1099-K from EBay for sales of personal items

[Greta]

It's not a business. Where to report $1056.

[chasetax · Accepted solution]

Originally I thought to enter as 'other income' and then write-in a subtraction for the same amount.  However in the past when I have entered items there, it appeared IRS was not reading my entries-including preparer notes.  This year I will enter on Schedule C,  business activity--non-business sales of personal property,  activity 999999,  and under misc expenses will back out the amount as 'sales of personal property items-not a business'

[Terry53029]

If you sold any personal items at a gain, report on schedule D, as a capital gain. if a loss, no reporting is required. Make sure Ebay did not assign you a  Merchant Category Code Unless you are running a business. Having said that I would put on other income and back it out with a negative number, so my client doesn't get a letter from IRS

[BobKamman]

I don't sign inaccurate returns under penalty of perjury just because I want to play "Trick The IRS Computer," nor do I advise my clients to do so.  And IRS sends inaccurate notices to people all the time anyway, like the CP80 going to people whose check was cashed but whose return is still in Service Center limbo.  

But even if I joined that game, I would realize that IRS has de minimis rules and isn't going to fuss over a piddling amount of $1,056.  If anything was sold at a gain, it goes on Schedule D.  An interesting question would be whether there were five Hummels sold, and one resulted in a gain of $500 and the other four in a loss of $800, how would you show it there?  Would it make a difference if it was all one lot?  If separate lots going to the same buyer the same week?  

[joshuabarksatlcs]

RE: But even if I joined that game, I would realize that IRS has de minimis rules and isn't going to fuss over a piddling amount of $1,056. 

Years ago, a client got audited.  I asked the agent to shed some light on what had triggered the audit.  After all, there wasn't much to audit for the mostly W2 client.  The reply was "The Form 1099". 

Wifie sold $600 worth of natural drinks in one of those pyramid sales sca...  um.... schemes and no income was reported on the $600+ Form 1099.  She didn't even know what that dang paper was for.  That was a long, long time ago, when an auditor nicknamed Maddog was  around at the local service center.  

[BobKamman]

Agents don't know what triggers audits. Those decisions are made at the Service Center, usually after a 1960s algorithm kicks a return out using a 1990s computer.  But then it is reviewed by a human, and sometimes those are detailed-in from local offices (but that reviewer would not end up as auditor).  The agent was, to use the technical term, "pulling your leg."  It was probably your client's neighbor who turned in a whistleblower form because they didn't like all those cars parked in the street for the Tupperware parties.  

[IRonMaN]

I have been hanging around here too long.  For some reason I knew Bob would pop in and offer the advice that he offered.  Bob - you need to run with scissors and surprise us once in awhile 😉

[joshuabarksatlcs]

RE: Agents don't know what triggers audits..

Believe what you believe in.  Of course I know how audits are picked.  Computers kick out returns, humans decide whom to audit.  It's been that was for years.

I said "shed some light on".  Auditors know or have a feel of more than you think. 

Another audit, during the audit, there was a certain line of inquiry.  At the exit conference, the auditor pinpointed on my client's practice.  Donut shop.  The owner tossed the small changes (for a donut or two) in a can instead of keying in the cash register.  One of the regulars was an IRS agent.  She reported it.  An audit mandate was to ask the TP about the cash receipt procedures.  Turned out client had a daily entry into the cashier of a lump-sum at the end of the day and claimed that was from the can.   I never knew about the can until the audit.  No adjustment there.   

Auditors knew more about the case than what you think.

[Ephesians3-14]

HA!

[BobKamman]

Auditors definitely know more about the case than what they tell you.  If the tip came from another IRS agent, they can tell you.  If it came from the neighbor, they can't.  

[joshuabarksatlcs]

Yep, them auditors may even know if the Bengals are going to win today....