eBay Sales reporting

[jazzer]

I received a 1099 from eBay listing about $3,000 in sales for 2021. I used eBay as a yard sale type situation, selling off old belongings. All of the items were pretty much sold for less than (or at least not more than) I paid for them, except for one item. My sales fell into three categories:  1.) The single item that I bought new 35 years ago for $100 and sole for $500.   2.) Items that I did not use and sold as new for less than I originally paid for them.   3.) Items that I used over the years and then sold as used, for less than I paid for them. I also had shipping expenses and sales costs. 

How do I deal with this when filing taxes? Does the loss on new/unused items that I sold for less than I paid offset the gains from the one item that I sold for a $400 profit?

Thanks for any help that you can give me with gaining clarity on this issue.

[KrisD15]

I assume eBay sent you a 1099-K. The IRS will also get a copy of the 1099-K.

Form 1099-K is not entered on a tax return, rather it is used as information by the Taxpayer. 

How you report the "garage sale" depends on your intent. 

If this is a one-time thing, or sporadic just to clean house without intent to make a profit, you could ignore the items you sold for less (you can't claim a loss on a sale of a personal item) and only claim the item you sold at a profit as a capital gain.  

If you do this on a regular basis to make a profit and/or earn a living, you would use Schedule C and report the sales as a business venture. In this way you could claim all the sales, as well as other business expenses, therefore limiting the gain on that one item. You might be subject to Self-Employment tax and you would need to upgrade in order to use TurboTax. The IRS might even argue that you are not in business, but rather just enjoying a hobby. Additionally, you would technically be responsible for keeping business record. 

In my opinion, the easiest avenue is to claim the gain on the one item and move on. 

The gain for that one personal item would be entered under “Stocks, Mutual Funds, Bonds, Other”. 

[jazzer]

Thanks for the reply. One quick follow-up question- where do I report the gain on that single item that I sold for a profit on eBay? I assume that I report the net after shipping cost, listing fee, etc. (Not treating this a a business, just cleaning house after many years of acquiring stuff.)

Thanks!

[JohnW152]

Please see the TurboTax Help article Where do I enter a 1099-MISC? or How do I enter a 1099-K in TurboTax Online?, as relevant, for guidance entering your transaction.

After you enter the info from your form, the program will ask you a few questions to make sure it’s not for self-employment.

Although you’re not reporting all the items you sold, maintain your Form 1099 and information on the transactions for three years, just in case the IRS asks any questions later.