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A Tom Copeland Daycare Tax Tip
Keep a Record of Garage Sale Purchases

Here's a tax tip from Tom Copeland:

If you buy items at a garage sale, you need to keep an adequate record to deduct it as a business expense.

There are several things you can do:

  • Bring along a sales book for the homeowner to sign,
  • Make out a note of the transaction which states the date, place, item purchased, and amount paid, and/or
  • Take pictures of the items.



  • If you are hosting your own garage sale, you probably will not have any tax consequences. If you sell items at a loss that you only used personally, you don't have to report the income received. If you sell items at a loss that you used in your business, you could report the business loss as a tax deduction, or not report anything at all. It's unlikely that you'll sell any item at a profit, but if you do, you must report it as income on Schedule D.

    Alison adds: I'm not so sure that you are unlikely to sell an item at a profit. It could all be profit if you sell something you have previously deducted or depreciated as a business expense. Gain from the sale of a business asset is reported on Form 4797.

    For further information, refer to Tom Copeland's Family Child Care Tax Workbook and Organizer.

    Last updated: 27 November 2013

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    Alison T. Jacks is an Enrolled Agent specializing in tax preparation and payroll services for California family child care providers. A graduate of the University of California, Berkeley, she is dedicated to effective client communication and attention to detail. Alison has a diverse clientele, but since 2007, she has been accepting child care provider clients only. The FCC Payroll Service was launched in 2010 to meet the needs of preschool and day care employers.

    Alison is located in San Francisco East Bay City of Fremont, but she works with clients living throughout Central, Southern, and Northern California. She is a member of the National Association of Tax Professionals.

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