One of the questions I hear most often from eBay sellers is how
to value inventory for purposes of preparing their tax return,
especially if it was purchased at a garage sale, or if you used
the item before you sold it on eBay.

For new items that you purchase for inventory, make sure you
keep all of your receipts. In addition, you might want to keep
a spreadsheet with a description of the item purchased, date,
and the purchase price, including shipping costs.

For items that you purchase from a garage sale or thrift store,
you may not get an itemized receipt from the seller. So, I would
encourage you to write up a receipt (carry a small notepad with
you while garage sale shopping or thrift store shopping), while
you are still at the garage sale or thrift store. Record a
description of the items purchased, date, amount paid, and the
location. Ask the seller to sign the receipt you wrote up.

The hardest inventory to value is inventory that you used for
personal use before you sold it on eBay, such as clothes you
bought for your children that they have outgrown. Before you
sell these items on eBay, you should research similar items to
see what they have sold for on eBay or similar auctions. For
tax purposes, the value of your inventory is the average
selling price on the similar items you researched. Print out
your research, and be sure to enter the average selling price
on your inventory spreadsheet, in case the IRS comes knocking.

If you clean out your garage and list the items on eBay for
sale, you cannot claim a loss on their sale. The amount used as
your cost basis in inventory converted from nonbusiness use can
be no greater than its fair market value at their time of
conversion. You also must be able to prove the property’s cost
or you may be denied any basis (you’ll have to report the
entire proceeds as gain).

The most important thing to remember is to keep good documents.
If the IRS audits you and you can't provide documents showing
how much you paid for an item, they may claim that your cost
basis is $0, which means you will pay tax on 100% of the sale
price instead of just paying tax on the profit.

To your financial success,
Kristine McKinley


About The Author: Kristine McKinley is a CPA and Certified
Financial Planner®. For more information on eBay taxes, sign up
for our free special report 'Tax Tips for eBay Sellers'.
http://beaconfinancialtips.typepad.com/ebaytaxtips/2007/02/free_special_re.html
 

Few things are more frustrating than visiting an eBay store and
be presented only with a mile long list of items that one has to
scroll through. It is very difficult to find items in a long
list if you are looking for a particular type or genre of item.


What many eBay store owners do not seem to realize is that eBay
buyers are not desperate to find and buy their particular items.
There are so many auctions going on at any particular point in
time, that the browser Back button is probably the most used
function when browsing or searching for items.

The default sort order for the listing display in an eBay store
is listing end time, with those auctions ending soonest
displayed at the top. There are other listing sort orders
available as well, but unfortunately none of those are
necessarily very well suited for a store inventory display.

The primary means at your disposal to make it easier for an
eBay buyer to find what he or she is looking for are the
categories.

Think of the categories as virtual aisles in your store. You
need to use those virtual aisles in your store to guide the
buyer through the merchandise on offer.

The easier you make it for the buyer to find the desired item,
the better the chances that the person will buy your item and
not someone else's.

You know your merchandise best and know how you can slice and
dice the types of merchandise into meaningful categories.
However, do not limit a particular item to only one category.
With an eBay store, you can list an item in two different store
categories free of charge. Make full use of it.

An eBay buyer might miss an item while browsing one category
but notice it in the second category. This is synonymous to
putting cans of the same cream in both the dairy section and in
the baking section of a groceries store.

You cannot predict all the uses that a buyer will have in mind
for your merchandise, but you can at least cover off the most
obvious ones. When a buyer visits your eBay store and sees the
categories, they will first think of what they want to use the
item for and see if there is a matching category.

You can have up to 300 different categories in your eBay store.
Make full use of it to help your buyer easily find the item (or
even similar item) they want to buy.

Generally, a person visits your store wanting to buy something,
i.e., with money in hand. It is a great loss when they leave
your store because they couldn't find your item that is hidden
amongst tens or hundreds of other items.


About The Author: Jason Griffith writes eBay Store reviews for
http://BestAuctionStores.com
(http://www.bestauctionstores.com), a site dedicated to
providing eBay Buyers with the ability to review and rate eBay
stores.