Finding original price for tax purposes
I have sold a number of things and cannot find documentation as to how much I originally paid for them. When tax time comes around next year I will need to pay taxes on the capital gains of each item.
Any idea how I should go about this? Should I guess what the original cost was? Is that sufficient or will I need to pay the full taxes on the paid amount?
I am just guessing that someone here has had that same issue.
Thanks.
7 comments
pcobra93
·2 years agoOf course this question should be addressed by a tax professional however mine has told me as long as the guesstimate is "reasonable", the IRS will accept it. In theory...if you have garage sale items with no receipt,, one could easily buy a receipt book and make their own "receipts"....thus why I believe the IRS does not really question the assumptions too much. Give the write offs you can take selling is why the old 20k threshold existed. They figured anything under 20K and you could find enough write offs to cover the "profit"....now they want to see all our work....I am reminded of a certain grade school teacher all of a sudden!
glsmyth
OP2 years agoOkay, thanks. I am definitely under $20,000 in sales, but if a reasonable guess makes sense then that is what I will go with.
Thanks.
rfmtm
·2 years agoAre you talking about items you purchased for resale or just personal garage sale items you are selling?
glsmyth
OP2 years agoI purchased them as part of my hobby with the intention of someday selling.
I did pay taxes on "hobby sales" this year, but next year the amount will be significant (for me).
rfmtm
·2 years agoGenerally for most personal item sales there is no profit, as it is obvious you are selling at a loss, so you only need to provide a reasonable estimate of value.
While you can go the capitol gains route, currently the IRS is allowing a simplified way to do this when just selling personal or garage sale items not for profit or as a business or hobby. You report the total amount as Misc/Other Income. You then can post an Adjustment up to that total amount to offset that income. This results in a wash (zero profit), you will owe no taxes, and the IRS will be happy.
Any accountant or tax software can guide you through this.
glsmyth
OP2 years agoI use TurboTax so I'll look for this in the software next year.
rfmtm
·2 years agoUsing TurboTax you have two options.
For reporting Form 1009-K for personal items sold not associated with a trade or business, you have two options:
* Option 1 in TurboTax Premier or higher: reporting Form 1099-K as investment income
1. Go to the search box and enter Investment Sales
2. Select Jump to Investment Sales
3. Select Other at the next screen, OK, what type of investments did you sell? and click Continue
4. At Tell us more about this sale, enter in the name, such as Form 1099-K eBay Personal Property Sales and the Payer's EIN and click Continue
5. At Now we'll walk you through entering your sale details, under the first dropdown menu, What type of investment did you sell? Select Personal Items
6. Answer How did you receive this investment with an option from the dropdown menu.
7. Enter the Description. If you are uncertain what date you purchased the goods, select Something other than a date so that TurboTax will enter Various
8. Next, enter your Sale Proceeds and an equal amount for the Total Amount Paid and click Continue. The description for the cost should include Cost of Personal Property
9. Select None of these apply at Let us know if any of these situations apply to this sale and Continue
10. Continue through the rest of the prompts
11. Select Add another sale to add the next Form received
* Option 2 in TurboTax Deluxe or higher: reporting it via Other Miscellaneous Income is acceptable to the IRS.
1. From the left menu, go to Federal and select the first tab, Wages & Income
2. Add more income by scrolling down to the last option, Less Common Income, and Show more
3. Scroll down to the last option, Miscellaneous Income, 1099-A, 1099-C and Start
4. Choose the last option, Other reportable income and Start and Yes
5. Enter the applicable description and amount and Continue
* First, enter Form 1099-K as received. It is essential that the full amount be entered.
* For a description, include Form 1099-K and Personal Property Sales
* Next, in other reportable income also, enter an adjustment to reflect the cost of these items as an offsetting, negative amount up to the amount of the income.
* For the cost description, include Form 1099-K and Cost of Personal Property
* In other words, if the goods cost you $100 and Form 1099-K was for $10 in sales, the maximum cost allowable would be $10.