Monthly Chat - February 8th at 1:00 pm PST

[devon@ebay]

Come chat with the TaxAct team to discuss how the IRS’ recent 1099-K Decision Impacts eBay Sellers this Tax Season. Get all of your questions ready for the team, so we can make the most out of this month's chat on February 8th at 1:00 pm PT!

Thanks for joining us for the Monthly Chat with eBay Staff and the TaxAct Team.

The chat thread will remain open until 2 PM PT at which point we'll close it from additional responses. After that time, we'll continue to work on responding to any queries that might still be unanswered.

To post your question, click Reply in the lower right corner of this post, type your question, and hit submit between 1-2 PM Pacific Time. The format of our chat mirrors the format of our Community Discussion Boards, where each post will appear in the thread chronologically. The taxAct and Community Team will review each question as it comes in, and will quote the original question in our reply. This quote and the reply will appear later in the thread, so just keep scrolling down to see our answers.

As a reminder, we want TaxAct to be able to get to as many members as possible during the allotted hour, so we have a few things to ask of you:

• Keep on topic
• Scroll through the list of questions to see what has already been asked to decrease chances of redundancy 
• Keep the message/question simple and no more than one to two items. If you include multiple questions in a post, please be aware that they may not be addressed during the chat and (specialist name) will do their best to follow-up with it after the chat has closed 

Missed the chat? Send your questions to the podcast by calling 888-723-4630 or email us at podcast@ebay.com and maybe your questions will make it on the air! Or listen to past episodes while you wait for next month!”

[mam98031]

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@clarkphilatelics wrote:

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@packrat2k wrote:

Followup on your statement about deducting capital losses -- what I'm selling are garage sale type items: books, collectibles, old computer parts -- so would these be classified as personal-use items and so not deductible?

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I sell collectibles as a business. It is my understanding that losses on sale of collectibles by hobbyists are not deductible. Will some eBay sellers operating as business be regarded as hobbyists by the IRS? When is filing Schedule C not enough? What is the role of profitability?

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Remember that some sellers are selling off their personal stash of collectibles and other sellers actually purchase the collectibles to resale on Ebay.  The two types of sellers are different.

[packrat2k]

Losses from the sale of personal property do not need to be reported unless you received a Form 1099-K

===

Thanks.  But yeah, I did get a 1099-K from eBay.  Didn't we all? 

[mam98031]

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@tax_act wrote:

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@shipscript wrote:

Mark, many sellers on eBay are simply liquidating closets and garages to make ends meet. They are not operating like a business and are very unfamiliar with the kind of expense accounting required by sellers making a profit. What advice can we give them? If they are filing their own returns, can they use the 1040 EZ or are they now required to file the full form and schedules?

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@shipscript - Thank you for your question and Yes, this can be difficult to understand and report on your tax return.  This type of property being sold would be considered personal property.  If you sold personal property at a loss and did not receive a Form 1099-K, you do not need to work about reporting this on your tax return.  For instance, you bought a couch for $1,500 5 years ago and sold it for $1,000 in 2022.  You have a personal property loss of $500 that is not deductible on your tax return.  If you did receive a Form 1099-K for this transaction, you must enter the income on Schedule 1 and the same exact amount as a deduction on Schedule 1.  This will show the amounts properly to the IRS when they receive a Form 1099-K.  Unfortunately, Form 1040-EZ no longer exists and a Form 1040 must be filed in this situation.

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So there is no consideration to the diminished value of the couch that was used for 5 years before selling it?

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Edit: A reply to your question can be found here.

[mam98031]

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@tax_act wrote:

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@packrat2k wrote:

Followup on your statement about deducting capital losses -- what I'm selling are garage sale type items: books, collectibles, old computer parts -- so would these be classified as personal-use items and so not deductible?

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Hello @packrat2k - Based on the question, it sounds like personal property vs capital assets.  Losses from the sale of personal property do not need to be reported unless you received a Form 1099-K.  Personal property gains will be reported on Schedule 1.

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IMHO @packrat2k was a bit vague on what they were asking.  There are lots of sellers that visit garage sales, estate sales, etc.  to purchase stuff to resale.  Just because an item is used doesn't mean it is someone's personal item they are selling here.

It is my understanding if you purchase an item for the purpose of reselling it, whether it was purchased at a garage sale, Estate sale, etc, it is NOT handled like selling personal property?  

Do I have this wrong?  If so, why?

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Edit: A reply to your question can be found here.

