Selling Michigan athletics tx thru StuHub-new Regulation
As most of you know know Stub-Hub is the officially recognized ticket reseller for Michigan Athletics. As a season ticket holder (x two), who lives outstate, I have sold individual game tickets to games I cannot attend for a number of years. The fees are fairly high, but there has been a significant convenience attached and the University has endorsed Stub Hub.
I recently received a request from StubHub to furnish a tax ID (SSN for me) because of a new IRS rule that went into effect on 1-1-2022 which requires StubHub to issue a 1099 for any seller who sells more than $600 in tickets in a calendar year. They advised that they will be reporting the GROSS amount to the IRS and NOT the net I receive after stub hub fees are deducted. They then add: "talk to your tax advisor if you have questions."
If I exceed the $600 (which seems likely considering this will be most of the basketball season and all of football season), I now must account for this, even if I don't make a $1 in profit on the sales, when one takes into account the stub hub charges, and my cost of the tickets to begin with (which really also includes the seat license fees).
If I needed any more disincentive to remain a season ticket holder, I think I just received one.
January 5th, 2022 at 10:33 AM ^
F the IRS
January 5th, 2022 at 12:59 PM ^
No, F the Congress who writes the tax codes.
January 5th, 2022 at 1:06 PM ^
I didn't say not to F them.
January 5th, 2022 at 1:10 PM ^
lol, fair enough.
January 5th, 2022 at 10:41 AM ^
That was a nice little present from our Government in the March $1.9T stimulus package. They are doing the same thing to all online reselling sites such as eBay, FB Marketplace, Mercari, etc. Same deal, these sites will send a 1099 reporting your gross revenues (not your net) totaling over $600. This should be a really good deal for the tax professionals. Make sure you keep good records. So much for taxing the rich...gotta go after the little guy to pay for all this stuff.
January 5th, 2022 at 10:30 PM ^
"So much for taxing the rich..."
One party wouldn't go along with taxing the rich. Well, one party and a couple of 'moderate' (read: represent one party while voting for the other) Senators...
January 5th, 2022 at 10:42 AM ^
Not a CPA but I would assume there is some form to file that would account for the cost basis of the item sold
January 5th, 2022 at 10:49 AM ^
No big deal, just a little extra red tape? As the OP stated, another reason to avoid buying season tickets.
January 5th, 2022 at 10:43 AM ^
Might want to speak to a tax advisor, but this may be a good thing. You now have a business that allows you to deduct the ticket's original price plus the StubHub fees. Depending on how often you turn a profit, you may be able to claim a loss on those tickets. Many other things open up if they plan on treating you as a business.
January 5th, 2022 at 10:46 AM ^
i guess we can all consider next year's UCONN football tickets as a tax shelter.
January 5th, 2022 at 12:20 PM ^
Agreed. This MIGHT be a good thing for those of us who go to the big games and sell the lesser games at below face value. I have a rental property that loses money every year and it certainly helps the taxes.
January 5th, 2022 at 12:28 PM ^
Seems like it is a little like starting a home business. If so, there may be many other tax deductions available (if you itemize, of course). Talk to your tax professional!
January 5th, 2022 at 10:46 AM ^
You can deduct the cost of the tickets and the StubHub fees on Schedule D, the same as you would on a stock investment. If you are creative or have a creative tax accountant, you could deduct additional expenses that you can associate with your investment in the season tickets.
January 5th, 2022 at 11:00 AM ^
Stock Investment- what's that? I was kinda hoping I'd get through my life without ever going the "creative tax accountant" route.
I kid- I do appreciate the sincere advice.
January 5th, 2022 at 11:00 AM ^
Most people don't itemize and just take the standard deduction.
The amount of money in play here is small. Does not make sense to hire a tax accountant to do this.
But...if you already are paying a tax accountant because your taxes are not so simple (own a business or whatever) AND already itemize,,,,yeah, you are right this would be the way to go.
January 5th, 2022 at 11:35 AM ^
1) Schedule D is for the sale of capital assets. Unless you purchased these season tickets strictly as an investment, You should be using Schedule C to deduct your cost/expenses. Your annual seat donation is not a deductible cost.
