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Chris4198
Level 1

Selling on Ebay, but selling my own stuff. I'll probably have about $10,000 in sales. How do I report it as I'm not buying and reselling

 
3 Replies
Opus 17
Level 15

Selling on Ebay, but selling my own stuff. I'll probably have about $10,000 in sales. How do I report it as I'm not buying and reselling

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 items with a combined loss of $1000 and one item with a gain of $10, you have a $10 capital gain.  

 

You need a spreadsheet listing your items with a description, date purchased, cost when new, date sold, and selling price.  If you don't have receipts, make your best guess and hope you aren't audited.  Without proof of your cost, the IRS would be allowed to disallow your costs and declare the entire proceeds as taxable income.  (A listing made at the time of sale is better than nothing, but not as good as receipts.  The more complete and businesslike your records, the more the auditor is likely to view them as reliable.)

 

 

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, then report a negative 1099-K in the same amount, then report the sales transactions 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 a more detailed explanation. 

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
Chris4198
Level 1

Selling on Ebay, but selling my own stuff. I'll probably have about $10,000 in sales. How do I report it as I'm not buying and reselling

I've already started a detailed spreadsheet and have  receipts for probably half the items.  Many items were gifts or inherited over the last 40 years.  Can I notate an item as a gift or inheritance then put a probable cost at time of receipt?  I don't foresee making a profit on any of this, or just a minimal profit, but don't want to get in trouble for not having the right documentation.

Opus 17
Level 15

Selling on Ebay, but selling my own stuff. I'll probably have about $10,000 in sales. How do I report it as I'm not buying and reselling


@Chris4198 wrote:

I've already started a detailed spreadsheet and have  receipts for probably half the items.  Many items were gifts or inherited over the last 40 years.  Can I notate an item as a gift or inheritance then put a probable cost at time of receipt?  I don't foresee making a profit on any of this, or just a minimal profit, but don't want to get in trouble for not having the right documentation.


All you can do is make the best list you can and hope for the best.  The more reliable your information looks, the more likely it will be seen as reliable in the unlucky event you are audited.  For inherited items, the cost basis is the fair market value on the date the previous owner died.  For gifts, the cost basis is the price the giver paid.  

 

 

 

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
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