Concert Ticket Sales reported on 1099-K

[valk97]

I have read various other posts on this subject but still not sure how to handle this.  Received a 1099-K form from Ticket Master showing, in box 1a, a $1,900 Gross Payment to me for ticket sales.  My cost for the tickets was $1,600 so my net profit for the sales was only $300.    This is not a business and not a hobby.    I just bought too many tickets so I had to sell a few. 

Right now, I'm being taxed on the full $1,900.   

Where do I make the adjustments to show my cost was $1,600 resulting in a net profit of only $300. 

(I do not itemize deductions.)   

Thanks

[DaveF1006 · Accepted solution]

I would suggest reporting the $1600 cost as a negative number to offset the income from the 1099K. Here is my suggestion.

1. Click Federal Taxes -> Wages & Income 
2. Scroll down to Less Common Income Go to the last selection, Miscellaneous Income and click Start 
3. Go to the last option, Other reportable income and click Start 
4. When it asks, "Any other reportable income?" say yes and then type in Offset to 1099K Income for cost of Tickets then report it as -1600. This will offset the income from your 1099K.

[rjs · Accepted solution]

Your profit on the sale is a capital gain. The IRS instructions are to report it as a capital gain, just like a sale of stock. In TurboTax, you enter it as an investment sale.

See "Personal item sold at a gain" at the following link on the IRS web site.

Understanding Your Form 1099-K

[valk97]

Dave:  Thank you so much. 😉  I must admit I could have read the tax code from front to back, multiple times, and never would have come up with that solution!  Unfortunately, there may be literally thousands of folks who encounter the same issue this year.   This is because the IRS lowered the reporting threshold from $20,000 to $600!!  

UPDATE:  I just stumbled upon the following: (which tells me I "may not" have to report the $1,900 on the 1099K form from Ticketmaster).   Now thinking I may wait a bit before filing or just not report this 1099-K.  Worst case (hopefully unlikely) I'll need to file an amended return down the road.

Updated January 3, 2023: Frequently asked questions about Form 1099-KPDF

IR-2022-226, December 23, 2022

WASHINGTON — The Internal Revenue Service today announced a delay in reporting thresholds for third-party settlement organizations set to take effect for the upcoming tax filing season.

As a result of this delay, third-party settlement organizations will not be required to report tax year 2022 transactions on a Form 1099-K to the IRS or the payee for the lower, $600 threshold amount enacted as part of the American Rescue Plan of 2021........

....Additional details on the delay will be available in the near future along with additional information to help taxpayers and the industry. For taxpayers who may have already received a 1099-K as a result of the statutory changes, the IRS is working rapidly to provide instructions and clarity so that taxpayers understand what to do.

The IRS also noted that the existing 1099-K reporting threshold of $20,000 in payments from over 200 transactions will remain in effect.

[rjs]

You have to report the income, and pay tax on it, whether or not you get a 1099-K. The delay of the requirement for Ticketmaster to send the 1099-K does not mean that you don't have to report the income. You have $300 of taxable income from the sale.

Furthermore, Ticketmaster already sent the 1099-K, even though they were not required to. So the IRS knows that you received $1,900. But they don't know what your cost was. If you don't report the payment and show the cost, the IRS will assume that the entire $1,900 is taxable, and you will get a bill for the tax on $1,900, plus penalties and interest for not having included it in your tax return.

[valk97]

Thanks for the advice.  I incorrectly assumed I would not owe taxes if I did not meet the previous higher threshold of $20,000.   

Regarding this: "For taxpayers who may have already received a 1099-K as a result of the statutory changes, the IRS is working rapidly to provide instructions and clarity so that taxpayers understand what to do."    They must not be working too rapidly "to provide instructions and clarity so that taxpayers understand what to do".  I'm guessing there are literally thousands of people who sold a couple of tickets and that do not understand what to do with this 1099-K.  Many may end up paying taxes on the full amount.    Just another tax related Fustercluck.  

[valk97]

Champ...Thanks.  At first I didn't believe this should be treated as a Capital Gain given it wasn't reported on a 1099-B.   But following your advice did the following.   I first entered the info in the "Income from Form 1099-K" field (under 1099 MISC and Other Common Income).   

The instructions then directed me to the Investment Income section where I was able to enter the sum of the sales and the cost basis.   I entered it as a short term gain.  I think I got it right.   

Here are the instructions provided by Turbo Tax: 

How do I enter personal item sales that were included on this 1099-K?

We’ve collected your 1099-K information, but you’ll need to add more info about your sale in another section.

1. Select Continue on this screen.
2. On the Your 1099-K Summary screen, select Done.
3. From the Income Landing table, navigate to Investment topics, and select Start or Revisit for "Stocks, Cryptocurrency, Mutual Funds, Bonds, Other (1099-B).
4. Go to Investments and Savings (1099-B, 1099-INT, 1099-DIV, 1099-K, Crypto) on the Income & Expenses screen. Select Edit/Add. 
5. On Your Investments and Savings Summary screen, you’ll see a line item for your 1099-K income. Select Edit or Review and enter the information for the first personal sale item.
   1. Be sure to select Personal Items under the What type of investment did you sell?
   2. The Cost or other basis amount should be the amount you originally paid for the item.
6. Select Continue when you’re finished to go to the Review your Sales screen.
   1. If there was more than one personal item sale included in the 1099-K amount, select Add another sale to add each item.
   2. If not, you can Continue.

If you sold your personal item(s) for a loss, that loss cannot offset other income on your tax return like capital loss items (stocks).

If you sold your personal item(s) for a gain, then you’ll need to pay short or long term capital gains tax on it, depending on how long you held the item. This is why you should enter each item separately and not net them together.