Hello,
In 2021 I was living at home with my parents (I was 29 at the time). They decided they were going to sell their house. In preparation for packing and moving, I sold some of my personal items that I no longer used on eBay. To help them downsize, my parents also let me sell some of their things in the house that they no longer wanted on eBay and keep the proceeds. I received a 1099-K for 2021 for approx. $4000 for 125 transactions between May and December 2021 (Box 1a. Gross amount of payment card / third party network transactions).
My question is what is the appropriate/best way to handle this situation from a tax return perspective? My understanding is that what I did was not classified as a "hobby" (I was not doing it as a recreational pursuit or for the love of it). I guess that leaves the possibilities of going either the Schedule D route (Capital Gains and Losses) or the Schedule C self-employed business route, or some combination of the two?
If I was just selling personal things, I would probably just use Schedule D to report the capital gains for the limited number of items that I sold for more than I paid or got for free. For many of the personal items I sold, I can document the basis with receipts from when I purchased them, and in most cases sold the items for less than the basis (as is generally the case with items sold at a garage sale or the online equivalent of a garage sale). I understand that capital losses are not recognized for used personal items.
It seems a little more complicated to me, though, when having to as well deal with the items my parents didn't want and let me sell -- I guess these items were "gifted" to me and then I sold them. In which case, from a Schedule D capital gains/losses perspective, my basis is what their adjusted basis was. However they don't have any documentation of what they paid for these items (mostly random things like old skis, old bike racks, lamps, clothing, etc.). So if I were to go the Schedule D route for these items, I would likely claim $0 basis to be safe. But with 50-75 items it's not like I could list them all individually, so could I lump them all together as one long-term capital gain? (they were all things my parents had for > 1 year) Or should I go the Schedule C route? (either to account for just the sales of my parents things, or for everything I sold?) I don't know if I'd really classify what I did as a "business" since it was more of a one-off way of selling things that I and my parents no longer wanted, and it's not like I was buying items and then re-selling them. However, I was getting items from my parents for "free" that I planned on selling, so would this be considered some sort of temporary short-term self-employment business?
Thanks for any assistance/advice in sorting this out! I think I have some grasp on it but it's all a little confusing to me.
