@guitar289403 wrote:
So it sounds like a schedule C along with a COGS equal to what I paid would be the best route?
I would argue for my suggestions #1 or #2 as being the most technically correct. You are not engaged in an ongoing trade or business, and you are selling personal tangible property for less than your cost, which, if you reported it at all, would be a schedule D non-deductible capital loss. However, solution #1 or #2 may result in an IRS letter, for which you need to be prepared.
Solution #3 (schedule C) as suggested by @Critter-3 is least likely to result in IRS examination if you e-file, simply because the numbers will look ok on first pass, and the IRS is always backlogged (now more than ever). But it is least correct under the tax code.
The IRS has 3 years to audit you from the date you file in most cases, and 6 years if they are going to allege deliberate fraud. So whichever method you choose, save your backup documentation for at least 6 years.
