Inventory cash method or “Lower of cost or market value” – Which should I use (or both)?

[JoanI]

I started selling on eBay in 2020.  The first 6 months I only sold items and collections from my own home, and then started selling other items purchased in 2020 at garage and estate sales.  My total sales for the year (before any expenses for shipping, fees, supplies, etc.) were approximately $7500.   Of that only $1,500 were from those recent purchases – the rest (approx. $6000) were personal items from my home.

I want to use the cash method where I only deduct the cost of the goods at the time the item sells. That is easy on the recently purchased items.

However, for the personal items that were purchased years past (and I don’t have receipts that tell when/where and how much) I am using the “Lower of cost or market value” method.   Most of the items I’m sure cost more than what I sold them for so I am using the sold price as the current market value.  The rest I am using what I believe to be around the lower original cost. 

How can I choose both of those methods on the schedule C?  T Tax only allows me to check on or the other – not both.  Or do I just choose the “lower of cost or market value” since even the recently purchased items have an original cost.

[Mike9241]

lower of cost or market works. if you sell items purchased at a loss they're deductible if you sell personal items at a loss, those losses are personal and not deductible. if you sell personal items at a profit, those sales are taxable. another thing you should be aware of. if the activity produces net losses in 3 out of 5 consecutive years

the IRS could classify the activity as a hobby. as a hobby certain expenses would not be deductible.

read the following thread

https://www.investopedia.com/terms/h/hobbyloss.asp#:~:text=The%20hobby%20loss%20rule%20of%20the%20In... 

[JoanI]

Thank you for your answer.   Here is a follow on scenario/question:   

Personal items sold for $6,000 (market value of goods at time of sale are $5500 - No profit)

Purchased items sold for $2000 (actual cost of those items were $500 for a $1500 profit)

Total Sales are $8,000 with a total cost of goods were $6000.

On the business side there were total expenses for platform selling fees,  shipping supplies and fees, mileage, and other expenses to sell all items and run the business that were $2500.  I would think that those can be deducted from the total sales and be used as a loss for the business, right?

Total Sales $8,000, less Total Cost of Goods $6,000, less Expenses $2,500 = Total loss of $500.

Thanks again for your response.