Yet another 1099K question

Forum|Forum|4 years ago
February 21, 2022
1 reply
9 views

So got a 1099K from eBay for the first time for only selling 6 items all year for $2340.00 as reported on my 1099-K. Done my research and plan on putting that 1099-K info under Misc income. Now two of those items I also bought in 2021 for a total of $1523. Those two items I sold for a 'gross amount' of $1600...so a $77 profit. However, eBay shows my my net sales from the two items being $1338.21 so I actually sold for a loss. I plan on doing what many others are suggesting and adding another row under 'Misc income' and putting a 'Negative' amount to offset the gross $2340.00 amount. What amount should I enter for those two items is my question? Should I put '-$1523' since that's what I paid for those two items? Or should I put something different? The other 4 items I have no records of and am not worried about paying tax on the sale proceeds.

ColeenD3

Level 15

If you bought items and then turned around and sold those items at a profit, which is a very different thing. You have a business. The technique for having zero income is for people who sold old items they had laying around their house.

You need to enter your income on Schedule C.

Ty1725Author

Level 2

Even if I had no intention of selling the items when I bought them? I used them for more than 6 months and decided I didn’t want them anymore. I honestly don’t see how that is different than selling whatever I have laying around the house. Those items were what was laying around the house which is why I sold them. The only reason I made money off those items is because of how the market has been which has increased the value of those items due to part scarcity much like everything else

DianeW777

Level 15

If you are saying that you are not in the business of buying selling items, AND this is an isolated situation, then you have a gain or a loss of personal items. Either way, this is not miscellaneous income unless you choose to report the full proceeds your received for the sold items. If you choose that entry method, there is no allowable deduction for expenses of the cost of the items or sales expense.

These companies have received new reporting rules that require they report to the IRS any sales that equal or exceed $600. This means you are issued the Form 1099-K and the IRS receives a copy as well.

IRS General FAQs on Payment Card and Third Party Network Transactions

If the personal items sales create a taxable gain, then you may be required to file a tax return if you meet the filing requirements. A chart is attached here for your convenience. This income is not subject to self employment tax or considered a business if you are not in an active business to sell purchased products.

The sale of personal items is considered investment income if there is a profit or gain. The gain is determined based on your cost basis in the asset you sold. Purchase price and any sales expense are what is allowed to be used for the cost basis to determine gain or loss. Personal losses are not required to be reported and those losses are not allowed to offset or reduce other taxable income.

Keep all of your records pertaining to the sales with your tax return.

These are considered investment sales for tax purposes and reported on Schedule D. TurboTax CD/Download and TurboTax Premier Online will handle these transactions. You can use the following link for instructions on how to enter into your tax return.

How to enter investment sales

If you are in the business of buying and selling merchandise then as our awesome Tax Expert @ColeenD3 explained, you must use Schedule C for self employment income.

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