How to Deduct Expenses of Items Purchased for Content Creation and Then Sold

[comic-book-guy]

As part of my self-employment as a content creator who makes blog articles/reviews and videos, I purchase products featured on my websites and videos for coverage and then later generally sell them for a small loss (or occasionally a small profit) on eBay. I received a 1099-K from eBay this year for the first time, and I’m not sure how/where to include this in my schedule C. I know how to include the 1099-K in income, but am unsure under what Expenses headings to include the cost of goods sold, selling fees and shipping costs. Does anyone have any advice or guidance upon this? I’m quite sure I should be able to deduct these expenses since they are part of my business, but it’s new to me and I’m worried I will mess it up, as finding the proper areas to deduct these seems very complicated. 

[KrisD15]

To clarify, The 1099-K from eBay shows the proceeds from the sales of the items, but do you also get a 1099-K as income for the value of the products you receive or do you actually purchase the items on your own?

Who supplies the income? In other words, who pays you to review the products? 

Is this a profitable business? 

[comic-book-guy]

It is a profitable business, as I earn funds via affiliate programs and followers clicking links, etc. All products I provide coverage for I purchase myself. The eBay 1099-K makes it look like I’m making a HUGE profit, which is why I think it’s important to deduct the actual costs of the products and selling fees. 

[RobertB4444]

In your case what you need to do is treat this business as though it has two income streams.  First is the income that you receive from followers and affiliates, etc. that you are already reporting.  Second is a sales job on Amazon and eBay.  

You should create a second schedule C for the sales of inventory.  Then you will run it - on paper at least - as though you had a store.  You purchase inventory and that is an expense.  You sell that inventory and that is a profit.  You pay for shipping and that is an expense.  And so on.

You'll enter the 1099-K exactly as you received it for 2024.  Then you will enter the actual cost of all of the items that you sold in order to earn the money on the 1099-K.  You will also enter any related expenses.  Based on what you've written here this will probable result in a net loss for the year which will help offset some of the money you earned from your main income stream.

@comic-book-guy 

[comic-book-guy]

Thanks! That’s very helpful! So do you recommend going through and writing out the individual cost of each item sold within the Expenses area of the Schefule C, or is that overkill and I should just summarize as there are quite a few items sold but the 1099 is just one lump total number?

[PatriciaV]

No, you don't need to itemize the cost of sold merchandise. A grand total is fine. The IRS is looking for business income that is at least as much as what was reported on Form 1099-K. Your expenses can be reported in broad categories.