Sold $26k in collectibles on eBay with no profit... how to handle 1099-K on taxes?
I've been downsizing this year and sold most of my collectibles on eBay. Just got a 1099-K showing around $26k in sales. The thing is, these were mainly trading cards from my collection that I bought through breaks and hobby boxes over the years, and I literally lost money on every single one. I'm 100% certain none of this was actual profit - just me trying to recover some of what I spent. How do I show this on my tax return? I want to accurately report that this was just me recouping some costs, not making profits. I'm concerned the IRS will flag me and demand proof of all my original purchases. The biggest issue is I don't have receipts for most items. I do have PayPal transaction history showing how much I spent over time buying these collectibles. Will that be enough documentation? What are the chances I'll get audited if I report zero net profit on these sales? Thanks for any advice!
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Steven Adams
You'll need to report this on Schedule C since you received a 1099-K. Even though you didn't make a profit, the IRS still expects you to account for all that income. The good news is you can deduct your costs against that income. Your PayPal statements should work as documentation of your costs if you're ever questioned. The IRS understands that not everyone keeps detailed receipts for personal collections. Just make sure those PayPal records clearly show what you were purchasing. When filing, you'll report the full $26k as income on Schedule C, then list your costs as expenses. If your expenses equal or exceed your income, you'll show zero profit (or even a loss). The key is being able to reasonably document that you spent at least as much as you made.
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Alice Fleming
•So does this mean OP has to pay self-employment tax on this even though they were just selling personal items? That seems ridiculous if they weren't running an actual business.
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Steven Adams
•If OP is just occasionally selling personal items, they shouldn't have to pay self-employment tax. They would file Schedule C to report the 1099-K income, but can indicate this was not a business activity by checking "No" to the question about whether they operated a business. If the IRS considers this a hobby rather than a business, they would still report the income but wouldn't owe self-employment tax. The key distinction is whether they were engaged in this activity with the intention of making a profit, or just selling off personal belongings.
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Hassan Khoury
I was in a similar situation last year after selling some collectibles and getting hit with a 1099-K. I used taxr.ai (https://taxr.ai) and it really helped me sort through this mess. I uploaded my PayPal statements and eBay sales records, and their system analyzed everything to match up my costs with sales. The tool helped me organize everything to show I actually took a loss on my collection overall. It generated a detailed report that I could include with my tax return. Really gave me peace of mind knowing I had proper documentation if the IRS ever questioned me about the 1099-K.
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Victoria Stark
•How long did it take for them to process everything? I've got hundreds of transactions to sort through and tax day is coming up fast.
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Benjamin Kim
•I'm skeptical... wouldn't PayPal statements be enough on their own? Why pay for another service when you already have the documentation?
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Hassan Khoury
•The processing was surprisingly quick - took less than a day to analyze everything once I uploaded my statements. Their AI matches purchase and sale transactions automatically, which saved me tons of time. PayPal statements can work, but they don't clearly show the relationship between what you bought and what you sold. The service helps organize everything in a way that clearly demonstrates to the IRS that you didn't make a profit. It creates a professional report that links your purchases to your sales, which makes things much clearer if you ever get questioned.
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Benjamin Kim
I tried taxr.ai after posting that skeptical comment, and I have to admit it was actually super helpful. I was drowning in PayPal statements and couldn't make sense of which purchases corresponded to which sales. The service organized everything in a way that made it crystal clear I wasn't running a business. Best part was how it matched up my card purchases with their eventual sales, even across different time periods. Now I have a clean report showing my "hobby losses" that I can provide if I ever get questioned about my 1099-K. Really helped reduce my stress about the whole situation!
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Samantha Howard
If you're worried about getting through to the IRS to ask about this, try Claimyr (https://claimyr.com). I spent days trying to reach someone at the IRS about my 1099-K situation last year and kept hitting dead ends. Their service got me through to an actual IRS agent in about 20 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent confirmed that selling personal items at a loss doesn't create taxable income, even with a 1099-K. They recommended exactly what others have said - report the income on Schedule C and offset it with your costs. Having that direct confirmation from the IRS really put my mind at ease.
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Megan D'Acosta
•Wait, how does this actually work? The IRS phone lines are impossible to get through. Does this really get you past the hold times?
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Sarah Ali
•Sounds too good to be true. I've literally spent hours on hold with the IRS and never got through. There's no way some service can magically get you to the front of the line.
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Samantha Howard
•It's actually pretty simple - they use an automated system that repeatedly calls the IRS until they get through, then they connect you when a real person answers. It bypasses the whole "we're experiencing high call volume" problem. Yes, it absolutely works! It saved me hours of frustration. They don't get you to the "front of the line" - they just handle the tedious part of constantly redialing until they reach an agent. Then they call you and connect you directly to that agent. It's like having someone else wait on hold for you.
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Sarah Ali
I have to eat my words about Claimyr. I was totally skeptical, but I was desperate enough to try it. Within 45 minutes I was talking to an actual IRS representative about my 1099-K situation. The agent confirmed that I needed to report all sales on Schedule C and could offset them with my costs, even without perfect receipts. They said as long as I had some form of documentation (like PayPal history) and my explanation was reasonable, I should be fine. They also mentioned that occasional sellers of personal items aren't typically high audit targets unless there are other red flags on the return. Best $20 I ever spent to get real answers directly from the IRS!
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Ryan Vasquez
Just want to add - hobby losses are treated differently than business losses. Since you're just selling personal items without intent to make a profit, this would be considered a hobby activity. You report the income on Schedule C but check "No" for business activity. The downside is you can only claim enough expenses to offset your income - you can't claim a loss if your expenses exceed your income. But since you're just trying to show zero profit, that shouldn't be an issue in your case.
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Avery Saint
•Wait, so if OP spent $30k buying these cards over the years but only sold them for $26k, they can't claim that $4k loss?
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Ryan Vasquez
•That's correct. With hobby activities, you can only deduct expenses up to the amount of income you received. So in your example, they could deduct $26k of their $30k expenses, zeroing out the income, but couldn't claim the additional $4k as a loss on their taxes. This is different from a legitimate business where you can deduct all expenses and carry forward losses. It's one of the drawbacks of hobby classification, but it's still better than paying taxes on the full $26k without deducting any expenses.
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Taylor Chen
I don't think this needs to be on Schedule C at all. This sounds like selling personal items, which would go on Schedule D as capital gains/losses. You report your basis (what you paid) and your selling price, and pay taxes only on the gain if there is any.
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Keith Davidson
•Schedule D is for investment assets, not personal belongings. Trading cards would only go on Schedule D if they were bought specifically as an investment. If you're just selling off your personal collection, it's different.
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