tax dilemma - selling high-dollar items for someone else
Hi, folks - I've been selling on eBay for as long as there has been eBay (when it was called Auction Web), and have adapted to lots of changes over the last 28 or so years. But this new IRS reporting has me stumped in one area. I have a friend who inherited a collection of Case knives from his father and wanted to sell them. He's not on eBay and since I've sold thousands of items with never a negative, he asked me to sell them for him. So I did, for no fee to him, as a friend. I'm not a knife guy, but with Google and eBay 'sold', I can, and did, figure it out. Let's just say they brought a lot more than either of us expected. So here I am now, going to have reported to the IRS that I sold about $4000 in knives, and it ain't my money. Technically, I think he personally could have sold them and claimed no income, since they were inherited and when you inherit something you get it at the stepped-up basis of what it was worth when you got it, meaning there would be no profit. But he didn't sell them, I did (as far as the IRS will see it). So is there any way I can pass the taxes on to him as far as the IRS is concerned? Can I maybe send him a 1099? In all the years I've been selling, I've never done consignments, so maybe some sellers who sell on consignment can help me out here.
monica-sells
·3 years agoWhay @luckythewinner posted is very good advice.
I have helped out an older friend sell off stuff...that is exactly what I do. I claim it as an expense, (which offsets my actual income) and place the burden of reporting the 'income' on my friend.
Get the proper advice from a reliable source, but since I am operating as an individual, I am not required to issue a 1099-MISC by exceeding the $600.00 threshhold (as I would if I was selling on my business account)
Read the IRS publication and get sound advice to make sure..........
luckythewinner
·3 years agoYou would deduct what you paid the friend as an expense.
Consignment shops do it all the time.
The IRS even has a publication about it.
https://www.irs.gov/pub/irs-utl/auctions_and_consignment_seller_tax_considerations.pdf
nfoltz12
·3 years agoEasy fix. Write a check to the other guy and show this as cost of goods sold. It should be a wash of you give him the total amount you sold them for. If not it will show as a profit, just like anything else you sell you need receipts to show costs
evry1nositswindy
·3 years agoYou really aren't selling on consignment, as the income is reported on your social security number and going into your bank account. You need to talk to a professional.
heckofagame
·3 years agoI report any payments made to consignors as an expense on my Schedule C. You can send him a 1099-misc if you so wish but it is probably not required as you are paying for merchandise, not services. Consulting a tax professional may be a good idea.