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Olyken
Level 1

Sales of Personal Property and Proper Records

I have read the posts.  What is still unclear to me is what the IRS will consider as a proper record for determining the basis of any item sold.

 

Also, I'm unclear as to whether other sales of personal property can be combined with sales of personal property on Ebay.  I am selling things that have some value on Ebay.  Other items I'm selling on Craigslist and garage sales.   Can I combine all the sales to determine whether I have a gain or loss?

2 Best answer

Accepted Solutions
tagteam
Level 15

Sales of Personal Property and Proper Records

The best evidence would be sales receipts and, depending upon the circumstances, the IRS may not accept anything less. 

However, pictures of the items and handwritten notes as to the prices paid and dates of purchase will most likely suffice.

 

Importantly, you cannot use losses on the sales of items held for personal use to offset gains on other items also held for personal use. In other words, you have to report the gains (and potentially pay capital gains tax on those gains) but cannot deduct the losses.

View solution in original post

tagteam
Level 15

Sales of Personal Property and Proper Records


@Olyken wrote:

Would it be best for me to file as a side business to combine all the items?


If the items were held for personal use, then filing as if they were held for business purposes (such as inventory) would be problematic (if not run afoul of the Code).

 

Further, even if the items were held for resale, you would have to pay not only income tax on the net gain (federal and, most likely, state) plus state and/or local sales tax. Additionally, you would be subject to self-employment tax on the net profit.

View solution in original post

6 Replies
tagteam
Level 15

Sales of Personal Property and Proper Records

The best evidence would be sales receipts and, depending upon the circumstances, the IRS may not accept anything less. 

However, pictures of the items and handwritten notes as to the prices paid and dates of purchase will most likely suffice.

 

Importantly, you cannot use losses on the sales of items held for personal use to offset gains on other items also held for personal use. In other words, you have to report the gains (and potentially pay capital gains tax on those gains) but cannot deduct the losses.

Olyken
Level 1

Sales of Personal Property and Proper Records

Thanks.  Are you saying the IRS regulations create a "heads they win tails you lose" for sales of used items?

tagteam
Level 15

Sales of Personal Property and Proper Records


@Olyken wrote:

Thanks.  Are you saying the IRS regulations create a "heads they win tails you lose" for sales of used items?


Yes, with respect to items held for personal use (not business use or investments).

Olyken
Level 1

Sales of Personal Property and Proper Records

Would it be best for me to file as a side business to combine all the items?

tagteam
Level 15

Sales of Personal Property and Proper Records


@Olyken wrote:

Would it be best for me to file as a side business to combine all the items?


If the items were held for personal use, then filing as if they were held for business purposes (such as inventory) would be problematic (if not run afoul of the Code).

 

Further, even if the items were held for resale, you would have to pay not only income tax on the net gain (federal and, most likely, state) plus state and/or local sales tax. Additionally, you would be subject to self-employment tax on the net profit.

Olyken
Level 1

Sales of Personal Property and Proper Records

Thanks.  I get it now.  

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