The idea that you would generally not have to report these sales when they are like a garage sale applies when the amount at which the goods were purchased is greater than the amount at which the goods were sold, as @Hal_Al stated.
However, when a Form 1099-K is issued, the IRS receives a copy, as well. The IRS will be looking for this income to be reported on your return.
Rather than wait for the IRS Notice, 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-, but it does acknowledge the Form as issued, which will satisfy the IRS automatic search to match their records.
To do this in TurboTax, follow these steps:
- From the left menu, go to Federal and select the first tab, Wages & Income.
- Add more income by scrolling down to the last option, Less Common Income, and Show more.
- Scroll down to the last option, Miscellaneous Income, 1099-A, 1099-C and Start.
- Choose the last option, Other reportable income and Start and Yes.
- Enter the applicable description and amount and Continue
- First, enter Form 1099-K as received. It is essential that the full amount be entered.
- For a description, include Form 1099-K and Personal Property Sales if this is coming from personal items sold similar to selling items at a garage sale.
- Next, enter an adjustment to reflect the cost of these items as an offsetting, negative amount up to the amount of the income.
- For the cost description, include Form 1099-K and Cost of Personal Property
- In other words, if the goods cost you $100, but Form 1099-K was for $10 in sales, the maximum cost allowable would be $10.
@yogi449
@emilar59
