Hi. I received a Form 1099K from Paypal for the sale of 9 antique pottery items on eBay during 2020.
The 1099K reports the gross amount of the 9 sales (a little over $1,000), which appears to include the eBay sales price, the shipping charged to the buyer plus state sales taxes collected by eBay. The transaction fees for these sales, including eBay and Paypal fees and US Post office shipping charges, are not reported on the 1099K. My total basis exceeds the gross amount so I have a total loss on the sales, even before deducting transaction fees. How do I report these sales?
From my work so far on this matter, it seems I report these sales as Investment income - Stock, mutual funds, bonds, and other. Next, I report as Sales not reported on 1099-B, entering a summary of each sales category (rather than reporting each sale). I include the total transaction fees as a negative adjustment and then insert adjustment codes C (for collectibles) and E (for selling expenses not reflected on the 1099K). I also have to mail to the IRS a statement with more details. Am I correct on this approach? What information needs to be included in the statement to the IRS?
Thank you!
