Off-Topic StubHub Now Requiring SSN's due to new IRS Reg

[TheOriginalCane]

I don't understand how anyone (other than government functionaries, of course) can support this garbage.

My law school tax professor (the one who lectured like Ben Stein in Ferris Bueller's Day Off) loved making us read Code Section 61 out loud:

"...gross income means ALL income from WHATEVER source derived..."

 

[TheOriginalCane]

They should be looking at all of the wasteful spending and fraud and not small **** like this.

While I agree with the basic spirit of your statement, the IRS is not in charge of spending, Congress is.

 

[TheOriginalCane]

Back to my question though, if I get a 1099 for the income, I should be able to deduct the expense of buying the tickets?!? And what about taking a loss?

Yes and yes. If you use TurboTax, you may need to check a few boxes about being "actively involved" (i.e., NOT "passive" income) and "at risk" (you are not just someone financing a ticket business with non-recourse debt), but once you do that, you should be able to take the losses.

If you want to chat offline, I'm always happy to talk with you. I think I know what you're referring to, as you are not doing this to make a profit. I too have taken a few losses on "crappy games" and/or "last-minute friend cancellations".

We might need to talk to Dan about allocating "face value" to each game ticket in our season ticket purchases.

I'm sensing a big IRS refund in your future...

 

[JD08]

While I agree with the basic spirit of your statement, the IRS is not in charge of spending, Congress is.

If I recall correctly, the $600 requirement has technically been law since $600 was enough to buy 2000 gallons of gas. Since it benefits them due to inflation, don't expect that to change.

 

[TheOriginalCane]

Everybody loves the idea of taxing the rich. They just don't realize the politicians think everyone is rich.

Yeah, this has nothing to do with "the rich", as the IRS (after 20 years of complaints) still doesn't chase down K-1 reporting nearly as hard as they should (and the truly rich cheat a LOT more than people realize, particularly with pass-through entities).

This has everything to do with certain members of Congress who target certain businesses and industries that "don't contribute to them" enough. I'm certain that an influential member in Congress called someone in the IRS to "ask" why StubHub wasn't sending out 1099s.

People tend to forget, this will be an ENORMOUS recordkeeping and audit challenge for the IRS, which is already massively underfunded and understaffed (and I realize that some people will see that as a "good" thing).

Soooo...now...the IRS is going to have, literally, millions more 1099s from ticket broker websites, which they will then "try" to match to 1040s, and then they will have to sort through the OBVIOUS logic of "original purchase price" just to arrive at a number that is either (a) nominal taxable income, or (b) in the @SpikeUM example, a massive loss which actually REDUCES his massive taxable income, and the IRS actually LOSES money in the deal.

Brilliant.

I keep trying to walk people through this, but it's true. The IRS (hated though tax collectors have been since Biblical times) is not the true enemy, the corrupt Congress IS.

 

[TheOriginalCane]

If I recall correctly, the $600 requirement has technically been law since $600 was enough to buy 2000 gallons of gas. Since it benefits them due to inflation, don't expect that to change.

Correct. Hasn't been indexed or raised in...forever. Same thing with a lot of stuff (student loan interest deduction is the same $2,500 it's been since I graduated law school and started repaying my loans).

Bottom line, if you HAVE a threshhold (to weed out the need to file for every "de minimis" extra bit of income), then it AT LEAST needs to be revised every so often. I understand not changing it every year ("hey, guys, this year the threshhold is $616!"), but every 5 years or so would be a good time for revision.

Not an exaggeration, the IRS is being overwhelmed with TOO MUCH de minimis reporting. The publicly-traded company that I work for just got an IRS refund...FROM FOUR YEARS AGO. Sorry, we REQUESTED it four years ago, it probably arose from an even earlier fiscal year.

But, sure, "thank you, bitter Congressperson, who didn't get a campaign contribution from StubHub."

 

[JD08]

Correct. Hasn't been indexed or raised in...forever. Same thing with a lot of stuff (student loan interest deduction is the same $2,500 it's been since I graduated law school and started repaying my loans).

Bottom line, if you HAVE a threshhold (to weed out the need to file for every "de minimis" extra bit of income), then it AT LEAST needs to be revised every so often. I understand not changing it every year ("hey, guys, this year the threshhold is $616!"), but every 5 years or so would be a good time for revision.

Not an exaggeration, the IRS is being overwhelmed with TOO MUCH de minimis reporting. The publicly-traded company that I work for just got an IRS refund...FROM FOUR YEARS AGO. Sorry, we REQUESTED it four years ago, it probably arose from an even earlier fiscal year.

