I went through this exact situation last year and want to share what I learned after talking to a tax professional. The key thing to understand is that the 1099-K is just an information document - it doesn't automatically create taxable income. Here's what I did and what worked: 1. **Created a simple spreadsheet** with columns for: Item description, approximate purchase date, estimated original cost, sale price, and net loss. For items without receipts, I used reasonable estimates based on what similar items cost when I likely bought them. 2. **Used online resources** to verify reasonable original prices. For electronics, sites like Amazon price history or manufacturer MSRP data helped establish credible original values. For clothing, I looked at brand retail prices from the approximate purchase timeframe. 3. **Kept all eBay communications** - saved my listing descriptions, final sale prices, and any buyer messages that might help establish the personal nature of the items. 4. **Documented the personal use** - I noted in my spreadsheet how long I owned each item and that they were used personally, not held for investment or business purposes. The IRS understands that people clean out their homes and rarely make a profit on used personal items. As long as you're reasonable and honest with your estimates, you should be fine. The burden would be on them to prove your estimates were unreasonable, which is difficult for typical household items. Don't stress too much about perfect documentation - just be prepared to show these were legitimate personal items sold at a loss.

This is such a timely question - I just went through this exact situation! I sold about $1,800 worth of personal items on eBay this year (old video games, clothes, books, etc.) and was panicking about the 1099-K. Here's what I learned after doing a ton of research and talking to a tax preparer: **The 1099-K is NOT a tax bill** - it's just reporting what payment processors paid you. It doesn't mean that amount is taxable income. **For your specific questions:** 1. **Proving personal items sold at loss**: Create a simple spreadsheet showing item descriptions, estimated original purchase prices, sale prices, and the loss on each item. The IRS expects "reasonable estimates" - you don't need perfect precision. 2. **Original receipts**: You don't need receipts for everything. For items without receipts, document reasonable estimates based on typical retail prices when you purchased them. For example, if you sold a 2019 iPhone for $300, you can reasonably estimate it cost $800+ new. 3. **1099-K breakdown**: No, the 1099-K will just show your total gross payments. But you can download detailed sales reports from eBay that show individual transactions. **My approach**: I made a spreadsheet with columns for item, purchase year, estimated original cost, sale price, and net loss. For items I couldn't remember exact prices, I researched typical retail costs for those items during the year I likely bought them. The key is being reasonable and honest. The IRS knows most people lose money selling used personal items - they're not trying to tax you on legitimate personal losses.

Great discussion everyone! As someone who's been navigating these rules for my own fleet, I wanted to add a few practical considerations that might help. First, keep detailed records of business vs personal use from day one, even if you're planning 100% business use. The IRS can be very strict about listed property documentation, and having contemporaneous logs will protect you if audited. Second, consider the timing of your vehicle purchases carefully. If you're planning to buy multiple vehicles, spreading purchases across tax years might help optimize your depreciation benefits, especially if you're hitting the luxury auto limits. Finally, don't overlook the research credit implications if you're using any vehicles for testing new technologies (like electric vehicles or autonomous features). Some of my colleagues have been able to claim additional credits on top of the depreciation benefits. The state conformity issue mentioned by Brianna is huge - definitely factor that into your financial projections. Some states have their own bonus depreciation rules that might be more or less favorable than federal.

This thread has been incredibly informative! I'm actually a tax professional who works with several rental car businesses, and I wanted to add some clarity on a few points that have come up. The distinction between Section 179 and Section 168(k) for rental cars is correct - rental cars are generally excluded from Section 179 but can qualify for bonus depreciation under 168(k). However, there's an important nuance: if your rental car business also provides services like delivery or transportation (not just renting to customers who drive themselves), those specific vehicles used for the service portion might qualify for Section 179. Regarding the luxury auto limits mentioned throughout this discussion - these limits are adjusted annually for inflation. For 2024, the first-year limit with bonus depreciation is $20,200 for cars and $21,200 for trucks/SUVs. This can significantly impact your cash flow projections, especially for higher-end vehicles. One strategy I've seen work well for clients is purchasing a mix of vehicle types. Trucks and SUVs often have higher depreciation limits and might better suit certain rental markets (contractors, families, etc.). Also, don't forget about the potential for Section 1031 like-kind exchanges when you eventually replace vehicles. This can help defer the recapture issues that Brianna mentioned earlier. The documentation requirements really can't be overstated - I've seen audits go very badly when clients didn't have proper contemporaneous records, even for 100% business use situations.