[devon@ebay]

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@photobrow wrote:

I have 3 business accounts registered for a Corporation S. I received incorrect 1099K forms on two of them. They show my name and SSN instead of the business name. The third one is correct. I called eBay several times. Please don’t tell me IRS required eBay to do this on my two accounts while the third one was treated as a corporation, just like last few years. 
Please fix this error and don’t mislead sellers with made up answers that don’t make sense. 

thank you!

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Hey @photobrow. For the 2022 Tax year, we have aligned issuing 1099Ks to IRS standards for Sole-Prop and Single Member LLC requirements. The IRS requires that Sole Props and Single Member LLCs file returns using the SSN of the owner, not the EIN of these entities. More information on this can be found here. 

[tax_act]

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@packrat2k wrote:

Should column H on the 8949 be 0 for any item sold at a loss, so that when the column is totaled it shows just the gains?  Which is all the IRS cares about for a non-business.  

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Hi @packrat2k - You can report personal items sold at a loss on Form 8949 and the loss amount would be $0 in column H. The IRS is also allowing taxpayers to file income reported on Form 1099-K that was from personal property sold at a loss on Schedule 1 instead of Form 8949. The income would be entered on Schedule 1(line 8z) and then an adjustment is added on Schedule 1(line 24z) for the same amount zeroing out the income.

[clarkphilatelics]

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@mam98031 wrote:

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@clarkphilatelics wrote:

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@mam98031 wrote:

Some questions aren't TaxAct related but Ebay report questions.  Is TaxAct going to respond to the Ebay report questions too?

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How can a program like TaxAct be of use if eBay does not present data in a useable form?

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I'm unsure how to respond to that as I find the Ebay transaction reports under the Payment tab in the Seller Hub to work.  I drop it into Excel and redesign it in the way that I like to use the information.  All of the info is there.

devon@ebay 

There is one problem that has been true since the day Ebay has given us the Transaction reports for MP.  The way they have coded the date column does not translate well at all.  For example when you drop the worksheet into Excel, you can not sort by the date because it is coded in some way that prevents that.  It will return in what seems to be a random order.  I have always had to insert a column and type in the date myself so I can sort successfully.  The Reports team needs to review what they have done to that specific data to cause this issue.

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I have not seen that problem, but when formatting the column try using  format like *3/14/2012 as the type or if that fails move to ANSI format like 2012-03-14. 

@mam98031 Regarding useability, most eBay sellers are unlikely to be as skilled with Excel as you are.

The difficulty with Managed Payments is lack of useable summary data for sales and expenses (fees) by category. A simple report issued monthly could cure that. For those who characterize every payout need to see sales totals and fees grouped and summed by fee type. I am looking at an individual Payout containing 185 entries.  There are no totals for Amount (sales) or Fees (expenses). The report for this one payout occupies four pages. It is not reconcilable.

[devon@ebay]

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@decal_universe_inc wrote:

My account is set up on eBay as registered business account with business name & EIN (as it has been for the past 7+/- years). 

In past years my 1099's have been correctly issued to my business name & EIN. 

For 2022 I have received a 1099 filed to personal name and SSN (this is incorrect). 

I have to file my taxes for my business using forms with business name & EIN (NOT personal name & SSN). 

I have read posts from other some other sellers on eBay that are saying that this same thing has happened to them, and was previously acknowledged by eBay as a "technical issue". 

I contacted eBay CS, and was told that the mistake would be fixed, and I would be re-issued a corrected form, however as of about 10 days later I am still waiting for the correct form to be uploaded to my account.

Is this issue being corrected? With revised forms sent to sellers with registered business accounts?

Thanks for your time

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Hey @decal_universe_inc. For the 2022 Tax year, we have aligned issuing 1099Ks to IRS standards for Sole-Prop and Single Member LLC requirements. The IRS requires that Sole Props and Single Member LLCs file returns using the SSN of the owner, not the EIN of these entities. More information on this can be found here. 

[wooden_flower]

devon@ebay 

Easy one for you - can you pass the word to customer service that they should not tell members to ignore an unexpected 1099k? Thanks!

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Edit: A reply to your post can be found here.

[devon@ebay]

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@wooden_flower wrote:

devon@ebay 

Easy one for you - can you pass the word to customer service that they should not tell members to ignore an unexpected 1099k? Thanks!

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Hey @wooden_flower! I will be sure to have that shared with the correct teams!  

[shipscript]

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devon@ebay wrote:

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@photobrow wrote:

I have 3 business accounts registered for a Corporation S. I received incorrect 1099K forms on two of them. They show my name and SSN instead of the business name. The third one is correct. I called eBay several times. Please don’t tell me IRS required eBay to do this on my two accounts while the third one was treated as a corporation, just like last few years. 
Please fix this error and don’t mislead sellers with made up answers that don’t make sense. 

thank you!

