1099-K Personal property sales with a mix of gains/losses

[Beldorx]

I've tried to find the answer, but keep going down the wrong rabbit holes. I have Turbo Tax Desktop Deluxe. I'm not self-employed, run a business, or anything like that. I've just sold a few personal items on ebay (some at a small profit, some at a loss). Ebay sent me a 1099-K just like they did last year. But this year the entries for TT are different (or they seem so). Can I even enter this with Deluxe? I completed the 1099-K summary section with: -Personal item sales - Issuer -TIN # - Gross amount of sales (total on the form) - Selected "sold some items at a loss or had no gain" - Entered total proceeds that were at a loss. I assume that means the sale price for the items at a loss. All others were sold at a profit. That's where it starts wanting me to fill out the section for "Stocks, Bonds, ... other". There are entries for accrued Market discounts, wash sales, and a bunch of items that make no sense to me. This is mixed household and personal memorabilia, from books, to figures, to purses. I just want to find some way to enter that I sold: Item 1: Gross earning, Cost, Net (either positive if profit, or zero for a loss) Item 2: etc. HELP! Am I even in the right area?

[KrisD15]

Yes, you are in the right area. 

You enter the 1099-K and select "Personal Items" 

Personal items cannot give you a reportable loss, only a possible gain. 

After entering the 1099-K, go to the top Investment Income option "Stocks, Mutual Funds, Other" 

There should be a line with the 1099-K listed, click edit

Click Edit once again for the Ebay 1099-K

You may enter one sale at a time, but if you owned all the items for more than one year, it would be easier to enter a summary and "build in " the gain. 

For example if you sold $100 worth of items and lost 20 but made 10, you could enter 100 as proceeds and 90 as the basis. Remember that for personal sales, you cant claim the loss. In this example, you'll have $10 income (because of the gain)

If you think it would be easier, you can enter the sales separately. 

If you enter a summary, and these are "garage sale" type items, you do not need to choose a Sales category.

(if you have a gain, long-term / short-term will matter. Short-term is one year or less)

The main concern is to signal to the IRS that this 1099-K was received for ebay sales and not Self-Employment income or major transactions 

[Beldorx]

Thank you for the quick response.  Summarizing would be fine, but I've I've understood what the software is saying, if I don't break it out for each sale, I'd have to physically mail in an itemized 8453 form anyway (see below).  If I don't summarize, it asks for item that are unclear like Accrued Market discount and Wash Sale Loss Disallowed (no idea what those are).

I guess if I don't want to mail something in, I have to itemize each sale?

Using the summary option, it comes up with:

To finish reporting these sales, follow the mailing instructions.

Mailing Instructions

Take a moment to double-check that your statements are complete. For each sale listed, there should be:

- A Description
- Date Acquired
- Date Sold
- Sales Price
- Cost Basis
- Gain or loss for each sale
- A sale category based on how the sale was reported to you and the IRS

In some uncommon cases, there will be an adjustment code and adjustment amount.

NOTE: Any sales summaries that include only Box A or Box D sales, and which have no adjustments to gain/loss, do not need to be included on a statement mailed to the IRS.

Here's how to mail your statements:

If you are e-filing your tax return, then mail your statements along with Form 8453 to:

Internal Revenue Service....etc.

If I don't summarize, it asked for:

date acquired (not sure other than many years ago)

Accrued market discount

Wash Sale loss disallowed

Proceeds from collectibles - I'm assuming no, but I don't know what bearing that has.

Fed/State tax withheld - that would just be zero.

[DaveF1006]

Yes, if you decide to report these transactions individually, you would ignore such things as accrued market value, accrued market discount, Wash Sale loss disallowed, Proceeds from collectibles, Fed/State tax withheld as these don't pertain to you. These are important when reporting sales of stocks and bonds or similar investment transactions.

As far as date acquired, if you don't know, you might estimate the date or time frame when you first purchased these. The date is not so important as the holding period you own these personal items.

It determines  the tax treatment you received on your return.  if you own these items longer than 1 yr., you will be taxed at a long-term taxable rate. If one year or shorter, the sales are treated as a short-term sale and you will be taxed at the ordinary income tax rate. 

I hope this helps clarify any questions you may have. If it doesn't, please reach back to us as we are here to help.

@Beldorx 

[Beldorx]

Thank you.  One last question so I can get this straight. 

