What can I include in my cost basis when selling collectibles on eBay as a hobby? 1099-K reporting threshold questions

This sounds correct to me, but I'm confused about one thing - I thought hobby expenses weren't deductible anymore after the 2017 tax changes? Does that apply here or is this different because it's directly reducing the income rather than being a separate deduction?

That's a great question! You're right that hobby expenses as itemized deductions were eliminated by the Tax Cuts and Jobs Act of 2017. However, what we're talking about here is different - these aren't separate hobby expenses, but rather direct costs of the sale that reduce the amount of income recognized. When you sell something, your gain is always calculated as the selling price minus your basis in the item. Your basis includes not just what you originally paid, but also the direct costs of making the sale (like the eBay fees, shipping, and packaging). This isn't about deducting expenses separately - it's about correctly calculating how much income you actually received from the transaction.

That sounds promising, but does it work if I have hundreds of small transactions? I sell vintage toys from the 80s and keeping track of all the fees, shipping costs and original purchase prices has been a nightmare.

I'm skeptical about using third-party tools for tax stuff. How does it handle situations where you don't have receipts for the original purchase? I've had some of my comic books for decades and don't have proof of what I paid.

For hundreds of small transactions, it's actually perfect because it can process your entire eBay sales history and organize everything by transaction. It identifies patterns in your sales and categorizes similar items, which makes handling volume much easier than trying to track everything manually. For items without original purchase receipts, the tool has a fair market value estimator that can help establish a reasonable cost basis based on historical pricing data for collectibles. It helps you document a reasonable estimate for the original purchase price based on when you likely acquired the item and what it would have cost then. This creates a paper trail showing you made a good-faith effort to accurately report your basis.

How does this actually work? Does the IRS know you're using a third-party service to reach them? I'm not sure I understand how they're able to get through when nobody else can.

This sounds like complete BS to me. If it was that easy to get through to the IRS, everyone would be doing it. I've spent hours on hold multiple times and never got through. I doubt some random service can magically get you to the front of the line.

The service basically uses an automated system that waits on hold with the IRS for you. When their system detects a human agent has picked up, it immediately connects that call to your phone. The IRS has no idea you're using a third-party service - from their perspective, it's just a normal call that's been waiting in their queue. They're not skipping the line or getting special treatment - they're just waiting on hold so you don't have to. It works because they have technology that can stay connected and detect when a human answers, which saves you from having to personally wait on hold for hours. I was skeptical too, but it genuinely works, and the IRS agents are helpful once you actually get through to them.

What's the best way to organize all this info? I've been selling baseball cards and have about 200 transactions this year. It's getting overwhelming keeping track of everything!

I recommend setting up a simple spreadsheet with columns for each transaction: item description, date purchased, purchase price, date sold, sale price, shipping cost, packaging cost, platform fees, and net profit. Then create a digital folder system where you store scanned receipts and screenshots organized by transaction ID or date. For high volume sellers, consider using accounting software designed for online sellers that can import your eBay data directly. Some people also use apps specifically designed for collectible inventory management that can track both your collection and sales. The key is consistency - update your records as you go rather than trying to reconstruct everything at tax time.

Good point! I'm in Maryland and was surprised to learn we have different rules than federal. Definitely worth checking your specific state requirements.

Great questions! For the garage sale purchases, your detailed notes should be sufficient documentation for your cost basis. The IRS doesn't require formal receipts for every transaction - they understand that garage sales and estate sales don't typically provide them. Just make sure your notes include the date, location, and amount paid. A simple notebook or phone app where you record "6/15/2024 - Garage sale on Oak Street - Sonic game $5" would work fine. Regarding storage costs, that gets tricky for hobby sellers. Since you're not operating as a business, you generally can't deduct ongoing storage expenses. However, if you can reasonably allocate a portion of storage costs to specific items you sell (like keeping detailed records of what percentage of your storage space each item occupied and for how long), you might be able to add that to your basis. But honestly, for hobby sales, this level of complexity might not be worth it unless you're dealing with very high-value items. The IRS might view regular storage costs as personal expenses rather than costs directly related to the sale. I'd focus on the clear-cut costs like purchase price, shipping, packaging, and platform fees first - those are much easier to defend if questioned.

This is a really important distinction that I wasn't aware of! I've been treating all my collectible sales as regular income, but some of my comic books have been in my collection for over 10 years. If I understand correctly, the long-term capital gains rates (0%, 15%, or 20% depending on income level) could be much better than my regular tax rate of 22%. Do you know if there's a minimum threshold for this to apply? I've mostly been selling lower-value items ($20-100 range), but I have a few key issues that might be worth $500+ that I've held for years. The photo documentation tip is brilliant too - I wish I had started doing that from the beginning!