---

Hey @photobrow. For the 2022 Tax year, we have aligned issuing 1099Ks to IRS standards for Sole-Prop and Single Member LLC requirements. The IRS requires that Sole Props and Single Member LLCs file returns using the SSN of the owner, not the EIN of these entities. More information on this can be found here. 

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devon@ebay 

"...unless [the entity] files Form 8832 and affirmatively elects to be treated as a corporation".

Does eBay accommodate this filing? Or is this a Customer Support manual override?

[tax_act]

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@mam98031 wrote:

A question I see more times than I can count in the Community is in regards to sellers that sell their personal stuff.  The big question is how do they value that item if they did not keep the receipt?  Do they need to depreciate the item if they do have proof of the original cost?

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Hi @mam98031 - Thank you for your question.  This can be difficult to determine.  If you are able to find past bank/credit card transactions for this purpose, talk to the store from which you originally purchased the product or some other honest faith estimate to arrive at the purchase price, then you should be good in the eyes of the IRS.

[clarkphilatelics]

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@mam98031 wrote:

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@tax_act wrote:

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@shipscript wrote:

Mark, many sellers on eBay are simply liquidating closets and garages to make ends meet. They are not operating like a business and are very unfamiliar with the kind of expense accounting required by sellers making a profit. What advice can we give them? If they are filing their own returns, can they use the 1040 EZ or are they now required to file the full form and schedules?

---

@shipscript - Thank you for your question and Yes, this can be difficult to understand and report on your tax return.  This type of property being sold would be considered personal property.  If you sold personal property at a loss and did not receive a Form 1099-K, you do not need to work about reporting this on your tax return.  For instance, you bought a couch for $1,500 5 years ago and sold it for $1,000 in 2022.  You have a personal property loss of $500 that is not deductible on your tax return.  If you did receive a Form 1099-K for this transaction, you must enter the income on Schedule 1 and the same exact amount as a deduction on Schedule 1.  This will show the amounts properly to the IRS when they receive a Form 1099-K.  Unfortunately, Form 1040-EZ no longer exists and a Form 1040 must be filed in this situation.

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So there is no consideration to the diminished value of the couch that was used for 5 years before selling it?

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What if the sale price was more than the original price. If a stamp collector sells a collection and makes a profit, is the determination based on each stamp sold separately or the group?

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Edit: A reply to your question can be found here.

[babclassics]

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@mam98031 wrote:

@babclassics 

Just some added info for you.  Many Sole Proprietorships use EINs.  They can get one if they apply for it with the IRS.

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Yes, thanks, I know.  I have an EIN for that.

But since the IRS is now guiding they prefer SSN for Sole Proprietor, I was addressing LLC to try to help other sellers caught in that situation.  Where their / my account is stuck in the old class of Sole Proprietor / LLC which used to be the only choice when you registered for either type.  Ebay was using that class of seller as a catch all.  That is why they allowed EIN and business name in that business class.  They just generated a 1099-K with EIN and business name for ALL Sole Proprietor / LLC  accounts since it did not hurt anything.

But now the IRS does not want EIN (on 1099-K) for Sole Proprietor although they clearly state it is OK to have an EIN to use for other things, just not your 1099-K any more. But eBay did NOTHING to help those who were in that old grouping but still need an EIN for their LLC.  They simply see them as Sole Proprietor ONLY since that was much easier to code during migration with the new specifically LLC account type  ha ha.   If you go in and try to change that business information is simply shows "Sole Propietor owner" even tho the value you are trying to change DOES say LLC also.  Its a migration mess.  People don't want to have to create a new account just to get the new "official LLC EIN" account designation.  They would loose all their ratings and sales record.

[mam98031]

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@tax_act wrote:

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@mam98031 wrote:

A question I see more times than I can count in the Community is in regards to sellers that sell their personal stuff.  The big question is how do they value that item if they did not keep the receipt?  Do they need to depreciate the item if they do have proof of the original cost?

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Hi @mam98031 - Thank you for your question.  This can be difficult to determine.  If you are able to find past bank/credit card transactions for this purpose, talk to the store from which you originally purchased the product or some other honest faith estimate to arrive at the purchase price, then you should be good in the eyes of the IRS.

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There are so many sellers, especially during the last few years, that were selling off whatever they could just so they could pay the rent or put food on the table.  Some of that stuff was purchased quite a few years ago and going back to the retailer you purchased from simply isn't an option, much less remembering when they actually purchased the item.  What about those sellers?

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Edit: A reply to your question can be found here.