Join Early Retirement Today
Reply
 
Thread Tools Display Modes
tax reporting - sale of collectables - 1099k
Old 03-28-2022, 09:56 AM   #1
Thinks s/he gets paid by the post
 
Join Date: Apr 2007
Posts: 1,298
tax reporting - sale of collectables - 1099k

I see that places like EBAY and some of the Internet auction sites are now sending a 1099-k to sellers who sell more than $600 in one year.

From some discussion on other forums, it seems that those receiving the 1099-k have become a de-facto small business and need to file Schedule C where they would report gross receipts and subtract off costs.

Antiques and other collectables are considered to be investments and I was under the impression that these would be reported along with stock transactions as long term capital gains, but with the collectables status indicated to be subject to the 28% rate.

Does receiving the 1099-k cause a conflict with reporting the sale of the collectable as a long term capital gain rather than as business income?

For the sake of this question, please assume that I am a collector who would occasionally sell several duplicate items that are now redundant after a better example having been acquired rather than one of the tag sale types that buys hundreds of items and sells them on EBAY. I suppose the question would also apply to the case of wanting to liquidate the entire collection near the end of my life span, although in my case I will probably just gift the collection to my younger collector friends.

Thanks.
joesxm3 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 03-28-2022, 10:39 AM   #2
Thinks s/he gets paid by the post
 
Join Date: Mar 2013
Location: Coronado
Posts: 3,674
I know there is some disagreement about this, but I am of the opinion that you did not start running a business just because someone else issued you a 1099-K, therefore a Schedule C is not necessary. Tax law and IRS publications still say that you should report the sale of collectibles on an 8949 and Schedule D as long- or short-term capital gains.

This is not to say that the IRS won't send you a letter saying "hey, you got a 1099-K so we think you should have a Schedule SE, please send us one". (I have only seen this type of letter about 1099-NEC, but I wouldn't rule out the possibility of them sending one for a 1099-K.) If you want to try to head them off, you could include "on 1099-K" in the description of each item on your 8949. Or if you do get a letter, you can always respond with a letter stating that this activity does not meet the criteria for a business, and here's an itemized list of sales and another copy of the 8949 and 1099-K showing that everything matches up. If the January and December numbers don't quite match, you may have to explain that some sales were reported on the previous or subsequent year due to when you received the funds.
cathy63 is offline   Reply With Quote
Old 03-28-2022, 02:57 PM   #3
Thinks s/he gets paid by the post
 
Join Date: Oct 2013
Posts: 1,181
First off, thanks, cathy63 for your advice in the reply above. You always hit the ball out of the park on the tax questions. I've certainly learned a lot reading your answers to others' tax questions.

However, I recently removed most of the items I had for sale on ebay. There's no way I can establish an accurate cost basis on things I bought 30 years ago and for which I no longer have the original receipt.

Furthermore, there seems to be a wide range of opinions on how to report such activity to the IRS and what the IRS defines as a collectible, and what's defined as a business. It's not the tax due that's the problem for me. It's how to establish the profits without original paperwork and how to report it to the IRS that's the problem. Looks like it's back to Craigslist, FB Marketplace and any other site that doesn't involve a third party in the middle of the transaction.
freedomatlast is offline   Reply With Quote
Old 03-28-2022, 04:31 PM   #4
Thinks s/he gets paid by the post
 
Join Date: Mar 2013
Location: Coronado
Posts: 3,674
Quote:
Originally Posted by freedomatlast View Post
First off, thanks, cathy63 for your advice in the reply above. You always hit the ball out of the park on the tax questions. I've certainly learned a lot reading your answers to others' tax questions.

However, I recently removed most of the items I had for sale on ebay. There's no way I can establish an accurate cost basis on things I bought 30 years ago and for which I no longer have the original receipt.

Furthermore, there seems to be a wide range of opinions on how to report such activity to the IRS and what the IRS defines as a collectible, and what's defined as a business. It's not the tax due that's the problem for me. It's how to establish the profits without original paperwork and how to report it to the IRS that's the problem. Looks like it's back to Craigslist, FB Marketplace and any other site that doesn't involve a third party in the middle of the transaction.
Thank you for the kind words.

You're supposed to report income from sales on FB or Craigslist too though. You report it exactly the same way that you report transactions from a K-1, so legally you do have to figure out whether you're in business or not and whether you're selling collectibles or not and what their cost basis is. This is nothing new. The only thing the K-1 reporting changes is that it's harder for people to evade the taxes on some transactions.
cathy63 is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
What (if anything) may be collectables in the future (i.e 10-20 years out) Retiree_Having_Fun Other topics 71 01-05-2019 07:21 PM
Collectables? Ronstar Other topics 44 06-16-2017 05:28 PM
Any success in Investing in Collectables Car-Guy Other topics 44 10-27-2014 07:07 PM
Sports Collectables mickeyd Other topics 1 01-19-2008 04:53 PM

» Quick Links

 
All times are GMT -6. The time now is 01:43 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.