Question Regarding eBay 1099-K or Other Related

[ejek6337]

If someone is doing a small volume of transactions on ebay or other platform maybe like paypal and they now need to generate you a 1099-K for gross payments, do you need to file based on the whole amount reported or can you deduct out the original cost of the item if you are doing it as a hobby without many sales.  For instance, if you are selling sports cards maybe 30 or so a year with possibly 2-4K of gross payments, but approximately say 40-50% of that is the original cost of the items, it would make sense to remove the 40-50% as you already were taxed on that and it is part of the original cost of the items you are selling.  Also for context this is to use that money to buy other potential sports cards and overall the person doing this is negative and in the hole anyway since just doing it as a hobby etc.

I have read even as a hobby you can deduct out the cost of the item and somehow report that with your 1099-K but I am unsure on how that will work in the turbotax program or also if this is the correct way to do this for removing the original cost. I understand all other expenses could not be claimed if it is not a business.

[Vince C]

I have a similar question to yours...

[johnd84]

Hi ejek6337:

Thanks for your question. I'm editing my original reply. So if we're selling collectible and not really considering this a business then we will report this under "Other Common Income" in TurboTax where you see 1099K listed. You'll report the full amount of the 1099K, but once you get into this section it will ask you questions about how much did you pay for the item. This is where your cost will be figured into the equation. TurboTax is currently working on a new flow for this in our software, so that changes will be accounted for in 2022. So you'll enter the full amount of the 1099K proceeds but you'll also enter your costs on a subsequent question in TurboTax. Thanks again! 

[ejek6337]

That is where it is confusing to me so overall probably losing thousands per year on other purchases for the collection.  However, a few sales do make some money but overall way in the negative.  I guess I do not see the point for a transaction count that low and amounts that low with purchases and expenses causing it to go way in the negative each year to put it as a business but if that is the rule......  I thought there were some options for hobby income that would allow some small sales.  I just was not sure how or if you could deduct the original card value if filed in that way as other income or something like that.

[johnd84]

I have edited my response above to reflect the changes that will be forthcoming from TurboTax for the new 1099K issues. Thanks so much!