Question about 1099-K for estate personal property sales

[suzukini]

I'll try to keep this brief, apologies for being long winded.

My father passed away Jan 2022.  We had 2 estate sales which purged most of the personal property (way below FMV).  However, he has an extensive model train collection that my wife has been selling on eBay under her social security number (thanks $600 rule).  The train sales are still below FMV but definitely more than we would have gotten at an estate sale.  We received the 1099-K from eBay which shows the amounts she brought in each month from Sept - Dec 2022.   

The question is, how do we deduct this amount from our taxes because this is part of the estate, not my wife's personal gain under her social?  I entered the 1099-K amount on Turbo Tax in the appropriate area, but I do not know how or where to deduct the estate sale portion.   Thank you for any help you can offer.

[Anonymous_ · Accepted solution]

I am sorry for your loss.

The items you sold from your father's estate (that you inherited) are capital assets and the holding period is long-term as the items were acquired from a decedent. You can report the sales on Form 8949 and Schedule D which translates to entering the sales in the same manner as having sold a stock, bond or mutual fund in TurboTax.

As a result, any gain/loss would be long-term capital gain/loss. However, since these were personal items, only a gain will be recognized; a loss cannot be deducted. 

Further, the basis for the items would be stepped up to their fair market value on the date of death. As items held for personal use (and probably mostly personal effects), there should be little or no gain and most likely a loss on the sales. Regardless, you need some way to show the basis of the items (i.e., the fair market value on the date of death).

If the items were sold shortly after death, then the sales price was probably equal to the fair market value on the date of death so the transactions were all a wash (i.e., no gain or loss). 

[Critter-3]

These go on your personal tax return since you inherited the property and disposed of it yourself.  I will be reported on the Sch D as collectables.  

[KrisD15]

if you sold the items soon after your father passed, there would be no gain nor taxable income to report. 

(If you inherited property and held on to it before selling, you might have gain)

According to the IRS:

"The basis of inherited property is generally the fair market value at the date of death"

Inherited property is treated as Long-Term. 

Here is how to enter that 1099-K

Enter the 1099-K as it is reported under 

Income 

Other Common Income

Income from Form 1099-K

be sure to select "Personal item sales" 

Click DONE

Return to 

Income

Investment Income

Stocks, Mutual Funds, Bonds, Other

Start

Click Edit next to the eBay 1099-K

Select "I'll enter a summary"

Enter the amount of "Total proceeds" and "Total cost basis" as the same amount

Select LONG TERM for the holding period

continue and select DONE 

[suzukini]

THANK YOU THANK YOU THANK YOU!!!!  I appreciate all of your help!  Now fingers crossed I did it right.  🙂