Choice 3: Report the sale and the cost of that sale, as long as it does not create a loss by entering Form 1099-K as Less Common Income and entering the offsetting amount as negative income. This will in effect report -0-. This is the most commonly reccommended method, in this forum.
But, I like @fanfare 's suggesstion better (it appears that TurboTax has been updated to do this better than it did in the past). Either way is "correct". Report it as the sale of personal items.
In TurboTax (TT), enter at:
- Federal Taxes tab (Personal in Home & Business)
- Wages & Income
Scroll down to
-Investment Income
-Stocks, mutual funds, Bonds, Other
Answer no, when asked if you got a 1099-B. Then follow the interview. You will reach a screen that says "Select any less common adjustments that apply". Check "any loss from this sale is not deductible for reasons other than disallowed wash sale (personal use property, sale to related party, etc)"
Next select "Personal use property". TT enters code L (rather than code O) on form 8949 and shows $0 net gain or loss.
Since you probably don't know your actual cost basis, it doesn't matter what you enter as long as it is no less than what you sold it for (you want to show 0 gain/profit and no loss)
