As a collector, I often buy items and use PayPal to pay for them. I also often sell items to make room for other items, and am paid through PayPal. Such items usually hold their value, and the buy and sell prices are usually about the same. I never buy or sell to make a profit, but do hope/expect to simply recover my investment to recover money to buy another item of greater interest to me.
If I buy an item for $100 and later sell it fro $110, am I expect to declare the $10 profit? And conversely, if I sell it for $90 am I allows to report the loss?
I may have hundreds of dollars flowing in and out of PayPal annually, but there is no net profit/loss to declare across multiple transactions.
And if these transactions now require me to keep accurate track of purchase and sell prices and dates, then what other transaction method is available to me that will prevent the generation of a 1099K and still allow be to manage a collection in this manner?
Great to hear from you 🙂. Key words that you mentioned, that you are a collector of knives and that you are not in it to make a profit consider your transactions a hobby. Under the new Tax Reform, the IRS does not allow you to deduct hoppy expenses from hobby income, you must report the income on Schedule I, line 8 of Form 1040. The income will not be subject to self-employment tax.
Hope this helps you!
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Let's say I bought one knife in 2021 and paid $900.00 and then sold it in 2022 for $800.00 to buy a different knife. You're saying that I will get a 1099K in 2022 for the $800 (because my intake exceeds $600) and this will be considered income, but I cannot report the fact that I paid $800 and therefore experienced a $100 loss?