2) As these new 1099 requirements will affect thousands(millions?) of individuals, expect the IRS to come out with some guidance as to the reporting of this type of income. They may introduce a new schedule to attached to your 1040.
3) My guess is that any net losses will not be allowed, but again, I'd wait to hear what the IRS guidance says.
P.S.- yes, I'm an Accountant
January 5th, 2022 at 12:06 PM ^
To point #1 - “your annual seat donation is not a deductible cost”
I think that was true as a charitable deduction when they changed the tax laws now that I have to claim income from ticket sales, why shouldn’t I be able to offset that with the seat donation? There is no way I could have bought the tickets I sold without making the MANDATORY “donation”
it seems to me the “donation” is a business expense
We can all thank our congressional representatives for another federal present
January 5th, 2022 at 12:45 PM ^
I agree that it is clearly a part of the cost of the tickets (just like 20% of it was back when we could deduct the other 80% as a "charitable donation"). How could it not be?
January 5th, 2022 at 12:39 PM ^
JoeFink, question for you as an accountant. I get that it's always case by case, but just generally speaking, do you think that tax accountants are worth the price? (I would be curious to hear if others had an opinion or other experience on this as well.) I had an experience about 20 years ago going to an HR Block and having their "tax accountant" ask me some questions and look up some answers (while I'm sitting there) and complete my tax return. I thought: I could do this myself.
I itemize. I am a W2 employee. I don't own anything fancy such as a business or horses, just some standard stocks and funds. Most in my bracket, let's call it, seem to use a tax accountant. The other bit of info I'll add as a partial explanation for my averseness to using a tax accountant is that I work in a field similar to accounting but not accounting, and I see malpractice committed on a weekly if not daily basis. I don't feel like forking over a couple of grand for someone to do a horrific job that leads to an audit or having to review that person's work.
Obviously, tax season is coming up so hopefully a relevant discussion for some others as well.
January 5th, 2022 at 12:56 PM ^
1) Don't go to H&R Block. If you absolutely have to, call ahead and make an appointment with an Enrolled Agent with AT LEAST 5 years experience.
2) If your tax preparer is only putting numbers into a computer, you need a new preparer. Tax planning is part of the job.
3) Is a good preparer worth the money? Obviously, I'm biased, but I save my clients money regularly, often much more than I charge them in fees, so my answer is ABSOLUTELY.
January 5th, 2022 at 1:10 PM ^
I think 2 is the key point here, the value is added based on what advice comes before and after the return is prepared.
January 5th, 2022 at 4:54 PM ^
Thank you both. This is helpful.
January 5th, 2022 at 1:03 PM ^
As a CPA, most of your front line HR Block employees don't deserve to be called 'tax accountants' they are data entry clerks that have to pass anything remotely complex up the food chain. They do exactly what you do when you use a tax software.
Finding a regional CPA firm to do your taxes will involve a minimum fee of between $750-$1,000 (going way up from there) and if this is the only complex area I would avoid that. If you go super local and small, you might shave of a tiny bit of cost, but you lose a ton of quality control backstops.
Its expensive, but what you should get is probably two or three professional staff reviewing your return and at least one of those has a decade plus of experience.
January 5th, 2022 at 10:52 AM ^
Let's Go Brxxxxx BLUE !!!
[Edited @ 12 noon to make the post unifying rather than divisive. -rob f]
January 5th, 2022 at 11:02 AM ^
f*** yeah.
EDITED to kumbaya-it-up with Rob ;-)
January 5th, 2022 at 11:04 AM ^
Enough of that already.
⚠️ Warning issued for injecting political crap into the discussion.
January 5th, 2022 at 11:33 AM ^
At this point I'd say an unprompted political shitpost such as that shouldn't even get the benefit of a warning. Just ban 'em and move on. They can shell out $5 if they want to come back.
January 5th, 2022 at 11:42 AM ^
Why not just ban him or at least remove the comment?
January 5th, 2022 at 11:55 AM ^
I'll edit his post.
Sometimes it serves us better, though, to leave things up on the MGoBoard and use them as examples, so as to dissuade others who might be thinking about posting garbage.
January 5th, 2022 at 10:57 AM ^
It's what many of you voted for!
