Ebay seller at an overall loss for the year but not sure how to show it on the Sch C. Purchases are higher than actual sales

[Lily251]

Hi, 

So I started reselling and bought a bunch of items like clothes, shoes, toys etc. to resell. I got a 1099K from ebay to show my income. Overall I am at a complete loss because of all the money I spent to buy items. I'm confused on how to show this on the Sch C. It says as a small business I'm not required to include inventory so do I put my purchases as an expense under supplies line 22? 

For example, amount I paid for items in tax year 2023 is $23,000 but only made $9,000 on items sold in 2023. 

Do I have to fill out the COGS section, if so how? If not, then do I Show income of $9,000 on line 1 and expense of $23,000 on line 22?

[JamesG1]

To report $9,000 Cost of Goods Sold in TurboTax Online, follow these steps:

• Within the self-employment activity, at the screen Here's your info, select Import expense transactions.  Select Inventory as an expense.
• At the screen Do you have inventory for your work?, select Yes.
• At the screen Did you use the cost method to value inventory, select Yes.
• At the screen Let's get the value of inventory, enter the beginning and ending inventory.
• To record the $9,000 cost of sales report $0 for both the beginning and ending inventory.
• At the screen Let's get the cost of goods, enter $9,000 under Cost of Purchases.

Schedule C Part III Cost of Goods Sold will reflect $9,000.  In TurboTax Online, view the entries at Tax Tools / Print Center / Print, save or preview this year's return / Include government and TurboTax worksheets.

[Lily251]

@JamesG1 what about the $23k I spent buying items like toys and clothes to resell? I can't deduct that amount?  When I do what you mention I have the $9k from the 1099-K showing on line 1 as income and then when I enter $9K as cost of purchases with zero inventory then it flows to line 3 on the schedule c and nets my gross income to zero. Can I maybe put $23k as cost of purchases instead since thats what I actually spent?

[JamesG1]

Was the cost of sales $9,000 or $23,000?  The step-by-step demonstrated how to post cost of sales.

@Lily251 

[Lily251]

@JamesG1 When you say cost of sales, if you are referring to what I sold and what I made then yes $9K. But what I actually spent on all the items including the stuff that didn't sell was $23K. So thats what I am trying to figure out. If I could deduct what I spent on items that haven't sold but I bought in tax year 2023.

[fanfare]

COGS means exactly that- Cost of Goods Sold,

whatever you have that is not sold is Inventory.

IRS has on it's website the recommended methog to report a 1099-K for your business.

@Lily251