Robert,
Thanks for your response to this question. As Mass/Vermont require reporting for amounts > $600, this has to be a very relevant question for many.
Some follow-up questions if I may:
1) Sales on ebay have costs (listing, % of sales, shipping). How are these accounted for in this method?
2) I imagine IRS checking software will be looking for a value that matches the 1099-K from paypal. Where will this end up in the return and will it match?
3) The hints and questions from turbo-tax when utilizing this method seem to imply this is for situations where you have a 1099-B and do not mention a 1099-K. Is this a flaw in TurboTax that should be improved?
4) Many posts here and in Ebay forums will suggest that this should be reported using schedule C. Further, TurboTax will lead you down that path as well when you have a 1099-K. Are the equivalent? Given that this is so common, has the IRS provided any specific guidance on this? How can one know which is the correct method? I'll add that I've typically had my taxes done by an accountant and they also treated these as sales of capital assets - so your advice seems to match their actions.
Lastly, the menu sequence was a bit different than described, Not sure if this makes a difference
TT: Here’s the investments we have so far : Input [Add More Sales]
TT: Did you get a 1099-B or Brokerage Statement for these sales? Input[NO] :comment: because I got a 1099-k.
TT: Choose the type of investment you sold: Input: Selected Personal Item.
TT: some basic Information about the sale:
Property Description: [description]
Net Proceeds: [value from box 1a of 1099-k]
Date of Sale:[Various]
TT: Tell us how you acquired this property: selected [Other Method]
Comment: These items were purchased as tools in businesses in which I was a co-owner and depreciated in the course of business. When the businesses closed, these items were too difficult to sell and were simply stored for more than a decade. I consider them ‘personal items’ at this point.
TT: Enter Cost Information
Cost basis:[0 + cost to sell and ship items on ebay]
Date if Acquisition: [Various]
TT:When was this Investment Acquired?
Did you acquire this investment before 12/31/2019 : [yes]
The result:
TT:You have a Long-Term Gain from this sale.. and It shows a gain of proceeds – cost basis.
This shows up in Shedule D as a long term gain.
Thanks again.
