received 1099k for items I sold for family member

[garciaenm0729]

My brother in law passed away and I sold his musical instruments for my niece on Reverb. I gave her (16yro) all the money total of $9812. I contacted Reverb and they said since I sold it, it was tied to my SS and Reverb sent me a 1099K. How do I account for this money on taxes and not have to pay on it when I didn't receive any money?

[DianeW777]

You can add the income and then remove it if necessary. Your niece should report the sale on her tax return. This would be considered an inheritance sale and the cost to your niece would be the fair market value (FMV) on the date of death.  It's likely there would be no tax on your niece's return if they were sold close in time to the death of your brother-in-law. It would be important for her to use the word 'Inherited' as the purchase date.

You have two options:

1. Nominee the 1099-K to your niece (see information below).
2. Add it and subtract it from your tax return.  Keep good records so that you can show the IRS if necessary later.

Nominee returns. 

Generally, if you receive a Form 1099 for amounts that actually belong to another person or entity, you are considered a nominee recipient. You must file a Form 1099 with the IRS (the same type of Form 1099 you received).  You must also furnish a Form 1099 to each of the other owners. 

File the new Form 1099 with Form 1096 (this is a transmittal for the 1099) by mailing to the Internal Revenue Service Center for your area. (Provided on the Form 1096)

• On each new Form 1099, list yourself as the payer and the other owner, as the recipient. On Form 1096, list yourself as the nominee filer, not the original payer.  The nominee is responsible for filing the subsequent Forms 1099 to show the amount allocable to each owner.

You can go to the IRS website using the links below for the necessary forms. 

• Form 1096
• Form 1099-K

Report on your tax return:

Other Miscellaneous Income:

1. Sign into your TurboTax Online account
2. Go to Tax Home (left panel)  Wages and Income  section 
3. Scroll to  Less Common Income > Select  Miscellaneous Income, 1099-A, 1099-C
4. Select Other reportable Income > Enter a description (----) and the amount
5. Repeat these steps to enter a negative amount
6. Enter the description Sale for niece and a negative same amount (-100)