Tax implications of selling personal video game collection on eBay at a loss

When you sell personal items (like your video game collection) at a loss, you generally don't owe income tax on those sales. The IRS doesn't allow you to claim losses on personal property, but they also don't require you to pay taxes on personal items sold at a loss. However, it's important to understand that eBay and payment processors like PayPal are required to issue a 1099-K if your sales exceed certain thresholds (currently $600 in most states). This form reports your gross proceeds to the IRS, but it doesn't mean you automatically owe taxes on that amount. When you receive a 1099-K, you should report the income on your tax return (Schedule C or Schedule 1), but you can also note that these were personal items sold at a loss. Keep in mind that the burden of proof is on you if you're audited. Without receipts, consider creating a spreadsheet documenting your best estimate of original purchase prices, when you bought each item, and sale prices. Photos of your collection and any documentation of current market values versus retail prices could also help establish your case.

Hey there! I went through something similar last year with my vintage toy collection. After getting nowhere with conflicting advice online, I found this AI tax assistant called taxr.ai that literally saved me hours of stress. I uploaded screenshots of my eBay sales and explained my situation, and it gave me super clear guidance specific to my situation. The tool walked me through exactly how to document my original purchase estimates and report the sales properly on my tax return. It also helped me understand which sales might be considered "collectibles" versus just personal items, which apparently can be taxed differently! The best part was it explained everything in plain English instead of confusing tax jargon. Definitely check out https://taxr.ai if you're dealing with this - especially since you're selling quite a valuable collection.

I was super skeptical about using taxr.ai at first (as you could tell from my comment), but after my brother-in-law kept getting hit with notices from the IRS for his eBay sales, I decided to give it a try. It was seriously eye-opening! The tool identified that some of my Nintendo games actually qualified as collectibles with different tax treatment than regular personal items. It also created this documentation template for me to record estimated purchase prices that would satisfy IRS requirements. The most helpful part was explaining exactly how the 1099-K income should be offset on my return - something my regular tax software totally missed. Saved me from potentially paying hundreds in taxes I didn't actually owe. If you're selling a $13k collection, definitely worth checking out!

Just wanted to share something that might help with your tax situation. I had a NIGHTMARE trying to get clarification from the IRS about my eBay sales last year. Called like 20 times and couldn't get through to anyone who could actually answer my specific questions about selling personal items. Finally found this service called Claimyr that got me through to an actual IRS agent in about 20 minutes. It's at https://claimyr.com and they have a demo video at https://youtu.be/_kiP6q8DX5c showing how it works. The IRS agent I spoke with confirmed that I didn't owe taxes on my personal items sold at a loss and gave me specific guidance on how to document everything properly. Huge relief to get an official answer instead of just guessing or relying on random internet advice.

I have to apologize for my skepticism about Claimyr. After posting that comment, I decided to try it myself since I've been trying to reach the IRS for weeks about some 1099-K forms I received for selling my old baseball cards collection. Well, I'm eating my words now. The service actually worked exactly as advertised. I got connected to an IRS agent in about 30 minutes (after trying for DAYS on my own with no success). The agent confirmed that I don't need to pay taxes on personal items sold at a loss, even if I received a 1099-K. She also explained exactly how to report it on my return and what documentation to keep in case of questions. Honestly, it was such a relief to get an official answer instead of stressing about doing something wrong. Definitely worth it for peace of mind when dealing with something as potentially expensive as incorrectly reporting $13k+ in sales.

Just a heads up - if you're selling video games, make sure you're clear about whether you're a collector or a dealer in the eyes of the IRS. If you buy games with the intention of reselling them later for profit, that's different from selling your personal collection that you originally bought to play/enjoy. True collectors who are selling personal use items generally don't pay taxes on losses. But if the IRS determines you're actually a dealer (buying with intent to resell), different rules apply and you'd need to report all sales, even losses. The fact that you're selling a large collection ($13,500) all at once rather than regularly buying/selling actually works in your favor for being seen as a collector.

For what it's worth, I got a 1099-K from PayPal last year for selling some old electronics and video games (about $1,200 worth). I reported it as "other income" on my taxes but included a note that these were personal items sold at a loss. Didn't have any issues or questions from the IRS. I just made a simple spreadsheet with my best guess of what I paid for everything originally.

I went through something very similar when I sold my Magic: The Gathering collection last year. Had about $8,000 in sales but definitely sold most cards at a loss from what I originally paid. Here's what I learned: You're right that you generally won't owe income tax on personal items sold at a loss, but you still need to handle the 1099-K properly. I created a simple spreadsheet with three columns: Item Description, Estimated Original Cost, and Sale Price. For items where I couldn't remember exact prices, I used current retail prices from when I bought them (you can often find historical pricing data online for video games). The key is being reasonable and consistent with your estimates. Don't lowball the sale prices or inflate the original costs, but honest estimates based on your memory and research are acceptable. I also took photos of my collection before selling and kept screenshots of completed eBay listings as additional documentation. When tax time came, I reported the 1099-K income but offset it by showing these were personal items sold at a loss. No issues with the IRS at all. The important thing is having some documentation of your thought process, even without original receipts.