Quote:
Originally Posted by sabotai
Did you factor in the amount of taxes you'd have to pay on the amount of income you generated from selling off the gift cards? (I would assume that you would have to pay taxes on the income you made from selling a product you had, regardless of how you came to own said product. But that's just an assumption, I don't know much about tax laws.)
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No. Sort of. You only get taxed on the profit that you make when you sell something.
So, let's say that you get $10,000 worth of gas cards. You would then have to pay tax on $10,000. But, the cards would then have what is known as $10,000 worth of "basis" in them. That means that when you sell the cards, your first $10,000 of receipts is tax free. So, if gas goes up a bit and you sell the cards for $10,500, then you would have to pay tax on the $500. And, if you end up selling it for less, then you have a loss that you can offset against other gains, but that gets a bit more technical.
Really, though, one of the best ways to value something is to see what it sells for in an arms-length transaction. Let's say that you get 9,000 gallons worth of gas. And within a week or so you sell the cards to a local delivery service for $X dollars. Assuming that the sale was legit (i.e. not to your brother for a below market rate or something), you can be pretty safe in just paying taxes on $X.