Hi cipra90, 

For online sellers, this is self employment, and you report ALL business income (1099-Misc, 1099-K, 1099-NEC, cash, checks, PayPal etc.), and all directly business expenses of making that income in Schedule C, Profit or Loss From Business.

https://www.irs.gov/pub/irs-pdf/f1040sc.pdf

https://www.irs.gov/pub/irs-pdf/i1040sc.pdf

Therefore, 1099s are only part of your business revenue. Schedule C, part I Income, line 1 Gross receipts or sales should always larger than or equal to the 1099s you received.

Schedule C, Part III Costs of Goods Sold, you enter the direct purchase/cost of items or materials that are been resold.

Part II expenses are administrative expenses, indirect costs, i.e. you still incur these costs regardless selling any items.

Schedule C is self-reporting of business operating results, in case of IRS inquiry, you should be able to support the numbers entered on the schedule. You do not submit receipts to IRS when filing initial tax return.

Below article FYI.

Top Five Ways to Avoid a Tax Audit.

https://turbotax.intuit.com/tax-tips/tax-planning-and-checklists/top-five-ways-to-avoid-a-tax-audit/...

Hope this helps. Thank you.

I bought sporting goods, toys, and collectibles that were resold on ebay. What category do I report the cost of these goods on Schedule C? I have minimal inventory leftover.

You can either keep track of the items by reporting inventory on your Schedule C.  This will generate a Cost of Goods Sold to help determine your profit from the sales.  Or, you can track the costs of your items by claiming it as a business expense.

The following TurboTax help article will give you more details and instructions for how to do this in TurboTax:

Do I need to report inventory?

@j619