@winterpalace25 wrote:
I think you're right. The tax form will probably be revised with instructions. If one Is only selling personal possessions at a loss, it can go directly on the 1040 as Other Income. And I believe there is a worksheet for cost of goods that includes good faith estimates. You can claim profit but not loss on this income and there would be no need to file a Schedule C. One downside is that you would not be able to deduct selling expenses, just cost.
If cost exceeds selling price, you would not need to deduct your selling expenses to offset the income so it would not really be a downside.
That aside ...
I believe Schedule 1 is the worksheet you use to document Other Income, but I do not see any obvious place to deduct your "cost of goods sold" when selling items at a loss.
The closest line that looks relevant is 8i "Activity not engaged in for profit income", but the instructions for that line simply say "See Publication 535". And frustratingly, Publication 535 is titled ... wait for it ... "Business Expenses".
Publication 535 does have a section called "Not-for-Profit Activities" that says you cannot claim a loss for an activity that was not engaged in for profit:
"If you do not carry on your business or investment activity to make a profit, you cannot use a loss from the activity to offset other income. Activities you do as a hobby, or mainly for sport or recreation, are often not entered into for profit."
So you have to infer that you can deduct the cost of the goods sold at a loss up to the amount you sold them for and effectively "zero out" that income. But there is nothing I see that appears to waive or modify the need for documenting those cost by substituting a good faith estimate.
So as noted before, some specific guidance from the IRS for "yard sale" sellers would be very helpful.
