New changes - amounts for ebay sellers

[Harv123]

This year ebay will send me a 1099K, since I have sold over $600. This is a part time hobby, not a business. Every item that I have sold was purchased by my parents in the 1960s-1970's (no receipts found.) I inherited their items in 1995, when they passed away. The items have been stored in my garage for about 25 years.

For example, they bought a crystal statue for $1000 in 1960. I inherited it in 1995, value unknown. Last month, I sold it for $400 on ebay. How do I show on my taxes to explain to IRS that I did not make $400 profit, even though it will be listed as part of the 1099K that I will receive from ebay for 2022?

[KarenL4]

Hi,

Unfortunately, the IRS will consider this to be income unless you sold the items for less than you paid for them (or your basis when you inherited them) and make the necessary adjustments to the reported income on your tax return (note, you should report the 1099-K, failure to do so will likely result in an IRS notice down the line).  Let's take this one step at a time:

• You mentioned this was a hobby. You can reduce the hobby income reported by the cost/basis of the goods up to the sales price (you can't take a loss on a hobby).  See this link that tells you how to do that in TurboTax. Unfortunately, since the Tax Cut and Jobs Act passed, hobby expenses like advertising, etc. are no longer reducing hobby income. You can read more in this article.  There's lots of other helpful information in there too.  
• If you do start to consider this a business, you can deduct your expenses without receipts. However, the IRS can and likely will challenge you on that, so be prepared for a fight if you are audited. This article talks a bit more about that.  
• In either a hobby or a business, you would need to know your basis in your inherited property.  This IRS web page talks about that.

Please cheer below if this response is helpful!

Best,

Karen