1099-k

[timetosellmorgan]

Since we are now going to get a 1099-K for selling over $600 instead of $20,000 (Illinois) what is an EASY SIMPLE way to figure the COST of an item you sold?  I.E. if you are selling someting that has been laying around for 20 years what is best way to value it... is using 50% of the selling price a good rule of thumb?

[monica-sells]

This is the short version of what I was told....(PLEASE GET YOUR OWN CPA Input)

If the item is 'common' it is fairly easy to determine the FMV for tax purposes by looking up documented 'comparable' sales.....the problem with that is the rule is:

it’s important to document the value of the item when it came into your possession, whether it’s the price (cost basis) for an item you purchased or the fair market value (FMV) of an item you inherited. For particularly valuable items you should have their FMV estimated by a professional appraiser.

If you are selling an item that is not so common, it is a bit more difficult.....

So, as you can see, there is not one 'rule of thumb' for this dilemna

receipts are good....but I can attest to the ink on some of the cash register receipts I have from as recently as 1995 has evaporated to the point I can't read them anymore

[timetosellmorgan]

so if no receipt and a garage sale item:  just figuring 50% of what im selling it to be the "cost" will probably satisfy the IRS?

[myboardid]

No, if you are audited, you must provide receipts or other proof of what you paid for an item.  There is no rule of thumb.  If it is an old item that you purchased new a long time ago, research it and make an educated guess on the original price.  Keep documented research as proof.  If you buy something at a yard sale, record the price you paid in a notebook.  I also record the date and the address of the sale.  

I only sell yard sale goods occasionally, most of my items are purchased wholesale.  I don't keep track of my yard sale purchases and just say they cost me nothing.  But if such sales are your main source of items to sell, you need to keep records of actual costs.

[frodobagginskennedy]

you really need to consult a CPA or Tax attorney.

What our CPA told us in November when we touched base with him was 25% of sale price was acceptable if you have no receipt.  Note this was what we were told.  YOU need to touch base with a qualified CPA