When I read the article, I also spotted another claim. The article asserts that, “On the plus side, the proceeds from a garage sale are not taxable,” and quotes a CPA as saying, “Garage sales are considered the sale of personal property, and you do not have to claim the money you received from the sale.” That is so not true. Though most items sold at a garage or yard sale generate a loss, because they bring in less, and often much less, than what the seller paid for the item, there are times when an item fetches a price greater than what the seller paid. Though the losses are usually not deductible because the item is not a business or investment property, the gains are included in gross income. The notion that sales of personal property are not taxed is not one for which there is statutory authority in the Internal Revenue Code.Recently, while watching a Young Sheldon video and noticing some transactions that raised tax questions, reader Morris also noted that in the episode in question Sheldon claims that garage sales do not produce taxable income. This caused reader Morris to remember the MauledAgain post from seven years ago. He wrote to me that "They updated the story and the author still is mistaken and so is reviewer, fact checker, and CPA. Obviously they did not read your article of about 7 years ago."From scanning more than a few websites that make similar claims, though with different articulations, it appears that the true statement, “You generally are not required to report sales of items at garage or yard sales” gets smooshed into the misleading statement, “You are not required to report sales of items at garage or yard sales.” The loss of the word “generally” is critical. Why does it disappear? Twitter-type character limits? Preferences for short sound bites? Unwillingness to follow through with questions prompted by the word “generally”? Misunderstanding? Whatever the cause, it creates a misleading claim that can be dangerous when it causes someone to fail to report gain from selling an item at a garage or yard sale.
Indeed, he is correct. The article that I analyzed seven years ago was, according to the web page, updated on October 16 of last year. Not only does it contain the same incorrect language about the tax consequences of garage sales, it also continues to suggest that the tax savings from making a deductible charitable contribution is the amount of the contribution multiplied by the taxpayer's effective tax rate.
It is, of course, possible that the author, reviewer, fact checker, or CPA read the MauledAgain blog post from seven years ago, decided I was wrong, and made no changes to the article's discussion of charitable contribution tax savings and the tax consequences of garage sales. Yet, if they had done so, I would have expected a message from one or more of them after they read the article.
Is it not possible that others read the article, noted the errors, and commented in some way? It would shock, and distress, me if reader Morris and I were the only ones who recognized the errors. Is it possible that the author, reviewer, fact checker, and CPA simply held fast to what has been written? Yes. Did they? I don't know.
It is difficult to eradicate misinformation. It spreads quickly, especially when its message is one that people want to hear regardless of its veracity and people do not have the skill, desire, or time to verify what they are reading or hearing. In this instance, the problem is compounded. The author, who is not a tax expert, quotes a CPA who misstates the tax law, and the reviewer, also a CPA, leaves the article as written, as does the fact checker, who also is not a tax expert. Though often we are advised to get a second opinion from an expert even when we rely on experts, in this instance the author relied on two CPAs, quoting one and having another review the article. If nothing else, this situation demonstrates how difficult it is to tamp down misinformation before it spreads.
I am going to guess that more people have read the Investopedia article in question that read the MauledAgain blog post from seven years ago or the one I am posting today. And so the answer to the question, what happens when a MauledAgain commentary goes unread, at least by those who would benefit from reading it, is simply nothing. The misinformation is not removed and is not replaced with correct explanations.
And finally, no, I am not going to try to track down contact information for the author, reviewer, fact checker, and quoted CPA. Chasing down every source and repeater of misinformation is impossible even if several million people join in that task. Whether intentional or accidental, the creation and repetition of misinformation is a symptom of deeper flaws, ones that need to be addressed through other means that focus more directly on the underlying causes. Whether that will ever happen remains to be seen. I'm not optimistic.
