This isn’t correct. You’re taxed on the net profit only. So it’s not as bad as you make out. Or maybe it’s worse? Let’s do the math:maverick10126 wrote: ↑Fri Jul 16, 2021 8:40 pmI think ebay fees are something like 12% right? Looking at the capital gains tax calculator you posted I'm looking at 24.3% in capital gains taxes. So combine that with the 12% ebay fees and we are looking at 36% taxed on your sale price. For the sake of simplicity let's just guess shipping is $40. I'm seeing a break even of ~$726 on this thing....hmmm.

I might have to try to sell locally or reconsider my second purchase.

Purchase galactus for $400 plus tax = $430 in most states.

You have an eBay sale price of $X as breakeven, let’s solve for X

X * .87 is your take home after eBay fees of about 13%

You have to pay shipping, you think $40 will cover it, I think it will be more but let’s say $40.

Your net profit is X* 0.87 - $40

You will pay capital gains tax only on this net profit. It’s likely less depending on your tax bracket but let’s say 24%.

So your federal tax owed is (X * 0.87 - 40) *0.24

That means your take home after federal tax is (X*0.87 - 40) * 0.76, which is just saying 76% of your net profit after eBay fees and shipping.

Breakeven is where this equals $430 which is what you paid for the galactus after tax.

Solve for X:

(x*0.87 - 40) * .76 = 430

x*0.87 - 40 = 566

X* 0.87 = 606

X= $697

Now keep in mind the buyer has to pay sales tax too, even though you already paid sales tax. So their final price is closer to $760. People forget this, that the total price plus sales tax is what the buyer will pay.

So doesn’t matter if your break even point is listing the auction at ~$700, the buyer has to pay $760.

We’re also assuming no state income tax, so that’s about another 5% for most folks. Since the 1099 doesn’t just impact federal tax but state.

So yeah, the $400 galactus becomes $760 as the cost to the buyer on eBay just for the seller to break even.

And what most sellers don’t consider is potential for fraud or theft. So if you sell 100 galactus on eBay, maybe 1 buyer will file a fraudulent “item not as described” claim and ship you back a box of rocks.

Now you’re out the $430 you paid for the galactus plus the $40 you spent to ship it. And the risk of this has to be factored into your breakeven price.

So maybe a ballpark break even is the buyer has to pay $800 after tax on eBay for the seller to just break even.

And we’re ignoring the fact that the seller had an opportunity cost of the $430 for the year that it took for hasbro to make it. Could have put that in the stock market, maybe make $40 on that. And there’s a non-zero chance hasbro doesn’t make good on these and you’re out the $430 completely. Your credit card only covers you for a few months. If 10 months goes by and hasbro goes out of business, you’re out the whole $430.

Maybe only a 1 in 10k chance of that happening but it’s a risk that needs to be factored in.

And there’s time associated with packing the galactus for shipping, and going to the post office or UPS/FedEx is more likely since they have better rates for large packages.

So assuming you compensated for risks, opportunity cost of what you could have done with the money otherwise for the year. And paid yourself minimum wage for time involved, the break even point to the buyer is closer to $850 total price off eBay after sales tax.

So as the seller you say you want to make at least a reasonable amount for your effort. Let’s say $100 profit. Now the final price becomes $1k to the buyer since to make $100 profit, you have to raise the price by much more than $100 to account for the 13% eBay fees, 24% to 29% state plus federal tax, and increased sales tax the buyer has to pay on this amount.

So if the buyer pays $1k out of pocket for a galactus next year, then the seller makes $100 profit. Inspite of it being a nearly $600 up charge from retail.

Where does the $500 go? To eBay and to the federal government and to the state government and to UPS/fedex.

So you keep $100 out of the $600 price increase. But you assume 100% of the risk. If the buyer files a fraud claim, then UPS and Uncle Sam and eBay aren’t chipping in anything on your behalf.

So why even bother? Seems like a terrible deal to enrich other people, taking in massive risk to yourself in the process. Since you’re likely to only do this for one or two units, and if a fraud claim occurs to you, it doesn’t matter that it only happens 1 out of 100 or 1 out of 500 times, it happened to 100% of your single transaction.

And you’re out $470 because the galactus cost $430 and you had a $40 opportunity cost of not putting it in the stock market.

This of course, all assumes there’s a market for these at $1k on eBay. Perhaps the market will only bear $700 and you take a $150 loss.

You take 100% of the risk for 18% of the gain. But logistics companies, online marketplace platforms, and government entities take 82% of the gain.

Screw that.