I will get a 1099-k from paypal this year. I sold all my baseball cards from the last 3 years. It was about 25k but I only made $650. I buy and resell baseball cards.

[uvillj01]

So I bought cards from 2015-2017 and needed money, so I sold most of them. I know what I bought them for and what I sold them for. Some for gains and some for loses. I will get a 1099-k because I sold about 25k and 300 transactions. Do I need Business Turbo Tax? Does the $650 count as business income or personal and do I need to fill out a Schedule C? I do have another job. This was a hobby of mine but now I needed to get money. 

So the $650 is deducting all the ebay/paypal fees also. I sold a lot of cards for a lose but still gain a little bit. Thanks

[Anita01 · Accepted solution]

You would not report this either as hobby income or Schedule  C income, and you do not use the Business program for this.  

After thinking about your question for a while longer, I realized you were talking about the sale of what the IRS considers a collectible.  Collectible sales gains are taxed at a completely different tax rate and are reported as investment sales on Schedule D.

Given your high volume of transactions, you could break this down into one short-term and one long-term sale, based on whether you held the items less than or more than one year.  Gain and loss sales can be added together within each category, leading to a net gain or loss on each category. Your date of purchase and sale would be Various.

[Edited 1:42 pm 1/10/18]

This short list of collectibles from Investopedia is useful:

What is a Collectible?

Providing the answer to this question won’t get us very far, since it’s simply “an item worth collecting.” A list of examples will give you a much better idea: 

• Rare stamps
• Rare coins
• Rare books
• Art
• Baseball cards
• Glassware
• Antiques
• Fine wine

I will return shortly to add some links to Publications to support this answer.

I'm leaving my answer on response to an IRS notice because the IRS may still expect this income on a Schedule C and you would need to redirect them to the Schedule D.

https://taxmap.irs.gov/taxmap/pub17/p17-088.htm#TXMP51c36ea7

https://www.investopedia.com/articles/personal-finance/061715/how-are-collectibles-taxed.asp

http://1040return.com/collectibles-tax-collector/

[uvillj01]

Thank you!!! So I can do this even though I am getting a 1099-k? I am just worried the IRS will see I'm getting a 1099-k for 25k and me only having $650 gains. Thanks a bunch by the way.

[Anita01]

Please return and read the new answer about the sale of a collectible item!

[Anita01]

The 1099K is used to report income that will be included somewhere on your return.  

In your case, you will be reporting the income as capital gains income. The IRS may indeed expect to see this as Self-Employment income on a Schedule C, but all you need to do is respond by sending the IRS a letter saying the income was included on Schedule D.  You can include the accounting of gains and losses on your sales and your other expenses.  You can even prepare that accounting now in a manner that you would want to send to the IRS should they ask.

Letters like this are nothing to be afraid of, especially since you have all the detail information.  

Even if the letter comes to you as a billing for self-employment income, you always have to keep in mind that such notices are form letters that come out of an automated computer system, meaning no one has actually looked at your return to see where else the income might be reported, so all you have to do is tell them where to look.  Receiving such a notice does not mean you'll be put on some kind of list to be examined in future years, it's just the result of automated matching systems.

[uvillj01]

Thank you so much and it makes sense to me. I appreciate it. I will have to do a Schedule D for investments sales and dividends. Will I need Premier or Deluxe for that? Again, thanks so much.

[Anita01]

If you are using the online web product, you would need Premier for the investment sales.  If you use the Desktop CD or Download version, you could use Deluxe for everything.  And you're welcome, that's what we're here for!

[maglib]

the net effect won't be the same as expenses for hobbies are subject to 2% cap and are only deductible if they itemize.  Without knowledge of OP's other income, the 2% cap can be an issue. Plus their itemized deductions may be limited....   Would need to know full income and deductions to actually determine if filing a schedule c or c-ez may be better for op.

[Anita01]

See my corrected answer-these are Schedule D capital gains for sale of collectibles

[maglib]

great.  I suggest you edit comment then above too. I totally forgot about schedule D possibility.  Makes sense, forget hobby!

[maglib]

EDITED RESPONSE (sorry about confusions).  Report as Collectible Income so you can take expenses related on schedule D. It's not a hobby as you are profitable.

[uvillj01]

So I am not sure what is best still. Should I file a Schedule C???

[Anita01]

no, it's not optional to file these as investment sales on Schedule D with the investment type of collectibles.  Sorry we confused you.

[jbandtina1]

what was the conclusion to this,  including your income on Schedule C, Profit or Loss from Business, and including costs on the same form?

[DianeW777]

If you sold collectibles that were purchased as an investment, they will always be reported on Schedule D, as a capital gain or loss. Some people may consider this a hobby, however it is an investment and is reported as such on the tax return. 

According to the IRS "Net capital gains from selling collectibles (such as coins or art) are taxed at a maximum 28% rate."  The rate can be less, depending upon your other income and tax bracket.

• IRS Topic 409 - Capital Gains and Losses