"I never keep records because I do not care it is hobby stuff. If I am taxed again I paid taxes twice on the same money."
Yes, because you don't have records. Congress didn't take your situation into consideration when they changed the laws for 1099-Ks.
Selling tangible personal property is a capital transaction reported on form 8489 and schedule D. If you sell for more than your cost basis, you have a capital gain. If you sell for less than your basis, you have a capital loss. However, capital losses on personal property are not deductible and do not offset your gains. So if you sell 10 guitars with a combined loss of $1000 and one guitar with a gain of $100, you have a $100 capital gain. Capital gains are taxed at lower tax rates if you owned the item for longer than one year.
I don't think we know yet how to report this on your tax form, since many more people will be getting 1099-Ks for the first time. We don't know if the IRS will stick to the old procedures or create a new procedure. In my example you might get a 1099 for several thousand dollars but only have $100 of taxable income. The old way of doing this was to either:
a. report the 1099-K as "other income", then report a negative 1099-K in the same amount, then report the capital sales on schedule D. This way the IRS computer sees the 1099-K.
b. Leave the 1099-K off your return and just report the sales on schedule D.
In either case, the IRS might send a letter asking for an explanation, and you could send them a spreadsheet or other proof showing the items you sold and how you calculated your gain or loss. You would need to include the purchase date, purchase price, selling date and selling price, along with a description.
If you don't know the dates and prices, then you either guess, and hope you don't get audited, or enter a cost basis of zero and pay capital gains on the entire amount. But capital gains tax is less than regular income tax.
