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Get your taxes done using TurboTax
The reason is this-
A business (or Trader) can report losses, and gains, for sales of products or stock.
An individual selling their things are not allowed to claim loss on sale of personal items, but they do claim, (and pay tax) on items they sell at a gain.
The difference is personal versus business. It the way the IRS/Congress wrote up the tax laws.
A person buys and then later sells their cars at a loss, but that is not a loss they can claim on their taxes.
If a person buys a car and it becomes a classic, so they end up selling it at a gain, that gain is taxable income.
Personal items sold at a loss
A loss on the sale of a personal item can't be deducted from your taxes. But you can zero out the reported gross income so you don't pay taxes on it.
If you sold personal items at a loss, you have 2 options to report the loss:
Report on Schedule 1 (Form 1040)
You can report and then zero out the Form 1099-K gross payment amount on Schedule 1 (Form 1040), Additional Income and Adjustments to Income PDF.
Example: You receive a Form 1099-K that includes the sale of your car online for $21,000, which is less than you paid for it.
On Schedule 1 (Form 1040):
• Enter the Form 1099-K gross payment amount (Box 1a) on Part I – Line 8z – Other Income: "Form 1099-K Personal Item Sold at a Loss, $21,000"
• Offset the Form 1099-K gross payment amount (Box 1a) on Part II – Line 24z – Other Adjustments: "Form 1099-K Personal Item Sold at a Loss $21,000"
These 2 entries result in a $0 net effect on your adjusted gross income (AGI).
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