I sold two used rifles at a local gun store for less than the market value.  I made no profit from the sale.  I got a 1099-MISC form in the mail today for the amount as "non employee compensation" Does that mean I have to pay taxes on that sale?

I sold two used rifles at a local gun store for less than the market value.  I made no profit from the sale.  I got a 1099-MISC form in the mail today for the amount as "non employee compensation" Does that mean I have to pay taxes on that sale?

Yes you do have to report the sales as income. If you have a business that you fill out a schedule c for you can just add in the income and offset the income with the cost of the guns. Even if it is at a loss. If you claim it as a hobby you cannot claim a loss on the income but you can offset the income with the cost of the guns up to the amount on your 1099. If you don't declare you business or hobby then you just pay taxes on the income. Of course I base this information on what I have done over the past years. The rules change every year so you need to find out what the current rules are for tax year 2016. Plus my memory has a tendency to leave me at times so it is a good idea to discuss this with a tax expert as well.

Bottom line is one way or another you do have to claim the income.

Welcome to the new way to track gun owners, This has been around since 2012.

Effective January 1, 2012, the national healthcare legislation passed by Congress contains tax provisions that will require gun dealers to report to the IRS their purchases of guns and any other goods valued over $600. This reporting will be required for purchases from either individuals or corporations. The new IRS provisions apply to all goods and services. IRS 1099 forms will have to be filed, reporting the purchase by the gun dealer. (This same IRS issue exists for gold and silver bullion dealers, coin dealers, knife dealers, car dealers or any other business that buys goods from a person.) It applies to all businesses who buy from "persons." If you sell your gun for over $600 to an FFL, the FFL must send in a 1099 on you which reports the sale by you to the IRS. It is not simply a "business to business" reporting requirement. (Which, even if it was, would still be bad for business.) … It is true that gun dealers already have to keep A&D books that require very specific information. However, the information is not centrally databased by the IRS. This new law creates a list of private gun sellers with the IRS. Also, FFL's who fail to file 1099's on folks who sold them guns and were paid over $600 may be caught during their license inspections by way of their A&D books. This will cause trouble for the gun dealer and tax trouble for the private seller...


And that folks is why most gun shops wont buy guns from you and work 100% on consignment.

Welcome to the new way to track gun owners, This has been around since 2012.

Effective January 1, 2012, the national healthcare legislation passed by Congress contains tax provisions that will require gun dealers to report to the IRS their purchases of guns and any other goods valued over $600. This reporting will be required for purchases from either individuals or corporations. The new IRS provisions apply to all goods and services. IRS 1099 forms will have to be filed, reporting the purchase by the gun dealer. (This same IRS issue exists for gold and silver bullion dealers, coin dealers, knife dealers, car dealers or any other business that buys goods from a person.) It applies to all businesses who buy from "persons." If you sell your gun for over $600 to an FFL, the FFL must send in a 1099 on you which reports the sale by you to the IRS. It is not simply a "business to business" reporting requirement. (Which, even if it was, would still be bad for business.) … It is true that gun dealers already have to keep A&D books that require very specific information. However, the information is not centrally databased by the IRS. This new law creates a list of private gun sellers with the IRS. Also, FFL's who fail to file 1099's on folks who sold them guns and were paid over $600 may be caught during their license inspections by way of their A&D books. This will cause trouble for the gun dealer and tax trouble for the private seller...


And that folks is why most gun shops wont buy guns from you and work 100% on consignment.

Side note:  1099s are issued for the CUMULATIVE TOTAL of goods recieved in a calendar year.  Simply selling 2 guns valued less than $600 each in two transactions won't avoid the 1099 if you use the same dealer.

There is a space to declare 1099 misc income on your return, however that may not necessarily mean you have to pay taxes on that income. I'm looking to see for when you do and don't have to pay income on 1099 misc income.

https://en.wikipedia.org/wiki/Form_1099-MISC


Edit: I checked the 1099 misc instructions and could not find any mention go firearm, gun, or weapon. No luck yet on whether it is taxable. If you sell a gun for a profit then it is income, but if you sell the gun for a loss over the original purchase price then you really aren't making any money. I believe that is why garage sale income isn't considered taxable income.

Taken from here:
http://dontmesswithtaxes.typepad.com/dont_mess_with_taxes/2009/05/are-garage-sale-proceeds-taxable.html

IRS says, "if you sold an item you owned for personal use, such as a car, refrigerator, furniture, stereo, jewelry, or silverware, your gain is taxable as a capital gain."
The key phrase here is "capital gain," and that's underscored by the example the IRS offers:
You sold a painting on an online auction website for $100. You bought the painting for $20 at a garage sale years ago. Report your $80 gain as a capital gain on Schedule D (Form 1040).
But most items sold at garage sales and the like don't bring in more than what you paid for them. In fact, in most cases your total take for all yard sale offerings will be far less than what you originally paid