Allan Rolnick, CPA
Last week, a popular singer opened “just-for-fans” ticket presales for her upcoming 52-date “Eras” concert tour – and promptly broke the internet. 14 million users flooded Ticketmaster’s website, jamming the site with 3.5 billion requests. The singer, Taylor Swift, said, “It’s truly amazing that 2.4 million people got tickets, but it really [upsets me] that a lot of them feel like they went through several bear attacks to get them.” If we assume the average would-be ticket buyer is five feet tall (because, let’s face it, many of them aren’t done growing), and laid all 14 million of them end to end, they’d stretch from New York to Los Angeles, 5.5 times. Now those tickets are the hottest commodity in town. Seats for her May 26 Meadowlands show are listed for as much as $21,600 each on StubHub. (Welcome to New York!) Floor seats for her April 28 Atlanta show are listed even higher at $35,000. If you still own any crypto, you might consider rolling it into concert tickets. (On second thought, scratch that – if you still own crypto, you and your money are never ever getting back together.) Naturally, the desiccated husk of Twitter was buzzing with excitement over the whole thing. That included one tweet from a tax attorney who’ll be glad I’m not naming him here: “Reselling your Taylor Swift tickets for a profit? Don’t forget about taxes. Even if you’re not in the ticket business, it’s likely a short-term capital gain taxed at higher ordinary income rates. And you may be receiving a 1099-K if at least $600 in sales.” Two things. One: that guy is a buzzkill. And two: he’s absolutely right. (But tell me why that was the first thing that jumped into his mind?)
If you’re the enchanted one flipping those $35,000 tix, StubHub makes it clear that they don’t care how much bad blood they create for you with the IRS. For starters, they won’t even pay you without a Social Security number on file. Once they have that information, they say, “we’ll generate a -1099K and send it to you via U.S. Mail at the beginning of each year. The same information will be sent to the IRS and state tax agencies where applicable.” Of course, most sellers would consider paying tax on a 35,000$ ticket sale to be the ultimate champagne problem. If you sell enough tickets to make it a “trade or business,” your tax hit is even worse. Now your profits are ordinary income, not capital gain. Worse yet, you’ll owe employment tax, too. Of course, at that point you can take advantage of all the usual business deductions to minimize your bill. (Call us, we’ll be happy to help – and we’re at lot easier to deal with than the treacherous Ticketmaster!) Having said that, if you’re worried the Swifties at the IRS are after your quick profits, you need to calm down. Swift just sold over a quarter-billion dollars’ worth of tickets. And that’s before she sells the first sweatshirt or tee. The last time she toured, in 2019, she cleared $150 million for the year. Forbes ranks her #25 on their list of America’s top-paid entertainers and #48 in self-made women, with a net worth of $570 million. It’s enough to anchor the next great American dynasty. And it’s certainly enough to ensure they pay more attention to her than to you. Long story short, when this singer hits the road starting on March 17, it’ll be a gold rush for everyone. Enjoy the show!
Allan J Rolnick is a CPA who has been in practice for over 30 years in Queens, NY. He welcomes your comments and can be reached at 718-896-8715 or at firstname.lastname@example.org.