I buy and sell used clothing through Paypal using websites like Ebay and Grailed. I don't make enough money or transactions to be issued a 1099K by Paypal. However, I make enough that it definitely should be reported.
I believe I'm filling out a Schedule C form via TurboTax. However, I'm having trouble valuing my inventory because I don't buy clothing with the intention to resell it. It's more like a hobby. I buy clothing that I like and I eventually sell certain items several years later if I don't like to wear it anymore. I also work in an industry where I receive many clothing items as gifts. Sometimes I keep them, other times I sell them.
I have receipts that detail the original cost of most of the items sold online through 2020. But I don't know or fully understand what the "value of my inventory" was at the start and end of 2020 because this is a hobby of mine. I don't tally up the value of my entire closet every year. If I get bored of a piece of clothing in my closet, or if it no longer fits, I sell it. Basically, many of my items are pieces of clothing I purchased several years ago with no intention to keep as "inventory" to resell.
Is the original cost I paid for all the items I sold in 2020 the value of my inventory? Does it matter if the items that I sold in 2020 were purchased in between 2016-2019? Is the total amount I paid for these goods not considered to be inventory but an expense instead? Do I have to report the money I made off an item that I sold for less than what I originally paid for it? For example: I purchased a T-shirt for $60 in 2016 but sold it for $40 in 2020.
I know this sounds complicated and maybe I have to talk to an actual accountant to get an answer. But any help will be greatly appreciated!
