eBay Yardsale Exceptions

[Whysteriastar]

Hi,

My husband has started selling stuff on eBay and some of it is for profit and much of it is not and would fall under the yardsale exception. We're keeping receipts and mileage records for stuff he's bought to sell this year, but for older stuff we have no records. How do we deduct the purchase price of older items that he's selling from his collection but bought years ago?

[Janis M1]

Hello Whysteriastar,  The items that you sell from the garage/yard sale (personal property) and do not intend to make a profit are assumed to be at a loss, so you do not record the income or the cost/expenses of these items on the return.  The items that your husband sold with the intention of making a profit would be treated as a business and could offset the expenses of those products (for resale) (exclusive of the expenses for the Garage/Yard Sale items).

[Whysteriastar]

Sorry, perhaps I should have been more clear. I specifically meant how should we handle this with the 1099-K. Will it be a problem if the income we report doesn't match up to the 1099-K we receive from eBay?

[Janis M1 · Accepted solution]

Yes!  You will input the whole 1099-K. To reconcile the 1099-K you would make a negative adjustment for the Garage/Yard Sale income.  See below:

To clarify where to enter the negative amount:

1. Go back to Option 2, Step 5. Enter the applicable description and amount and Continue. (For example, the entries were Description Personal Property Sales and 100)
2. TurboTax now shows Other Miscellaneous Income Summary. 
3. Select +Add Another Income Item on the lower left side.
4. At Other Taxable Income enter Cost of Personal Property for description and the negative amount and Continue. (To continue with the example, the amount would be -100.)
5. Now returned to Other Miscellaneous Income Summary, select Done.

[Whysteriastar]

That's the first time I've read an answer to this problem that makes sense to me at all. Thanks so much!