Under the 1099-K, it asks about for Personal Item Sales:

- I sold some items at a loss or had no gain

    Enter total proceeds for items sold at a loss (dollar amount, unsure if they mean the gross of that sale item price or the loss on that sale (gross-cost))

However, under the section for the 1099-B/Other:

When it does a form check, It says there is a mismatch with the 1099-K, since it subtracted, the "loss" of that one item.  1 item sold at a loss of 20

So for example the 1099K says $600 gross sales, but 1 item sold at a loss ($20)

The error says the 1099-B needs to match the "linked" 1099-K at $580, where the 1099B is showing the 600 gross, net losses, and overall profit.

It works if I just leave the line I sold some items at a loss or had no gain with $0.  Is that correct?  Or am I doing something backwards and need to change the 1099-B?

[RobertB4444]

You can't have a loss on personal items sales.  The cost has to match the amount you sold it for so that the gain and loss are at zero.  Change the amounts so that they match and you'll be fine.

@Beldorx 

[Beldorx]

Ok... so now I'm confused again.

Suppose 3 items sold for a total of $300 sale price for all three:

Item 1: Sold for $150, cost $130. ($20 gain)

Item 2: Sold for $100, cost$90 ($10 gain)

Item 3: Sold for $50, cost $60  ($10 loss)

Overall, a profit of $20, with one item sold at a loss

1) I entered the 1099-K, which wanted:

   a) Type of income (personal items)

   b) Gross amount of "transactions", which is NOT loss or gain, but just the sold for price + shipping.  So that's $300.

   c) A reference indicating some items were at a loss and asked how much of the "proceeds" were items at a loss.  

2) For the 1099-B section, I itemized

   d) Sale proceeds (Sales proceeds are the total amount you received from the sales.) 

   e) Cost of item (which includes original item cost, shipping to me, shipping to customer)  

The software is saying that the two are linked

It added all of the D items and said it needs to match the item B, minus the value C.

If D is the total received (gross sale price of $300), I'm assuming the only way that works is if item C is listed as $0

Or am I supposed to put 300 and 50 in for items B and C, but then for item in the 1099-B, only list the items that sold for a profit and ignore the others which inaccurately reports my gains overall (reports as $30 when the overall gain is only $20)

[RobertB4444]

Sorry this is so confusing.

The key to this is item C.  No items were sold at a loss.  Personal items can't be sold at a loss.

The easiest way to do this is to lump them together.  $300 is what you got, $280 is what it cost, no items were sold at a loss.  $20 taxable.

@Beldorx 

[Beldorx]

That's what is throwing me off.

The TT software for section 1099-B tells me that if I "summarize", I then have to mail in a paper copy of 8453, which is again needing to itemize it.

     If you are e-filing your tax return, then mail your statements along with Form 8453 to...

Also noted that if I never click either of the loss buttons, Item C about a loss value from before never comes up.  

[JamesG1 · Accepted solution]

If you group all of your personal items together, be careful that you do not 'mix' gains with losses and misstate income.

Consider this example.

If you were to report one group of three personal items with a selling price of $1,000 and cost basis of $2,400, Schedule D would report $0 gain.

However, if you report each individual personal item, Schedule D would report $100 gain.

Personal items sold for less than their basis (most likely, the original purchase price) report $0 capital gain on line 7 of the Federal 1040 tax return.

Personal items sold for more than their basis report the gain on line 7 of the Federal 1040 tax return.  See this example.

                                              Selling                   Cost

                                              Price                      Basis

Couch                                   $500                       $2,000                  Capital loss on personal item = $0 loss

Jewelry                                  $400                       $300                     Capital gain on personal item = $100 gain

Chair                                      $100                       $100                    No capital gain or loss

                                                $1,000                   $2,400

Schedule D will report a $100 long term capital gain.

Federal 1040 tax return line 7 reports $100 long term capital gain. 

To report Personal item sales in TurboTax Desktop, follow these directions.

• Click on Start to the right of Income from Form 1099-K.
• Select Personal Item Sales.  Click Continue.
• Enter 1099-K information.   Click Continue.
• At the screen Personal Item Sales, you are told that further information will need to be entered.  Learn More provides detailed information for the next steps.  Click Continue.
• At the screen Your 1099-K summary, notice that the income relates to ‘Sale of Personal Items’.  Click Done.
• Click Start to the right of Stocks, Mutual Funds, Bonds....
• At this screen, you will be asked to Edit the Personal item sales (1099-K).
• At the screen Select any less common adjustments that apply, select Any loss from this sale is not deductible....  Continue.
• At the screen Here's all the sales reported...., Click Add to add additional lines 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.

Make sure that you retain any information about the items sold should you be required to demonstrate to the IRS that this is not taxable income.

@Beldorx