I got a nice item from my employer as an anniversary gift, but I’ve never used it and it still has the tags. I listed it for sale at a lower price than it would sell for new. If I sell it, do I need to report the money I get?
Are you sure the value of the gift wasn’t included in your income when you got it? If it wasn’t, selling it at a loss (for less than it’s worth) probably means you don’t have to report it.
Lane said:
Are you sure the value of the gift wasn’t included in your income when you got it? If it wasn’t, selling it at a loss (for less than it’s worth) probably means you don’t have to report it.
That was my first thought too. If the gift was expensive enough to raise concerns about taxes, your employer may have included it on your W-2.
Val said:
@Mai
I’m not sure. Would there be something on the W-2 that shows this?
It might show up in Box 14, but employers don’t always use that box for gifts.
Val said:
@Mai
I’m not sure. Would there be something on the W-2 that shows this?
It would usually just be included in boxes 1, 3, and 5 if it was treated as income.
Lane said:
Are you sure the value of the gift wasn’t included in your income when you got it? If it wasn’t, selling it at a loss (for less than it’s worth) probably means you don’t have to report it.
I think it was a gift for a work anniversary, not part of my pay. I got it two years ago.
@Val
Employers usually can’t give gifts without it being considered compensation. But for your question, even if it wasn’t counted as income, selling it at a loss wouldn’t make it taxable.
Lane said:
@Val
Employers usually can’t give gifts without it being considered compensation. But for your question, even if it wasn’t counted as income, selling it at a loss wouldn’t make it taxable.
There’s an exception for non-cash gifts under $25 and for bigger awards like length-of-service gifts:
These gifts can sometimes be excluded from income if their value stays within certain limits. Even so, selling the item for less than it’s worth wouldn’t create taxable income.
@Hart
If the gift’s value was included in your wages, your basis is what they reported. If it wasn’t included, the basis might be $0, so selling it would technically be a gain. But for something small, it’s probably not an issue.
@Mai
The item was a gift, so the basis should be the giver’s original basis. That doesn’t change even if the giver is your employer.
Technically, if you sell it for more than it’s worth, it’s a capital gain and reportable. But for something under a few hundred dollars, the IRS probably doesn’t care.
Quincy said:
Technically, if you sell it for more than it’s worth, it’s a capital gain and reportable. But for something under a few hundred dollars, the IRS probably doesn’t care.
The cost basis would be what the gift giver paid for it.
@Riley
I don’t know how much my employer paid. I looked online and found it costs $150 to $295 new. I’m selling it for $125. Does this count as a profit?
Val said:
@Riley
I don’t know how much my employer paid. I looked online and found it costs $150 to $295 new. I’m selling it for $125. Does this count as a profit?
Don’t stress. The IRS isn’t coming after you for a $125 sale. Just sell it and move on.
Val said:
@Riley
I don’t know how much my employer paid. I looked online and found it costs $150 to $295 new. I’m selling it for $125. Does this count as a profit?
I’d use the retail price as the basis if it’s still new. But honestly, this is such a small amount that it’s not worth worrying about.
Quincy said:
Technically, if you sell it for more than it’s worth, it’s a capital gain and reportable. But for something under a few hundred dollars, the IRS probably doesn’t care.
Isn’t the cost basis the same as what the gift giver paid for it?
Quincy said:
@Indra
I don’t think so, but I’d be interested to hear more about that.
Gifts keep the original basis from the giver. The only time that changes is when it’s an inheritance, which gets a step-up in value. For regular gifts, it’s not taxable to the person receiving it—only the giver might owe taxes if it’s a big gift.