Card Vendor Tax Basics
Accounting Methods, Sales Taxes and Federal Reporting
Tax Reporting Template
As you follow along with this article, we have provided the following template using Method 2 bookkeeping as described below for easier tax filing purposes.
Accounting Methods: Cash vs. COGS
Before anything else, here's two unrelated systems. Income tax is federal, about profit, reported yearly to the IRS, and indifferent to which state you did business in. Sales tax is state and local, about the transaction rather than the profit, collected from your buyer, and held until you remit it. You can still owe sales taxes on product you took a loss on.
This section answers one question: when does the money you spend on cards become a deduction?
Method 1: Deduct when you sell This is the default. Cards you buy are inventory, and inventory is not a deduction; rather it is an asset. The money sits there until the card sells, and only then does it come off your taxes as cost of goods sold (COGS).
Method 2: Deduct when you buy You are allowed to do this if your business averages under $32 million a year (2026) and your bookkeeping reflects this accounting method. Nearly every card vendor is under this limit. This is the practice where the IRS follows your own bookkeeping.
Which saves you more money? Neither. You either pay taxes now, or later. For example, you buy a card at $5 and sell it for $10. Buy another card for $10 and sell that one next year for $12.
| Method 1 (COGS) | Method 2 (CASH) | |
|---|---|---|
| Year 1 | $5 Profit | $5 Loss |
| Year 2 | $2 Profit | $12 Profit |
| Total | $7 | $7 |
This is the same tax, taken over different years. Method 2 helps a lot if you're buying more inventory (reinvesting) every year, but hurts if you slow down or stop.
Whichever you pick, you're stuck with it unless you file IRS Form 3115 to change your accounting methods.
Trading is a taxable event This is the part that costs vendors the most money, and almost no one knows about it. When you trade a card for another, the IRS treats that as a taxable event, even if no money was transacted. This is where Method 2 comes at a serious advantage over Method 1. If you file under Method 2, you do not have taxable income per-trade.
Sales Tax Reporting
Sales Tax has nothing to do with the IRS. It is money you collect from your buyer and hold until you send it to a state.
Online marketplace remittance When you sell on eBay, TCGPlayer, Whatnot, or most other platforms, the platform collects and remits the sales tax for you. For these sales, you would put the amount collected by the platform on your sales tax return as remitted. When you sell at a show, that part is yours.
Four types of states
- No statewide sales tax: Alaska*, Delaware, Montana, New Hampshire, Oregon.
- States where you register like any other store, even for a one-day show.
- States with a short-term permit built for events like card shows.
- States that put the burden on the show promoter, who may have to collect vendor lists or check permits.
*Careful with Alaska, since many Alaskan cities charge their own.
Federal Tax Reporting
Which structure should you use?
| Sole-Proprietor / Passthrough | C Corp | |
|---|---|---|
| Form | Schedule C with your 1040 | Separate Return |
| Self-Employment Tax | On all profits | On your salary only |
| 20% QBI Deduction | Yes | No |
| Losses | Offsets personal income | Stuck in the company |
| Taxed Twice | No | Yes, when you take money out |
| Best For | Almost everyone starting out | Reinvesting, not spending |
The reinvestment machine If your plan is to keep growing inventory instead of paying yourself, a C corp is built exactly for that. The corporation pays a flat 21% on its own profit. Compare that to a sole proprietor at a high income who can be paying a 37% top rate plus 15.3% on top of it.
Every dollar you do not send to the IRS is a dollar buying more inventory. At scale, that gap compounds year over year, and it is the entire argument for the structure.
The catch is that it only works if you actually leave the money in. The 21% is not a discount on money you take home, it's a discount on money you keep working.
Other tax advantages a C corp buys
- Health insurance is fully deductible to the company and not taxable to you.
- Retirement plans and other benefits go through the company.
- You control when you take money out, so you control what your personal tax year looks like.
- A loss carries forward inside the company to offset future profit.
- Adding a partner or an investor later is straightforward.
The personal business With a Schedule C, your business and your personal finances are the same tax return. A big year and a bad year both land on your 1040, while your income swings on the card market.
Federal Tax Deductions
The cards themselves What you paid for inventory, deducted according to whichever accounting method you picked above. This is usually the biggest deduction on your return.
Show costs
- Table and booth fees
- Mileage to and from the venue, at $0.76/mi after July 1, 2026
- Hotel when a show requires an overnight stay
- Meals while traveling overnight for a show, at 50%
- Display cases, tables, lighting, signage, tablecloth, and other accessories
- Parking costs at the venue
Shipping and handling
- Sleeves, top loaders, team bags, slab bags, magnetic cases
- Bubble mailers, boxes, tape
- Postage, labels
- Grading fees to PSA, BGS, etc
Keeping the business rolling
- Platform fees from eBay, Whatnot, and TCGPlayer
- Payment processing fees from Square, PayPal, Stripe
- Software subscriptions, including tracking and accounting tools
- Business bank account fees
- Insurance on your inventory
- Your CPA and any legal fees
- Business cards and advertising
- Storage unit if you rent one for inventory
- The business share of your phone and internet
Running the business from home If part of your operation happens at your house, and for most vendors it does, a share of your housing costs is deductible.
The exclusive use rule The space has to be used only for business, and used regularly. This is the whole test, and it's where most people fail. A spare bedroom where you list, ship, and store cards, and nothing else happens, qualifies. A dedicated corner of a room that never gets used for anything personal, qualifies. The kitchen table where you sort cards on Friday night and eat dinner at, does not qualify.
A C corp does not have a home office deduction, directly You do not take the deduction yourself. The company takes the deduction from reimbursing you for the home office under a written accountable plan.
Rule of thumb If you would have spent the money anyways without the business, it's not a business expense.
Recordkeeping Checklist
E-Commerce platforms and your other bills are already documented in the form of receipts, logged transactions, or forms downloadable from the platform themselves. What happens during a show is a black box that requires you to track it.
Good news: your tax return doesn't want your transactions. Schedule C has one line for what you took in and one line for what it cost. The unit for that, making accounting the easiest, is show analytics. Twenty shows a year is easy to file while four thousand transactions is not.
What each show needs to produce By the time you pack up, one show should give you everything you need:
- Total sales, including digital payments
- Total value of the cards received in trades
- Total cost of every card that left your table
- Total cost spent buying inventory
- Fees and mileage
CardBase hands you these after every show. Sales, trades, cost of goods, what you spent, totaled and dated. It calculates the numbers required for either accounting method, so whether you deduct inventory at purchase or at sale, the number is already there.
