Sales of antiques on Ebay

[crkdad]

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!   

[ThomasM125]

If you consider the antiques an investment rather than a business, then you are on the right track. You didn't mention if you deducted the cost of the antiques, so you do need to do that.

However, if you are actively engaged in selling similar items on Ebay you would be considered a dealer, in which case you should report the sales as business income, in the Self-employed income and expenses section.

An investment is something you purchase with the intent that it will appreciate in value over time, as opposed to something that you purchase at a discount and sell in the near future, which would constitute a business. Another aspect of an investment is something that you don't invest a lot of time in managing.

[crkdad]

Thank you ThomasM125!

Yes, I will deduct the total basis for the sum of all sales.   I should have said that.  My mistake.

A follow-up question:  Whether I send in a statement to the IRS or report each sale separately, I must report the date acquired for each item that I sold.    What if the item was acquired years ago as a gift and I don't know the date acquired?   I tried to report each sale separately, but turbotax will not allow me to complete the section without entering a date acquired.   (For the 2 items received as a gift I was planning to report a zero basis on those.)

Thanks again!

What information do I need to include on the 

[ThomasM125]

You need to report the date acquired since there is a different tax treatment for investments held for more than a year and those held for less than a year. So, just pick a date that is more than a year from the date you sold the items for which you don't know the date acquired.

For gifts, your cost is normally the cost it was for the person who gave it to you. But if you don't know that, you should enter -0- to be safe!

[crkdad]

Thank you again ThomasM125!  You've been a big help to me!

One final question:  As all items were sold for a long term loss, is it necessary to report these sales, if I'm willing to forgo the capital loss deduction?  I've read in other discussion posts that losses don't need to be reported.  Since I received a 1099K from Paypal I expect the IRS and my state are expecting me to report these sales and will question me if I omit them from the return.

Thanks again for your help! 

  Crkdad

[ThomasM125]

Yes you are right, the IRS and state taxing authorities will match up the sales reported on your return with what is reported to them on the 1099-K form. So, you want to make sure the total of the sales you report agree with that number.