But, sure, "thank you, bitter Congressperson, who didn't get a campaign contribution from StubHub."

It's not just StubHub that's doing this. Other retailers like ebay and etsy did also.

 

[TheOriginalCane]

@TheOriginalCane @wspcane

So do you list all of your tickets on Stubhub/ticketmaster, and deduct the unsold from the income amount?

Now THAT is an interesting question. It's like the gambler who walks around the casino or track to pick up discarded losing tickets to claim extra "gambling losses".

I would say this. I wouldn't go super-far with it. But I think you could get by with the following:

20 tickets listed on StubHub
16 tickets sell, you get a 1099 for the revenue
LESS: face value allocation for the 20 tickets offered for sale

In all honesty, I HIGHLY DOUBT that the IRS will audit many "ticket sale" Schedule Cs. If anything, they'll just assess people who fail to include the 1009 income on a 1040.

But one would argue that the "unsold" tickets are no different from a grocer who buys grocery inventory, and some of it spoils and prevents an actual sale. It's still a valid deduction.

You paid the money for 20 tickets, it's not your fault that only 16 sold.

Now, if you only sold 2 tickets? I wouldn't go around trying to generate a huge writeoff on season tickets (after all, who can prove anyone actually used the tickets?).

In my heart-of-hearts, I might hope that this will discourage the "Golden Canes" who buy dozens of away-game tickets before any of us plebeians get the chance to purchase, but then I'd have to acknowledge that a smart Golden Cane would generate a tidy little deductible loss.

Short answer: Yes, Virginia, there is a Santa Claus and you can take a StubHub loss on your 1040.

 

[TheOriginalCane]

It's not just StubHub that's doing this. Other retailers like ebay and etsy did also.

Yeah, and I'm generalizing with the StubHub name.

But do the math. Most of the targets are e-commerce companies. In Silicon Valley. In California. Which votes (and contributes) disproportionately to one party.

And before someone tries to neg me for being P-analytical, IT'S ALL P-ANALYTICAL.

 

[TheOriginalCane]

It's not just StubHub that's doing this. Other retailers like ebay and etsy did also.

@Rellyrell just crapped his pants, realizing he's going to get a 1099 from StockX.

I keed, I keed...

 

[JD08]

Yeah, and I'm generalizing with the StubHub name.

But do the math. Most of the targets are e-commerce companies. In Silicon Valley. In California. Which votes (and contributes) disproportionately to one party.

And before someone tries to neg me for being P-analytical, IT'S ALL P-ANALYTICAL.

True, but the bulk of the burden falls on the little guy. That's where they're going to derive any additional revenue. Those big tech companies will just pass on the cost of compliance to their customers in the form of higher fees.

 

[SpikeUM]

Now THAT is an interesting question. It's like the gambler who walks around the casino or track to pick up discarded losing tickets to claim extra "gambling losses".

I would say this. I wouldn't go super-far with it. But I think you could get by with the following:

20 tickets listed on StubHub
16 tickets sell, you get a 1099 for the revenue
LESS: face value allocation for the 20 tickets offered for sale

In all honesty, I HIGHLY DOUBT that the IRS will audit many "ticket sale" Schedule Cs. If anything, they'll just assess people who fail to include the 1009 income on a 1040.

But one would argue that the "unsold" tickets are no different from a grocer who buys grocery inventory, and some of it spoils and prevents an actual sale. It's still a valid deduction.

You paid the money for 20 tickets, it's not your fault that only 16 sold.

Now, if you only sold 2 tickets? I wouldn't go around trying to generate a huge writeoff on season tickets (after all, who can prove anyone actually used the tickets?).

In my heart-of-hearts, I might hope that this will discourage the "Golden Canes" who buy dozens of away-game tickets before any of us plebeians get the chance to purchase, but then I'd have to acknowledge that a smart Golden Cane would generate a tidy little deductible loss.

Short answer: Yes, Virginia, there is a Santa Claus and you can take a StubHub loss on your 1040.

So what we should all do is list all of our tickets on Stubhub, especially for the weaker games that will be poorly attended, as proof that we "attempted to sell" any unused tickets.

 

[TheOriginalCane]

This also impacts selling on eBay and similar platforms. But, hey everyone here makes over $400,000 which was the threshold below which taxes would never be raised-or so it was promised!


Don't blame me, I kind of enjoyed reading mean tweets.

Taxes were not raised. Taxes were always due on your StubHub/eBay money. You just failed to self-report.

