To provide further info on this topic, the TurboTax help is inconsistent with the software. The first approach I tried was to enter the 1099-K using the Step by Step view. At the conclusion, the following message appears:
Personal Item Sales
"We've added your personal item sales. You’ll need to enter additional information for your sale in another section. Learn More"
Upon clicking Learn More, the following instructions appear:
"How do I enter personal item sales that were included on this 1099-K?
We’ve collected your 1099-K information, but you’ll need to add more info about your sale in another section.
- Select Continue on this screen.
- On the Your 1099-K Summary screen, select Done.
- From the Income Landing table, navigate to Investment topics, and select Start or Revisit for "Stocks, Cryptocurrency, Mutual Funds, Bonds, Other (1099-B).
- Go to Investments and Savings (1099-B, 1099-INT, 1099-DIV, 1099-K, Crypto) on the Income & Expenses screen. Select Edit/Add.
- On Your Investments and Savings Summary screen, you’ll see a line item for your 1099-K income. Select Edit or Review and enter the information for the first personal sale item.
- Be sure to select Personal Items under the What type of investment did you sell?
- The Cost or other basis amount should be the amount you originally paid for the item.
- Select Continue when you’re finished to go to the Review your Sales screen.
- If there was more than one personal item sale included in the 1099-K amount, select Add another sale to add each item.
- If not, you can Continue.
If you sold your personal item(s) for a loss, that loss cannot offset other income on your tax return like capital loss items (stocks).
If you sold your personal item(s) for a gain, then you’ll need to pay short or long term capital gains tax on it, depending on how long you held the item. This is why you should enter each item separately and not net them together."
I could not find any "Income Landing table." An automatically generated item that corresponds to the 1099-K does appear in the 1099-B etc. section, but upon editing it, there is no facility to "select Personal Items under the What type of investment did you sell." (It is only possible to select personal items when entering the 1099-K.) Consequently, entering the original cost (which, for the majority of used items vastly exceeds the proceeds from the sale) results in a loss, which the IRS explicitly disallows.
While it may appear that a simple workaround would be to enter the cost equal to proceeds (which would result in a correct zero gain/loss), this still does not solve the issue of those amounts not being shown on Form 1040 Schedule 1 lines 8z and 24z, respectively, as the IRS wants.
