1099k and Unpaid Items?

[snow-bears]

Like many here, I’m just a casual seller that resells my own stuff, usually at a loss. I’m stressed about the new 1099k reporting requirements. Of course my first sale of 2022 was to a deadbeat buyer that never paid, further confusing things.

My understanding is that the 1099k only keeps track of income… so if they literally never paid me even 1 cent and I cancelled without getting paid…. That amount should NOT show up on a 1099k from eBay, correct? I have searched through the conversations and seen conflicting answers.

I also wanted to know if you don’t have a receipt for something you sold, if you have to consider the cost basis zero? IRS website was not helpful to me. I was hoping I could just use MSRP but I’m getting the feeling that’s not acceptable; the IRS just assumes we get everything for free.

[nobody*s_perfect · Accepted solution]

eBay will report the funds that they process for you.  The 1099-K is based on payments, so it won't include Sold items that were never paid for.

[luckythewinner]

The 1099-K is used by payment processors to report payments that were processed. 

If no payment was made then no payment is processed.

If no payment is processed then no payment is reported. 

[chapeau-noir]

@snow-bears   also wanted to know if you don’t have a receipt for something you sold, if you have to consider the cost basis zero? IRS website was not helpful to me. I was hoping I could just use MSRP but I’m getting the feeling that’s not acceptable; the IRS just assumes we get everything for free.

You can declare "FMV" - fair market value of an item; MSRP would help with that.

ETA:  Some general tips here.

I had to do this when clearing family estates - there was no other way to determine CoG when I sold these items through my store.

[dnasilver]

1099K does not track income. Is all it shows is the movement of money from a payment processor to a person's account. It does not determine income. There is zero reason to get stressed over this form. 

[superbowl32]

ebay's 1099k detailed report will show you all the listings they paid you for. They look at the column "date settled" as to which year or month that listing will belong. "date settled is when the buyers bank pays ebay.  It is not the day ebay marks it paid.  It is not the day ebay says it is completed. The "date settled" can not be determined by subtracting a specific amount of days from "date paidout". "date settled" only appears on ebays 1099k forms and can not be found on any other reports.  Your 1099K will never match up with Ebays sales reports which is based on the transactions report.  At the end of the year you can try to play bingo and see which orders were left of or added at the beginning and ending of the year. or you can just use the 1099k's numbers which are close but not that close.

[karetimbrel0]

actually that's not true,  Ebay is refusing to pay me because it says I reached the 600 limit and need to be issued a 1099 at the end of the year but the transaction that puts me over that limit was cancelled due to the fact that the buyer was a fraud and never paid.  NEVER PAID! YET, THEY WANT TO REPORT THAT I HAD THE INCOME ON A 1099 TO THE IRS - seems like fraudulent reporting to me since no money was ever transacted to them or to me

[luckythewinner]

---

 I have searched through the conversations and seen conflicting answers.

Forget searching conversations - go right to the source. eBay has a very detailed page explaining exactly what appears on the 1099-K. You can find it by clicking the "Help & Contact" link at the top of any eBay page, and searching for "1099-K". 

What's included in Form 1099-K
As Form 1099-K is an IRS information return, it includes the gross amount of all reportable payment transactions within a calendar year, based on when funds settle to eBay, not necessarily when funds are received by sellers. This amount does not include any adjustments, for example, credits, discounts, fees, refunds, or any other adjustable amounts.

...

Form 1099-K does not include the sales tax when it is automatically collected and remitted by eBay.

https://www.ebay.com/help/selling/fees-credits-invoices/ebay-form-1099k?id=4794

I also wanted to know if you don’t have a receipt for something you sold, if you have to consider the cost basis zero? IRS website was not helpful to me

The IRS does not give hard and fast rules because a lot of leeway is given to the auditor in an audit. You do not technically need a receipt to deduct an expense on your tax return, but you will probably wish you had one if you are audited. 

[nationaloutpost]

What is really infuriating here is corporations that make billions pay no taxes and get tax refunds and the IRS has to go after the little guy? I'm just waiting for the revolution.