I mean, that's the honest answer, don't shoot the messenger.

eBay has existed for decades. eBay seller revenue has gone unreported for decades. I'm sure the timing involves some ****ed-off Congressman.

It's probably some bloated, cold-weather-hating, skinny-jean-wearing guy from Texas with a pathetic beard and an ugly wife and whose father killed JFK. But, hey, that's just a guess, even though he is just the kind of petty vengeful sneaky little ****e like Neidermeyer who would do such a thing.

 

[TheOriginalCane]

So what we should all do is list all of our tickets on Stubhub, especially for the weaker games that will be poorly attended, as proof that we "attempted to sell" any unused tickets.

It's a very good idea. You might also consider "dropping the price" on Saturdays to insure that even Bethune-Cookman tix sell for $20 apiece. Remember, the sales price ends up on the 1099, so the IRS cannot POSSIBLY argue that you didn't sell what you actually sold.

 

[TheOriginalCane]

True, but the bulk of the burden falls on the little guy. That's where they're going to derive any additional revenue. Those big tech companies will just pass on the cost of compliance to their customers in the form of higher fees.

You are correct. It is still a big burden for the tech companies (compliance), and some of this is going to (probably temporarily) drive some of the business away (to such fine locations as the CIS Ticket Board).

It all goes back to the "petty/vengeful" factor. Certain congresspersons pushed for this without any realistic expectation that this will result in any more money being raised to pay our massive bipartisan deficit spending.

This is purely a "fvck you" maneuver.



(as an aside, most of the big accounting firms didn't used to give a fvck about the penny ante tax services like payroll, 1099 reporting, sales tax, property tax, etc., that was the province of the "smaller firms", but these days the compliance burdens on big companies are so substantial that there is a growing sector within even the biggest accounting firms for "non-income taxes")

 

[JD08]

Taxes were not raised. Taxes were always due on your StubHub/eBay money. You just failed to self-report.

I mean, that's the honest answer, don't shoot the messenger.

eBay has existed for decades. eBay seller revenue has gone unreported for decades. I'm sure the timing involves some ****ed-off Congressman.

It's probably some bloated, cold-weather-hating, skinny-jean-wearing guy from Texas with a pathetic beard and an ugly wife and whose father killed JFK. But, hey, that's just a guess, even though he is just the kind of petty vengeful sneaky little ****e like Neidermeyer who would do such a thing.

I'm afraid that theory is incorrect. The new regulations are due to section 9674 of the American Rescue Plan Act, signed into law in March 2021. It passed on a straight party line in both houses.

"The new requirement is in Section 9674 of the federal bill and dramatically lowers the annual 1099-K reporting threshold from $20,000 and 200 transactions to just $600 and eliminates the transaction minimum."

Federal Stimulus Bill Has Huge Tax Change For Gig Workers

Tucked inside the American Rescue Act is a tax change that has big implications for tax revenue and the gig economy.

www.forbes.com

 

[TheOriginalCane]

I'm afraid that theory is incorrect. The new regulations are due to section 9674 of the American Rescue Plan Act, signed into law in March 2021. It passed on a straight party line in both houses.

"The new requirement is in Section 9674 of the federal bill and dramatically lowers the annual 1099-K reporting threshold from $20,000 and 200 transactions to just $600 and eliminates the transaction minimum."

Federal Stimulus Bill Has Huge Tax Change For Gig Workers

Tucked inside the American Rescue Act is a tax change that has big implications for tax revenue and the gig economy.

www.forbes.com

Actually, I'm still correct, though I admit to being wrong about the 1099-MISC vs. 1099-K distinction. The new rule now equates the threshholds for both the 1099-MISC and 1099-K (and it should be obvious "why", as the 1099-K was never intended to be used this way).

You have ALWAYS owed tax on your eBay earnings. Your StubHub earnings. Your StockX earnings. ALWAYS.

You were ALWAYS supposed to self-report that income. ALWAYS.

HOWEVER. The 1099-K form is something that covers "Payment Card and Third Party Network Transactions". It arose after 9/11, in the "Patriot Act frenzy", when we became OBSESSED with those Muslim convenience store clerks who had jars to collect change and send the money back to Hezbollah, and when we decided to slaughter a mosquito with a bazooka by requiring ALL KINDS of extra banking and financial information and regulation. So I'll revise my original statements to FIRST blame Osama bin Laden AND THEN blame the corrupt Congress second.

