@starcob,
You only have to pay income tax on the "gain" when you sell things, which is what the IRS calls your profit. It doesn't matter if the items are new or used, personal items, or purchased for retail. You only owe income tax on the gain/profit.
However, especially when you are selling your own personal items, you need to be able to prove that you had a loss as opposed to a gain/profit. Otherwise, if the amount you received is reported on a 1099, the IRS will assume that all of it was profit unless you show them that it wasn't. You need to keep records so that you can prove that you had expenses that either lowered your gain/profit, or turned it into a loss.
So, if you don't want to pay income taxes when you sell personal items at a loss, you need to be able to prove that.
Keep records of your expenses. FYI, that's a major part of what "operating as a business" requires, so the best thing to do is act like a business.
If you don't have receipts for the original purchases, then you can look up what the MSRP was (manufacturer's suggested retail price). However, I suspect that if you get audited, the IRS agent might not accept that you always paid full retail, so it might be better to estimate what you actually paid. Or you can use the current market value instead That's probably lower than you originally paid, which accounts for depreciation. The current market value is whatever you sold the item for. I used that method when I was selling on eBay as a business, and I was never audited.