January 5th, 2022 at 4:09 PM ^
Welp!
I guess there just aren't any Led Zeppelin Physical Graffiti fans on this thread.
January 5th, 2022 at 11:27 AM ^
The University doesn't get to decide what you claim on your taxes. You should only claim your net. Or maybe buy some season tickets to basketball and do some tax loss harvesting.
January 5th, 2022 at 11:28 AM ^
I'm not a tax advisor but I do have important advise.. Don't ever sell to OSU or MSU fans!
January 5th, 2022 at 11:34 AM ^
I actually think this might be a good thing. Yes, a pain in the ass for everyone who sells >$600 in tickets a year, but most won't sell that amount. Who this really hurts are all the people who hoard tickets and artificially drive up prices by buying through bots on the internet. Now they are going to be forced to report and pay taxes on their income, just like the rest of us. Furthermore, this will give the government a clear eye into the monopolistic policies stubhub has and the insane fees they charge which anyone wanting to buy a ticket now has to deal with (even when trying to buy tickets direct from a venue). I just bought 2 Foo fighter tickets direct from the venue and still had to pay $100 in fees ~50% the face value of tickets, just ridiculous.
January 5th, 2022 at 11:47 AM ^
i'm sorry, i gotta say that it seems...really weird to me, to decide to not get season tickets because of a new tax regulation, but that's just me. and when i say "that's just me," it's honestly not meant to be snarky. it just wouldn't enter into the equation for me.
January 5th, 2022 at 11:59 AM ^
If you can't attend every game and sell your ticket/s online, the independent fees that don't go in the seller's pocket will result in an obligation to address it with the IRS. For most people, that sucks. It would make more sense if the obligation only existed if the value of the ticket alone is what triggered the reporting. And obviously this will result in even more fees charged by the ticket companies so that they can comply with the new rule which will likely increase the likelihood that even more ticket sales trigger a filing. The alternative is watching at home, which clearly a ton of people do.
January 5th, 2022 at 12:01 PM ^
There are many reasons that one might decide not to retain season tickets, which have been discussed in a multitude of threads here. I described this as an additional disincentive.
I have a belief that any individual who has no complicated finances should be able to complete their tax return in a short amount of time and by reading short, simple directions. I think of my own parents who were of modest means and with no investments other than their home, who didn't feel comfortable doing their taxes without help. I'm fine with tax accountants who can use their hard earned training to be compensated by those who choose a more complicated financial life. I just didn't anticipate that my choosing to buy season tickets and recoup some of my costs by selling tickets to games I cannot attend, placed me in that category.
I can and will manage. If you find my attitude weird, so be it.
January 5th, 2022 at 12:12 PM ^
i really didn't mean it to be a shot, but i see that it came across that way. i apologize.
i appreciate and generally agree with your sentiments, for what it's worth - the whole notion of trying to capture the "income" (note ironic quotation marks) you gain from selling your surplus tickets through the secondary market, even as that market generates obscene profits based almost entirely on the fees they charge to use it in the first place...well, it's infuriating. you shouldn't need an accountant to help you decide to sell your freaking UConn tickets, right?
EDIT to add - i meant to point out your note lower in the thread, too...$600 is a crazy-low threshold. that it's less than the cost of a single season football ticket (and license fees) just makes it more infuriating.
again, my apologies.
January 5th, 2022 at 12:49 PM ^
Thanks.
January 5th, 2022 at 11:59 AM ^
What is going to be a total screw job is calculating the original "cost" of the tickets. I bet you will not get to factor in the PSD, so if you pay an $800 PSD, even if you sell the tickets to break even with the PSD, that will be considered an $800 profit and you will have to pay taxes on it.
I get what is going on--a ton of people are now running a side business scalping tickets and they want their tax revenue. But it's going to suck for those of us just looking to sell a few tickets.
January 5th, 2022 at 12:11 PM ^
I get that too. I just think that $600 is too low of a threshold. When I first got the email from StubHub it referenced sellers with annual sales of more than $20,000. I thought that's odd, I've never hit even $1,000, let alone $20,000, but when I went to the site, it said that the threshold is $600. Perhaps some number between the 2 figures would better work to screen the huge re-sellers from the everyday fans?
