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Comment by jedberg | Hacker News Reader

Technically you've already depreciated the assets to $0, so any money you make is profit, minus the cost of marketing the garage sale.

But I doubt most people claim their garage sale income.

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This is not my understanding of how the tax code works. If the garage sale is not part of a business and you are selling an item you used for less than you paid for it, you generally have no reportable income. Everything I could find online seems to agree, [1] for example.

Do you have any sources?

1. https://www.findlaw.com/tax/federal-taxes/do-you-need-to-rep...

The link you posted explains the difference between business income and hobby income. It just depends on how often you have a garage sale. Like everything with the IRS, it's complicated, and also they usually don't care with small amounts anyway.

Agreed. I think the parent is confusing it with the case where you buy an item for your business, depreciate it to zero (thus deducting its full value as an expense), and then later find out you can salvage some value on resale. In that case, you would have reportable/taxable income from that resale, which you can think of as “correcting the overdeduction for depreciation.”

Unless you are selling a boat or a car at a garage sale you probably can't calculate depreciation. Typically only capital items can depreciate.

The IRS has a publication for that! https://www.irs.gov/pub/irs-pdf/p946.pdf

You can pretty much depreciate any physical object that wears out over time.

I want to see the guy who lists his Bic pens that he lets customers use to sign contracts. Yes, it has a limited lifetime. Yes it will last over a year. Yes you'll be audited if you claim depreciation on them.

You would probably just do a Section 179 on the entire bag in the year you purchased it, which would be totally legit.

Only ones that you use for business or income. Personal property used for non-buisness or income producing activities is not depreciable.

> To be depreciable, the property must meet all the fol-lowing requirements... It must be used in your business or income-producing activity

If you're selling at a garage sale it just became part of your income producing activity.

Even if you take this viewpoint, it still means you can't depreciate the item, because it wasn't part of your income producing activity until just that moment, which means the depreciation is zero, since depreciation can only be taken based on the time the item was used for your income producing activity.

That’s not what that means. That phrase is referring to you using an item as a tool to generate income. You could depreciate a desk that you work at, but not the one that your kids do their homework on. (Because homework is not an income generating activity)

You can, but why would you? Buying into the accounting-uber-alles paradigm only makes sense for business that can actually benefit by deducting the depreciation. Individual taxpayers get no such benefit, and therefore have no need to depreciate items. And without depreciation, yard sales consist chiefly of capital losses.

If you didn’t claim depreciation previously then why is it depreciated?

The IRS says that the item depreciates whether you claim it or not. It is in your best interest to claim it, because when you sell the item, they assume the depreciated value.

This comes up when you own rental houses. If you sell the house later, they reduce the base price by the assumed depreciation of the structure, whether you took the deduction or not.

Tax code deducts from your basis in an item the "depreciation allowed or allowable".

For personal property [such as typically sold in a garage sale], there is no depreciation allowed or allowable, so your basis in the good is whatever you paid for it.

> This comes up when you own rental houses.

Yes, this is true, but there is a massive difference between a real estate investment, and a garage sale.

Time depreciates.

Ok, maybe the US tax system is very different from the Canadian tax system, but I've never heard of someone claiming depreciation on personal use of children's toys.

why would you depreciate the assets to $0 when there's very good evidence that the assets do in fact have positive value?

in many countries assets value depreciate at a regualtory predefined annual rate till it reaches 0.

Coming from a country where that's not how it works it sounds quite strange. Does it apply to houses? Gold? Antiques?

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