1099-K VERY small profit on ebay

[bkgrant10]

I sold "2" items on ebay $550/each total reported on 1099-K $1,100. After ebay fees and the cost to buy the items $463/ each, real net profit for one is $87. Total real income, a whopping $174. I've been reading an ENTIRE section about this new 1099-k reporting and it's confusing and out of control (probably IRS intentions). How do I report this in TT Delux Desktop ? "Wages and Income - > Common Income - - > Income from form 1099-K --> $1,100, click done. Next, go to Less Common Income - - > 1099-A, 1099-C, learn more - - - > Miscellaneous Income - - - > Other Reportable Income - - - - > Description Incorrect form 1099-k (COGS) (Note: I'm not including shipping, tax, advertisement)  enter a negative $926 i.e. -$926.  All of this shows up on line 8z Schedule 1 and line 8 on the 1040 tax return, done deal? This seems like a LOT for only $174, to the point of not even wanting to sell anything any longer. :(

Please help, I'm reading about capital gains tax, blah blah (for $174??? ) :(

[JamesG1 · Accepted solution]

The IRS form 1099-K should be reported because the IRS will be receiving a copy of the 1099-K.

Selling expenses will be reported at the screen Select any less common adjustments that apply when entering the detail to the IRS form 8949.  Select The reported sales price did not deduct all fees or selling expenses.

Personal items sold for less than their basis (most likely, the original purchase price) report $0 capital gain on line 7 of the Federal 1040 tax return.

Personal items sold for more than their basis report the gain on line 7 of the Federal 1040 tax return.  See this example.

                                              Selling                   Cost

                                              Price                      Basis

Couch                                   $500                       $2,000                  Capital loss on personal item = $0 loss

Jewelry                                  $400                       $300                     Capital gain on personal item = $100 gain

Chair                                      $100                       $100                    No capital gain or loss

                                                $1,000                   $2,400

Schedule D will report a $100 long term capital gain.

Federal 1040 tax return line 7 reports $100 long term capital gain. 

To report Personal item sales in TurboTax Desktop, follow these directions.

• Click on Start to the right of Income from Form 1099-K.
• Select Personal Item Sales.  Click Continue.
• Enter 1099-K information.   Click Continue.
• At the screen Personal Item Sales, you are told that further information will need to be entered.  Learn More provides detailed information for the next steps.  Click Continue.
• At the screen Your 1099-K summary, notice that the income relates to ‘Sale of Personal Items’.  Click Done.
• Click Start to the right of Stocks, Mutual Funds, Bonds....
• At this screen, you will be asked to Edit the Personal item sales (1099-K).
• At the screen Select any less common adjustments that apply, select Any loss from this sale is not deductible....  Continue.
• At the screen Here's all the sales reported...., Click Add to add additional lines as needed.

The entry will be reported:

• on Schedule D of the Federal 1040 tax return, and 
• on line 7 of the Federal 1040 tax return.

Capital loss for a personal item sale reports $0 capital gain on line 7 of the Federal 1040 tax return.

Make sure that you retain any information about the items sold should you be required to demonstrate to the IRS that this is not taxable income.