, many programs use the same cutoff. So if you’re just below that threshold and get a raise, or work more hours, or whatever, you can suddenly be on the hook for your medical insurance, and lose your rent support, and your EBT, and so on. It’s an incentive for poor people to stay poor. ---
**Author:** ![The\_Other\_Waldo\_Pepper](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/the_other_waldo_pepper/32/12370_2.png) [@The\_Other\_Waldo\_Pepper](https://boards.straightdope.com/u/The_Other_Waldo_Pepper)\ **Post date:** [November 28, 2024, 8:54pm UTC](https://boards.straightdope.com/t/a-basic-question-about-income-tax-brackets/1010857/31 "2024-11-28T20:54:15Z")
> [@DrDeth](#): > > > [@The\_Other\_Waldo\_Pepper](#): > > > > What happens if he instead trades me those comics for, say, some bottles of wine? > > Bartering is income. …that’s a very general answer, but I’m genuinely curious about the specifics. Say you already have a $5000 comic book, and you’ve had it for years, and I likewise have already had a $5000 bottle of wine; and say that we don’t, uh, barter; no income, right? But if you trade me that comic book for that bottle of wine, then: _what?_ Did you just earn income? Did I? ---
**Author:** ![Exapno\_Mapcase](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/exapno_mapcase/32/1051_2.png) [@Exapno\_Mapcase](https://boards.straightdope.com/u/Exapno_Mapcase)\ **Post date:** [November 28, 2024, 10:08pm UTC](https://boards.straightdope.com/t/a-basic-question-about-income-tax-brackets/1010857/32 "2024-11-28T22:08:30Z")
This article from Investopedia illustrates the issues. > **[How Collectibles Are Taxed](https://www.investopedia.com/articles/personal-finance/061715/how-are-collectibles-taxed.asp)** > > The sale of collectibles can lead to a cash windfall. However, proceeds are heavily taxed because collectibles are not considered economic drivers. Capital gains at taxed at 28%. That’s a higher rate than for singles up to $191,950 and marrieds up to $383,900. If you have more taxable income than that and want to save 4% on your $5,000 because you’re in the next bracket, you should already know the answers. Say you purchased $10,000 worth of vinyl in the 60s. You take the collection to a record store, they look at the condition and offer $100. You accept. Do you take $9,900 in capital losses? No, because personal use of collectables invalidates them for capital losses. ---
**Author:** ![Exapno\_Mapcase](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/exapno_mapcase/32/1051_2.png) [@Exapno\_Mapcase](https://boards.straightdope.com/u/Exapno_Mapcase)\ **Post date:** [November 28, 2024, 10:11pm UTC](https://boards.straightdope.com/t/a-basic-question-about-income-tax-brackets/1010857/33 "2024-11-28T22:11:33Z")
Back to Investopedia > **[How and Where Is Revenue From Barter Transactions Recognized?](https://www.investopedia.com/ask/answers/101314/how-and-where-revenue-recognized-barter-transactions.asp)** > > Individuals and companies are required by the IRS to treat the fair market value of goods and services that they receive or provide through bartering as taxable income. ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [November 29, 2024, 1:46am UTC](https://boards.straightdope.com/t/a-basic-question-about-income-tax-brackets/1010857/34 "2024-11-29T01:46:04Z")
> [@The\_Other\_Waldo\_Pepper](#): > > But if you trade me that comic book for that bottle of wine, then: _what?_ Did you just earn income? Did I? Generally the IRS wouldnt know, but in theory, you each had $5K of income. Let us say - skip the bartering and you sold the comic books to them, and in return they bought the wine from you, both in cash or check, and both for $5000- that would be income, yes? Making it a barter doesnt change that. Mind you, if this all is just personal property that hasnt appreciated, sure go ahead. You want to exchange your macrame for their cookies and no one cares- unless either are in the business for selling either. ---
**Author:** ![Lord\_Feldon](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lord_feldon/32/341_2.png) [@Lord\_Feldon](https://boards.straightdope.com/u/Lord_Feldon)\ **Post date:** [November 29, 2024, 11:05am UTC](https://boards.straightdope.com/t/a-basic-question-about-income-tax-brackets/1010857/35 "2024-11-29T11:05:03Z")
> [@Chronos](#): > > > [@Schnitte](#): > > > > Otherwise, it would frequently happen that an increase in gross income reduces your net income. > > It’s odd that everyone complains about tax brackets doing this, when they don’t, but there’s another place where the law does have this effect, but nobody complains about it. Many safety-net programs have a hard cutoff, where if your income is below that cutoff, you get the full benefit, but if it’s above, you get nothing. Worse, many programs use the same cutoff. So if you’re just below that threshold and get a raise, or work more hours, or whatever, you can suddenly be on the hook for your medical insurance, and lose your rent support, and your EBT, and so on. It’s an incentive for poor people to stay poor. There are also state/local taxes, federal tax credits, etc. that aren’t designed as well as the federal income tax brackets. Ohio, for example, has a marginal income tax rate of 36,069% on the 26,051st taxable dollar ([cite](https://tax.ohio.gov/individual/resources/annual-tax-rates)). I can’t imagine very many people fall into the $360 range where that actually reduces their net income, but it’s still bizarre that it exists at all. ---
**Author:** ![Railer13](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/railer13/32/9742_2.png) [@Railer13](https://boards.straightdope.com/u/Railer13)\ **Post date:** [November 29, 2024, 2:24pm UTC](https://boards.straightdope.com/t/a-basic-question-about-income-tax-brackets/1010857/36 "2024-11-29T14:24:34Z")
> [@Mean\_Mr.Mustard](#): > > Specifically, can I just provide the numbers alone ($200 spent on packaging in 2024, $600 spent on postage, etc.) > [@Mighty\_Mouse](#): > > f those are really illustrative numbers, just a sheet of paper with those handwritten on them should suffice. Speaking as a volunteer tax preparer, I will add my emphasis to what @Mighty_Mouse said. Give me your total expenditures, and I’ll accept your figures. The one thing we don’t want to see is a stack of CVS prescription receipts or dental bills or anything else that will require us to sort through and add everything together. I tell my clients that if they can supply proof to the IRS in the unlikely event of an audit, then I’m okay with entering the numbers that they gave me. Or, ask the pharmacist or dentist for a yearly summary of what you paid. That’s the most accurate method of determining your expenditures. [Previous page](https://boards.straightdope.com/t/a-basic-question-about-income-tax-brackets/1010857.md?page=1)