Ebay 1099-k deductions

[2025taxman]

I sold about 100 items on ebay ($20,000) accumulated over the years.  At what point, $$$ or quantity of items, does the IRS consider the activity a business thereby allowing deductions and losses?

[RobertB4444]

If you are selling your personal items just to get rid of them (like an online garage sale) then it is never a business.  If you are trying to earn money doing a side gig on eBay then the very first dollar that you earned you were a business and should have been entering it on your tax return.

@2025taxman 

[2025taxman]

Thank you.  Guess I’m getting caught up in the definition of ‘earning money.’   The IRS considers the sales income but deductions for shipping, fees and other possible expenses can only be deducted if classified a business.   I had income, I have items costs & will report it.  Just trying to understand at what point I could also deduct add’l expenses or losses. 

[RobertB4444]

The second you make money.  If you are doing personal sales then the expenses can only be deducted up to the amount of income.  It's treated as a hobby.  You're still supposed to report the amount on the 1099-K but it can never be a negative number.  At best it zeroes out with the cost of the items that you sold.

If your intention is to make money though then it is a business the second you start earning.  Then you would enter all of your sales as income and deduct all of your costs.  If you end up with a negative number then you lost money this year.

If you are losing money at a business for three years then the IRS considers that a hobby.

@2025taxman 

[2025taxman]

Thank you.   So I could technically deduct expenses and classify this year’s revenue as a business loss but would need to show a profit  in 3 of the next 4 yrs if still selling stuff.   Correct?

[ThomasM125]

Determining if you are a business is more than simply earning a profit, although having a profit in three out of five years would be strong evidence that you are a business. You also have to take into consideration the amount of time you devote to the activity, how meticulous you are with record keeping, how long you are involved with it, what your other income producing activities are. 

Since you are selling personal items, if you simply do that until you run out of items it is less likely to be considered a business. On the other hand, if you purchase items for sale in addition to selling things you purchase for personal use, that would indicate a profit motive.

You can read this IRS article to learn more.

[2025taxman]

Thank you.  Great forum.  

[2025taxman]

One last thing, can I deduct ebay fees or add them to my cost if it’s just a hobby?   What about shipping costs?