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Selling personal items at a loss and what this means for the 1099-K
Around 99% of the items I sell on eBay are items that I purchased for personal use and end up selling at a loss. I have purchase receipts for nearly every item I sell, which is how I'm able to determine this. If I do make the rare profit, it's typically $5-10 dollars. With all this in mind, I have a few questions.
- Would this be considered a business or a hobby? I do have hopes that I will make a profit when listing items, however, I'm also realistic and expect that I likely will not. I do run things as a business would though in many ways: buying supplies, advertising, keeping records. So, I'm not sure which to consider being the set answer.
- If it is considered a business, how do I show that items are sold at a loss? In 2024, my gross sales were $2,257.15. This is obviously a considerable chunk of money, and the IRS will consider it to be so too. But again, adding the original price of each item totals out to be $5,000+ as to what I originally paid.
- Would personal items be considered current inventory when calculating COGS if I'm currently using them but might sell them in the future?
I'm kind of stressing out about all this as I want to make sure I do things correctly and therefore lawfully. Thank you for reading!
2 comments
golfingaddict
Mentor1 year agoI do not want to offer tax advice. That should be done by your accountant or tax professional.
I do know that I can do a google search and a search on the IRS site to find answers to your questions.
I think it is admirable that you are thinking about this ahead of time. The very best thing you can do is get the right answers from the one entity that matters the IRS.
https://www.irs.gov/
Hobby or business: here’s what to know about that side hustle | Internal Revenue Service
Best of luck to you.
just_delightful
OP1 year agoThank you for your reply! After viewing my Seller Hub, apparently I don't have a 1099-K form because I don't meet the minimum IRS threshold.