If you go back to the Forms 1120 (corporate income tax) and 1065 (partnership income tax) from the late-2000s/early 2010s, the frenzy even became so substantial that there was a SEPARATE REVENUE LINE on the income tax returns for revenue reported on a 1099-K. Meaning, even though big corporations with massive bank accounts just rammed all the income into our operating accounts, we had to search our January-February mailboxes for some random 1099-K forms so that we could BACK OUT the credit card revenue from our "regular revenue" line, just so we could make the IRS happy. I mean, ultimately some good stuff came out of this (I guess). I was working for Speedway/NASCAR at the time, and we were doing a TERRIBLE job of filling out our W9 forms, so I had BOXES of unnecessary 1099s every new year because nobody before my arrival knew how to fill out a W9 for an LLC owned by a publicly-traded C-corp.

But, hey, I digress. If you want true honesty, THE REASON YOU DON'T GET A 1099-MISC from StubHub/eBay is because you didn't perform any services for them. And, technically, StubHub/eBay actually performed broker services FOR YOU (I mean, if you want to get super-technical, YOU should be sending StubHub a 1099-MISC if they charged YOU more than $600 in brokerage fees, except for the fact that StubHub is a C-corp and you don't have to 1099 a C-corp). Thus, while the 1099-K arose as a sort of Patriot Act era form to track credit card transactions, it has recently become the de facto way of forcing "brokers" and "middle men" to 1099 you on gig-economy-type transactions for which a 1099-MISC would seem to be the "normal" way of reporting income.

And, for the record, the 1099-K threshhold was RE-lowered. When the 1099-K first came out, you were getting these random 1099-Ks from credit card processors even for a small amount of transactions. I can tell you, my brother's company (at the time) predominantly accepted payment via cash or check, and didn't have that many credit card transactions, and he still got multiple 1099-Ks that would have (until recently) fallen below the threshhold. Today when I do his returns, I actually expect to see 1099-Ks, because he accepts a lot more credit card payments.

If it's not already clear, the corporate world FREAKED THE FVCK OUT due to the initial 1099-K compliance costs, which is why it almost disappeared (it's gone from the 1120/1065 as a separate line-item). But now, like the cold hand of death rising from the grave, it's byke, baby. And it is now being used for some petty/vengeful stuff against gig-economy companies that was never contemplated during our Patriot Act orgy of the 2000s.

But, again, to sum up...all of us...should have ALWAYS (technically)...self-reported that income. Sorry that the threshhold was lowered. It's gonna suck for us, and it's gonna suck for the corps. But we "should have" always been self-reporting that income.

And I hate this crap. I've always done a handful of 1040s on the side, for free, for friends and family. The 1040s are getting out of hand now. INSANE.

 

[JD08]

Actually, I'm still correct, though I admit to being wrong about the 1099-MISC vs. 1099-K distinction.

You have ALWAYS owed tax on your eBay earnings. Your StubHub earnings. Your StockX earnings. ALWAYS.

You were ALWAYS supposed to self-report that income. ALWAYS.

HOWEVER. The 1099-K form is something that covers "Payment Card and Third Party Network Transactions". It arose after 9/11, in the "Patriot Act frenzy", when we became OBSESSED with those Muslim convenience store clerks who had jars to collect change and send the money back to Hezbollah, and when we decided to slaughter a mosquito with a bazooka by requiring ALL KINDS of extra banking and financial information and regulation. So I'll revise my original statements to FIRST blame Osama bin Laden AND THEN blame the corrupt Congress second.

If you go back to the Forms 1120 (corporate income tax) and 1065 (partnership income tax) from the late-2000s/early 2010s, the frenzy even became so substantial that there was a SEPARATE REVENUE LINE on the income tax returns for revenue reported on a 1099-K. Meaning, even though big corporations with massive bank accounts just rammed all the income into our operating accounts, we had to search our January-February mailboxes for some random 1099-K forms so that we could BACK OUT the credit card revenue from our "regular revenue" line, just so we could make the IRS happy. I mean, ultimately some good stuff came out of this (I guess). I was working for Speedway/NASCAR at the time, and we were doing a TERRIBLE job of filling out our W9 forms, so I had BOXES of unnecessary 1099s every new year because nobody before my arrival knew how to fill out a W9 for an LLC owned by a publicly-traded C-corp.

