@Mike9241
I disagree. Tangible personal property is capital property, so the sale of tangible personal property is a capital gain reported on schedule D.
@oldradio99
If you are selling off of your hobby, and you do not have the motive of making a profit or engaging in “an ongoing trade or business “, then I would agree this is a hobby. But this is not “other income“. Selling off items that you have held more than one year results in a capital gain or a capital loss and you report this on form 8949 and schedule D.
Your cost basis is what you originally paid. If you have no records, you can estimate, but if you are audited, the IRS is likely to disallow any estimate you can’t back up with proof. However, the long-term capital gains rate is 15%, or maybe even 0% depending on your other income, so this may offset the pain of reporting zero bases in the entire sales proceeds as your gain.
Because this is personal property, you can’t actually deduct the losses or use the losses to offset your gains, but they will still be reported on the forms.
The tricky part is going to be reconciling your schedule D with the 1099K. The IRS may institute new procedures for 2022 since many more taxpayers will be getting 1099K forms. In general, you could either ignore the 1099 K and hope the IRS realizes that you’re reporting the same income on schedule D, or you could report the 1099 K, then back out to 1099K (so the IRS computer sees it being reported) and then still report your actual gain on schedule D. I would wait until the tax forms come out before worrying about exactly how to report the income.
