Hobby Sales generating 1099

[oldradio99]

I am a hobbyist and am retired. I have reached the age where I need to start liquidating my vast array of parts purchased at flea markets and garage sales.
Last year I sold less than 200 lots totally just over $2,000.
The problem for this year I have no memory or documentation of what I paid for these parts, sometimes over 20+ years ago.
I dread the thought of paying taxes on the gross amount but have no idea on the cost of goods.
I know that some items will sell for less than I paid and some more.
I will know my EBay and PayPal fees which can offset the gross amounts.

What do I do for cost of goods?
Will I need to pay any Self Employment tax?
One suggestion I saw posted was to just list an amount as a negative equal to the gross sales.

Thanks

[Laura_CPA]

Hi Oldradio99,

I hope you are having a good day 🙂! I understand your concern here, happy to help. If you purchased all these parts with the intent to not make a profit, then this is treated as a hobby. Unfortunately, under the new Tax Reform, hobby expenses cannot be used to offset hobby income, so you'll have to report your income on Schedule I, Line 8 of your 1040 and this income will not be subject to self-employment tax. 

However, if you got into this with the intent to make a profit, then you'll be considered a sole proprietor and the net profit (after expenses, if any), could be subject to self-employment tax. As far as the expenses are concerned, you can make an educated estimate of what was spent in those years you purchased these items. You may search the items purchased online and get history price information to help you, please make sure you keep a log on how you came up with the estimated amounts. 

Please let us know if you have any further questions. 

[melj1]

You are bringing up an issue many of us older types are downsizing our collections. Because of PayPal, E-Bay and alike you will likely receive a 1099-K. That will cause you to report on a schedule C your income. The expenses on your schedule C will be your out of pocket expenses. The "Cost of Goods Sold" is a more difficult problem. You will want to estimate the best you can, what those amounts should be. Often is these situations you are not really making a profit, as most of these types of things have little or no appreciation. You will also want to remember that the IRS will consider the Schedule C a "Hobby" and losses will be limited.