Questions (one somewhat complicated) about eBay 1099 Personal Sales

[avigo45]

So like many, I received a 1099 for my personal ebay account where I only sell personal items (I also have an ebay where I sell to make money, which I received a separate 1099 for and which I record separately on a schedule C)

My questions regarding the personal sales 1099:

1. Most of these items were sold at a loss, some of them purchased many years ago. How do I record this, especially if I do not know the value or have proof of purchase (old items, items bought at garage sales, etc)

2. I realized on this 1099 that ebay has my wrong address, from a previous state that I have not lived in for several years. Not sure how this happened. Will this cause any issues when filing? Do I need to try and have this changed with ebay before filing my taxes? There are no state taxes owed or other state tax info on the 1099, and I currently live in a state with no personal income tax (but the state that ebay put on the 1099 is a state that does have income tax). Sorry, I know that is a bit complicated. 

Thank you

[JamesG1]

(1) Establish a record or spreadsheet of what was sold and record a date of purchase as well as a purchase amount.  You may not be able to locate a receipt but this is the best record that could be put together at this time.

(2) Have ebay change the mailing address but it could already be too late.  Different states have taken different approaches to the IRS form 1099-K.  Hopefully, the state that was sent the form will not be contacting you but it is always possible.

Make sure that the paper records that you retain to back up your tax return can demonstrate that you had no connection with that state.  For instance, you may have a letter from an employer reporting that you move from state A to state B.  

The posting of IRS form 1099-K for personal item sales is a two-step process.  

• First, you post the IRS form 1099-K amount of box 1a.  
• Second, you post the IRS form 1099-B Proceeds  From Broker and Barter Exchange Transactions to report the sales proceeds and the cost of sales.

Make sure that the amount reported on the IRS form 1099-K box 1a equals the Proceeds reported for the multiple entries of IRS form 1099-B.

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

In TurboTax Online, to report Personal item sales, follow these directions.

• Down the left side of the screen, click Federal.
• Down the left side of the screen, click Wages & Income.
• Click the drop down arrow to the right of Other Common Income.
• Click to the right of Form 1099-K.
• At the screen Did you get a 1099-K?, select Yes.
• At the screen How would you like to upload your 1099-K? click Type it in myself. 
• At the screen Which type of income is your 1099-K for, select the button for Personal item sales.  Click Continue.
• At the screen Let's get the info from your 1099-K, enter the information.  Click Continue.
• At the screen Personal Item Sales, click Continue.
• At the screen Your 1099-K summary, notice that the income relates to ‘Personal Items’.  Click Done.
• At the screen Your income and expenses, scroll down to Investments and Savings (1099-B, 1099-K….).  Click the down arrow.
• To the right of Stocks, Cryptocurrency, Mutual Funds, Bonds, Other (1099-B), select Start/Revisit.
• At this screen, you will be asked to Review the Personal item sales (1099-K).  Click Review.
• At the screen Now, enter one sale…., answer questions about the personal item sale.  Click Continue.
• At the screen, Let us know if any of these situations apply to this sale, sales expenses may be recorded.
• Select Add another sale 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.

[avigo45]

Thanks.

For personal items, some of are 10, 20, 30 years old. There is obviously no way to record what I paid at Walmart for something 20 years ago. Just confused what they are expecting people to do here. 

For the address, I guess I just forgot to update it with ebay when I moved. My shipping address with them was updated but I guess there was a registration address that did not automatically get updated. 

Would this have already been filed with the (wrong) state or could it be retracted and corrected for this year?

Basically, at this point do I just need to wait and see if this state reaches out to me? If they do, I'm assuming I'd just have to prove residency in the different state? It's making me nervous. 

It's just ridiculous that we are required to file a 1099 for selling personal things at a loss. 

[PaulaM]

A list of personal items that almost assuredly have depreciated in value since purchase should suffice. You said 'most' of these items were sold at a loss', indicating that some may have been sold at a gain? If so, then you would use the steps outlined by JamesG1 above to report the gain on those items.

If all personal items were sold for a loss (or even part of them), then the 1099-K can also be accounted for on Schedule 1. In TurboTax, you'll find the entry point under the Other Common Income section. 

Indicate personal item sales for type of income, then continue and mark the box that that says the amount in box 1 is too high or includes personal transactions. Then enter the amount to exclude. Note: this box is only for item amounts sold at a loss. 

The personal items sold for a loss amount will then flow to Part 1 of Schedule 1, and no taxes are owed.  I would wait for the prior state to contact you. Here's a list of states with lower 1099 - K filing thresholds to check if your prior state is one of them.