I've been dealing with similar ticket reselling tax questions and wanted to share what I learned from my accountant. The unsold ticket deduction is definitely legitimate, but there's one important detail that hasn't been mentioned yet - you need to be careful about how you classify yourself. If this is truly a "side gig" like you mentioned, make sure you're prepared to demonstrate business intent to the IRS. They look for things like: keeping business records, having a separate business bank account (even if it's just a designated checking account), treating it consistently as a business activity, and making genuine efforts to be profitable. For your $280 Taylor Swift tickets, absolutely claim that loss. But also document WHY they went unsold - was it because the market price dropped below what you paid? Did you list them but get no buyers? This kind of documentation helps establish that you were genuinely trying to operate a business, not just buying tickets speculatively. One more tip: consider tracking your time spent on this activity. Even if it's just a few hours a week, having a log of time spent researching, listing, communicating with buyers, etc. can help support the business classification if you ever need to justify it. The tax savings from properly deducting these losses can be significant, so it's definitely worth doing it right!

I've been doing ticket reselling as a side business for about 2 years and want to add some practical perspective on the unused ticket deduction question. You're absolutely right that those Taylor Swift tickets can be written off as a business loss - I've done this multiple times with expired inventory. The key thing that really helped me was creating a simple spreadsheet tracking each ticket purchase with columns for: purchase date, event, cost, attempted sale price, actual sale price (or "EXPIRED" for unused ones), and profit/loss. This makes it super easy come tax time and shows clear business intent if anyone ever questions it. For your specific situation, since you mentioned making "a few hundred bucks" in profits, writing off that $280 loss could significantly reduce your tax burden. Just make sure you have the purchase confirmation and some evidence you tried to sell them (even if it's just a text to a friend asking if they wanted to buy them). One thing I learned from experience - start treating this more formally as a business even if it's small scale. Open a separate checking account for ticket purchases, keep all receipts organized, and maybe even create a simple website or social media page for your "business." It doesn't have to be fancy, but having these elements makes it much easier to justify the business classification and associated deductions. The IRS really doesn't care how small your operation is as long as you're genuinely trying to make a profit and treating it like a business. Your profit motive is clear from your successful flips, so don't hesitate to claim those legitimate losses!

I can definitely relate to your confusion! When I first got my EIN through a service, seeing someone else's name on the documentation was really alarming. I spent hours researching whether this was legitimate or if I'd been scammed. What I learned is that this is actually the proper way these services operate. The IRS has specific provisions for third-party designees on Form SS-4, and reputable EIN services use this official channel rather than trying to impersonate you directly. The key insight that helped me was understanding that your EIN is tied to your business entity (the company name on the first line), not to any individual person. The third-party designee is just the administrative contact who facilitated getting your EIN assigned to your business. I've been using my EIN for about 8 months now for everything from opening business bank accounts to filing quarterly taxes, and I've never had any issues. The IRS, banks, and other institutions are very familiar with this setup since it's so common for businesses to use services for EIN applications. You're absolutely right to verify that everything is legitimate - that's good business practice. But based on what you've described, this sounds like a completely normal and proper EIN obtained through official channels.

I totally understand your concern - I had the exact same worry when I got my EIN through a service! The first thing I did was panic and think something was wrong with my application. What helped me understand this better was learning that the third-party designee is actually a formal role recognized by the IRS. When you look at Form SS-4 (the EIN application), there's an entire section dedicated to third-party designee information. This isn't some workaround - it's an official part of the process. The way I think about it now is that your business owns the EIN, and the service provider was just your representative for the application process. It's similar to how you might authorize someone to pick up a package for you - they're acting on your behalf, but the package still belongs to you. I've been using my EIN for business banking, vendor agreements, and tax purposes for several months now without any issues. No one has ever questioned the third-party designee name because it's such a common arrangement in business. One thing that gave me extra peace of mind was calling my bank's business department before opening my account to explain the situation. They immediately understood and confirmed this wouldn't be a problem. Most financial institutions and government agencies are very familiar with this setup.

Just want to add that I'm in a similar production business with an S-corp and I DO file Schedules L and M-1 even though I'm under the threshold. My reasoning is that these schedules create a paper trail of your business's financial position over time. If you ever get audited or need to show financial history for loans/investors, having these forms consistently filed gives a more complete picture.

Based on your situation, you're absolutely correct that Schedules L and M-1 aren't required since you're well under the $250k threshold. However, I'd strongly recommend addressing the salary issue that Dmitry mentioned - the IRS can be quite strict about S-corp owners taking reasonable compensation when the business is profitable, even if it's just $1,270. For the schedules themselves, since you're a small one-person operation, I'd suggest keeping it simple and only filing what's required unless you have a specific reason to include them (like establishing a financial history for future lending). Your time is probably better spent on growing the business back to full operations. One practical tip: if you do decide to include the optional schedules in future years as your business grows, start maintaining the books now in a way that makes completing them easier later. This gives you flexibility without extra work this year.