Artwork is generally considered a capital asset. The sale of capital assets is reported on Schedule D. Only the gain or loss from the sale of the painting would be included in your income, not the entire proceeds.
In order to report the sale of the painting on your tax return, you will need the sales proceeds and your basis in the asset. If you paid any expenses to sell the painting, you will be able to report those as well.
It sounds like you received a 1099-Misc for the proceeds from the sale of the painting. It is somewhat confusing that it was reported in Box 7 of Form 1099-Misc. This is generally used to report amounts received as an independent contractor or self-employed individual.
Your basis (or cost) in the painting is determined by how you acquired it. For example, if you purchased the painting, the basis would be the cost. If you inherited the painting, the basis would be the fair market value at the date of death of the person from whom you inherited the painting. If the painting was a gift, the basis calculation is a little more complicated. Please refer to this IRS Tax Topic for more information on determining the basis. You can also include any costs incurred to sell the painting, if applicable.
To report the sale of the painting in TurboTax, please follow these steps:
- Click on Wages and Income at the top of the screen
- Scroll down to Investment Income and click on Show More
- Click on Start or Revisit next to Stocks, Mutual Funds, Bonds, Other and Select Yes
- Select No to the question "Did or will you receive a 1099-B form or brokerage statement for these sales?"
- Answer the questions and enter the sales information
For more information on Capital Assets, please see this TurboTax Article.
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