January 5th, 2022 at 12:28 PM ^
$600 is the standard requirement for any business/organization to submit a 1099-Misc. I've been self-employed for many years in a variety of functions and any gig I take that pays more than $600 comes with a 1099-Misc and mandatory reporting of that income.
Essentially, StubHub as a marketplace used primarily by businesses selling tickets affects all who use the service.
January 5th, 2022 at 12:25 PM ^
It's odd that the threshold is only $600. You would think they could have used something in the $2,500-$5,000 range to capture the side business market. Even if those businesses used multiple sites, it's still a low figure in the context of an operating business.
January 5th, 2022 at 12:16 PM ^
You should consult with your own tax people, not rely on what I (a rando on MGoBlog) says, but...
I am a stickler for following the tax laws, so when I first got season tickets I did some research on this and have been following these points for years now:
1. If you sell your tickets for more than you paid for them, that's income and you need to report it and pay taxes on it. (My tax guy told me that few people have been doing this, but also that the law is clear here.)
2. What you paid for your tickets includes not just the direct cost of the tickets and UM fees, it also includes your premium seat contribution. Until a few years ago, 80% of the PSC was deductible as a "donation" and so not part of the cost of the tickets, but Congress wised up to that and eliminated that provision. They recognize that all of the PSC is going toward a thing of value (buying the tickets). But the flip side of that is that it reduces the profit you make when you sell your tickets.
3. Your profit on a sale is the money you get after fees (from StubHub or whoever), minus what you paid ((cost of tickets + fees + PSC) / number of tickets).
4. If you are in the business of selling tickets, you can take losses. But if you are just a casual seller like me, you can't. This part sucks. Basically, it means that if you have one ticket, and you paid $100 per ticket, and you sold one game for $300 and another game for $50, you have to report the $200 from the first game as income but you can't subtract the $50 from the second game from that.
I wish I had saved the IRS publications I based all of these conclusions on. I'll look for them and post them here if I find them.
January 5th, 2022 at 12:42 PM ^
Interesting info-thanks. I have another question- this season's basketball tickets are e-tickets only and I don't see anywhere what the "face value" of each game is. In the past they priced different games at different levels- MSU at one level lesser BT games at another, Out of conference games at another. Is this listed someplace that I am overlooking?
If I understand you correctly, I can't just take what I paid for the season tickets and determine what my profit or loss is, I would have to do it on a game by game basis? And if I sold for less than face value (if per above I can even figure out what face value is) on one game, I can't use that to offset the profit on a game I sold at more than face value.
The deeper I get into this, and the more complicated it becomes, I'm back to my original point- it makes me less inclined to go on with season tickets.
January 5th, 2022 at 12:43 PM ^
PS- my goal has never been to make a profit and I rarely have, I just want to help recoup some costs.
January 5th, 2022 at 12:54 PM ^
I don't think it matters what the face value is, it only matters how much you actually shelled out.
Re your second paragraph, yes, that's my understanding. If you pay $700 for 7 tickets, your cost is $100 per ticket; if you use 6 and sell 1 and are calculating your profit from the sale, you don't get to subtract the $600 from the 6 tickets you used, just the $100 from the 1 ticket you sold.
I have a spreadsheet where I account for all of this so it's been pretty simple--for me, the complicatedness of it is less of an issue than the expense of it. If I had evaded these taxes over the years, I would have reduced my out-of-pocket costs from having tickets by about 40%. At that rate, I probably would have gotten more tickets than I did!
January 5th, 2022 at 1:15 PM ^
But I thought that when I bought my 2 season tickets that if I added up the face value from each of the games that is what I was paying (outside of the seat license fees). It would be easier if I could just say 10 games at $100 per game equals 1,000 (to keep math simple in the example) and I sold one ticket for $120 and another for $60 for a profit $20 and a loss of $40. Instead of game 1 was a 60 game, games 2 and 3 were $80 games, game 7 and 8 were $140 games and so on adding up to $1,000 in my hypothetical- instead of having to attribute different cost basis to each of the games.
So I'm back to needing to know the face values.
It isn't as much the actual tax that might be owed (not that I like that) as that would be a small amount, but what seems to me like an inordinate hassle- and for what?