I received a 1099k of 1,000 sold personal items on ebay how do i report this Im not a business

[colby_parker]

Thank you very much for your response, it was extremely helpful!  I have two smaller follow-up questions:

Since there were over 1200 sales made and I don't know the actual cost basis for any of them, while trying to come up with my good-faith estimate, can I take a logical step like "this collection of cards was purchased for $12000 and I sold it for $13000"?  Even though some of those items may have sold at a profit and some at a loss, since I have no way of knowing?

Secondly, I received this collection to sell as a gift from a family member at the beginning of the year.  Would that affect the proper way to file this?

[ThomasM125]

You can report the cost basis as being more than the sales price if you can substantiate that assumption by producing documentary evidence. If you get audited, it is unlikely your assumption would be adequate if you had "no way of knowing."

The cost basis of property you received as a gift would be the cost basis of what it was in the hands of the donor, or it's fair market value, whichever is less. So, if you are dealing with collectibles that went up in value during the time the donor owned it, you likely have income upon it's sale.

@colby_parker 

[colby_parker]

Thanks again for your assistance. I don't want to report the cost basis as higher than what they were sold for; I'm asking whether it is okay to group the whole thing together as a collection of averages (say, the whole thing increased in value from my good-faith estimate of cost basis) even though it is theoretically possible that some items sold for less than they were bought for and some sold for more, since with 1200 different items some probably did.  I just don't know.

In other words, when trying to give a fair estimate of the original cost basis, is it okay to average it out for everything?  For example, declare that the collection was bought for $12,000 ($10/item) and sold at $16,000.  Even though some of them may have originally cost $1, some originally cost $21, some increased to $40, and some decreased to $2.  With 1200 discrete items sold I don't see any other way to feasibly do it.

The family member, like me, has no records of what they paid for any of the 1200 items as they were collected over the course of time.  They gave it to me at the beginning of the year and I immediately began selling it off.  The items certainly changed in value over time while they owned them but I didn't own most of them long enough for any appreciable difference to occur, and had no original cost to myself for them since they were a gift.

[Vanessa A]

"I'm asking whether it is okay to group the whole thing together as a collection of averages"  Yes and no.  You can group the sale together and report the entire selling price.  Your cost would not be an average since you do not have the actual numbers, you would not be able make up a number based on your assumptions.  You would need to add up each item individually.  If you do not know the number and you are sure all items cost at least $1 each, then you could use $1 for the ones you don't know.

Your selling price is not in question at this point.  You just need to determine your cost basis. 

In other words, when trying to give a fair estimate of the original cost basis, is it okay to average it out for everything?  No. For your basis, it is best to find some type of documentation or look up selling prices around the time the items were purchased.  You cannot just assume they all cost the same.  If you were audited, then you would need some form of documentation (even if it is research) to substantiate your claim for the basis.  If you have absolutely no way of knowing and you cannot provide anything to say that your estimate is reasonable, if you were audited, the IRS could decide that your basis is $0.  If some items cost $1 and some cost $40, but you have no way of knowing which ones were which and how many of them were at which price, the best answer is the most conservative answer.  The selling price in no way shape or form affects your cost basis.  So, you can't just average it out based on the increases and decreases. The IRS will look at these numbers separately. 

When you do come up with it, a spreadsheet of the sales price and costs, would be a good thing to keep with your tax records for 2022. 

[colby_parker]

Hello and thank you for your reply.

Since there are over 1200 nearly-unique items and there aren't any real tools to track down the price history for cards which were acquired piecemeal over the past decade, putting together those records seems more or less impossible and even if I did do that, would wind up being mostly the theater of putting in effort.  I'm not sure it makes much sense to go that direction unless I just say the original cost basis was $0 even though it most definitely wasn't.

Would it be credible and accurate to declare that income as hobby income?  I am currently still engaged in the practice of buying and collecting cards and sell some of them to help fund upgrades.  I've engaged in selling on and off some years since 2015 and since then have generated $24,000 in sales while spending around $20,000 on new collectibles and around $2,000 in sales expenses.  By year only in 2 or maybe even only 1 of the last 5 years have I made a profit, and I don't expect to going forward.  It's just that in 2022 I did many more sales and so I'm not sure if the volume of sales/amount of money involved would lead the IRS to consider that a business.

[DaveF1006]

Yes, you can report this as hobby income. In fact, hobby income is listed as an option to report your 1099K income.  A hobby is any activity that a person pursues because they enjoy it and with no intention of making a profit. People operate a business with the intention of making a profit. Many people engage in hobby activities that turn into a source of income even if they did not intend to.

[colby_parker]

Based on all this help, I am going to try to do my very best within reason to come up with a cost basis for these items and report them on my taxes as collectibles sales, I think.  Since I am planning on grouping these sales together and they occurred over a 6-month period, what should I put for the date of sale?

[DaveF1006]

You can enter various as a date entered.