But, hey, I digress. If you want true honesty, THE REASON YOU DON'T GET A 1099-MISC from StubHub/eBay is because you didn't perform any services for them. And, technically, StubHub/eBay actually performed broker services FOR YOU (I mean, if you want to get super-technical, YOU should be sending StubHub a 1099-MISC if they charged YOU more than $600 in brokerage fees, except for the fact that StubHub is a C-corp and you don't have to 1099 a C-corp). Thus, while the 1099-K arose as a sort of Patriot Act era form to track credit card transactions, it has recently become the de facto way of forcing "brokers" and "middle men" to 1099 you on gig-economy-type transactions for which a 1099-MISC would seem to be the "normal" way of reporting income.

And, for the record, the 1099-K threshhold was RE-lowered. When the 1099-K first came out, you were getting these random 1099-Ks from credit card processors even for a small amount of transactions. I can tell you, my brother's company (at the time) predominantly accepted payment via cash or check, and didn't have that many credit card transactions, and he still got multiple 1099-Ks that would have (until recently) fallen below the threshhold. Today when I do his returns, I actually expect to see 1099-Ks, because he accepts a lot more credit card payments.

If it's not already clear, the corporate world FREAKED THE FVCK OUT due to the initial 1099-K compliance costs, which is why it almost disappeared (it's gone from the 1120/1065 as a separate line-item). But now, like the cold hand of death rising from the grave, it's byke, baby. And it is now being used for some petty/vengeful stuff against gig-economy companies that was never contemplated during our Patriot Act orgy of the 2000s.

But, again, to sum up...all of us...should have ALWAYS (technically)...self-reported that income. Sorry that the threshhold was lowered. It's gonna suck for us, and it's gonna suck for the corps. But we "should have" always been self-reporting that income.

And I hate this crap. I've always done a handful of 1040s on the side, for free, for friends and family. The 1040s are getting out of hand now. INSANE.

That's why I said it goes back to when $600 bought 2000 gallons of gas. I didn't calculate it exactly, but it was in the 50's. I know I had to report as an independent contractor in the 80's and I got a 1099-MISC from the company I did work for.

So the new requirement is to squeeze a few bucks out of Uber drivers and housewives selling macrame plant hangers on Etsy.

 

[TheOriginalCane]

That's why I said it goes back to when $600 bought 2000 gallons of gas. I didn't calculate it exactly, but it was in the 50's. I know I had to report as an independent contractor in the 80's and I got a 1099-MISC from the company I did work for.

So the new requirement is to squeeze a few bucks out of Uber drivers and housewives selling macrame plant hangers on Etsy.

Yes. Sorry for the lengthy reply earlier, my starting point was @SpikeUM's comments about "1099" generally. When I realized that they are using the K instead of the MISC, that's when the mental ****e hit the fan.

The MISC has been around for "forever". The MISC is what people "expect" to get.

The K has only been around since the Patriot Act. The K is going to blow some minds. Individuals are going to be getting the K thinking "what in the ACTUAL fvck is this?".

And to the extent that Congress changed the threshhold...I think that I do understand it, FOR UBER AND LYFT drivers and whatnot (not sure if you are watching the HBO series on Uber, it's fvckin' great). But, again, this is a huge net that is catching way more than just Uber/Lyft drivers.

But for other situations where there is no "labor" (selling tix on StubHub), I think it is highly questionable.

Think about it in a practical sense. Filling out Schedule C would make perfect sense for an Uber driver. You get X revenue from credit card transactions with Uber...and you have legit expenses (auto, supplies, tolls, etc.). MAKES SENSE.

Doesn't make as much sense for StubHub. All you have is "original cost of tix, plus fees". Who needs a complicated Schedule C for that? And you could have effectively handled MOST of the "almost a full-time job" gig economy by setting higher-than-$600 threshholds, while not ensnaring the "but I've got a couple of extra tickets to unload" crowd.

Unintended consequences. When the Clinton administration tried to put the brakes on "executive compensation" by setting the $1M cash limit, that's when you saw the absolute EXPLOSION of stock-based comp, which now accounts for the vast-vast majority of overall executive compensation.

This is going to be a paperwork disaster. I wouldn't be surprised if the IRS asks for the creation of a new 1099 form and/or asks for some changes to the threshhold rules for the 1099-K.

 

[TheOriginalCane]

Oh, and for the record...you want some more bad news?

There is nothing in the current law that prevents these EXACT SAME RUL:ES from applying to Venmo and CashApp.

Are those companies handling credit/debit card transactions for you? And then putting the money in your account?

Can't wait until people get 1099-Ks from Venmo for paying each other back for ****e. ****, I put Florida/Sunbiz corporate entity renewals on my credit card for my brother and another friend of mine, and then they Venmo me the reimbursments. I'm pretty much fvcked here, and it's not even a business, it's a personal favor that I do for people I know.