Regarding the potential taxability of your sales, this is what I found in doing some poking around...
Tax Information Reporting For Online Sellers
Reporting My PayPal Sales On My Tax Return
As a tax professional, given that you have stated that you are really basically using PayPal to get paid just as if you were selling at a yard sale, you still will need to report this income (if more than 200 transactions in a year or total proceeds exceeding $20,000 for that year) on your personal tax return. Having said that, it is far more beneficial for you to report this "income" on a Schedule C versus "Other Income" because that way you can then deduct any/all expenses related to selling those items. MYbanktracker has some useful tips on what all you can deduct for these purposes. In addition, you can also list the cost of the items in total as "Inventory" available for sale. It is certainly not the traditional way, however, that is the "how-to" when you aren't really a business but use PayPal to get paid.
