Help concerning "downsizing". No receipts, but lots of cool stuff. Re-create Receipts on my own?

[wildriverrun_1]

Hi,

I was a power seller back in the day when LOTR collectibles were a thing.  Now I am aging and want to start downsizing for real and I am worried as for many things I have no receipt.  These are truly personal items that I have enjoyed (including jewelry, collectible books, dolls) and any receipts are long gone.  I am pretty sure I need to get a real business license and track my sales (as I will likely make enough for the income will get reported).  Couple of things:  Do I have it correct that I can make 5K without it getting reported?  And, what to do about things that I want to sell that I have no receipt?  I figure I have 10-15 good years to get my stuff down to a reasonable level, so my family doesn't have to deal with it, but I don't want it to show as all profit.  Many of my items will sell for much less then I recall paying, but how do I prove that?  Ideas and help?  

[stuff4divas]

@wildriverrun_1   The 5K thing has nothing to do with reporting income to the IRS. No matter one's income amount, it has to be reported, minus expenses. So your concern for receipts would be IRS related.

As far as receipts for eBay, collectibles aren't on their radar like new items, especially in bulk, electronics, designer clothing, etc., the things that are being stolen on a daily basis by scum.

[wildriverrun_1]

That is what I thought.   So how to I account for what I paid for item years ago?  Can I just do a spreadsheet with a well researched receipt?  

[onlinecentral]

How to deduct cost of good sold with no purchase receipt
https://community.ebay.com/t5/Selling/How-to-dedcut-cost-of-good-sold-with-no-purchase-receipt/td-p/...

The cost basis of goods is described in IRS Publication 551:
https://www.irs.gov/pub/irs-pdf/p551.pdf
https://www.irs.gov/forms-pubs/about-publication-551

https://www.irs.gov/pub/irs-utl/auctions_and_consignment_seller_tax_considerations.pdf

IRS form 8949
https://community.ebay.com/t5/Selling/1099-K-Personal-Item-Sales/m-p/33352394#M2112125

https://community.ebay.com/t5/Selling/1099-form-Good-news-for-me/m-p/33600642#M2174004
The IRS has a FAQ about dealing with a 1099-K when you didn't make a profit:
Q3. Is the gain or loss on the sale of a personal item used to compute my taxable income? Is that reported on a Form 1099-K? (added December 28, 2022)
A3. Gain or loss on the sale of a personal item is generally the difference between the amount you paid for the item (the purchase price) and the amount you receive when you sell it (the sales price).
For example, if you bought a refrigerator for $1,000 (the purchase price) and sold it for $600 (the sales price), you have a loss of $400. $600 sales price - $1,000 purchase price = ($400) loss amount.
On the other hand, if you bought concert tickets for $500 (the purchase price) and sold them for $900 (the sales price), you have a gain of $400. $900 sales price - $500 purchase price = $400 gain amount.
For calendar year 2022 tax returns, if you receive a Form 1099- K, for the sale of a personal item that resulted in a loss, you should make offsetting entries on Form 1040, U.S. Individual Income Tax Return, Schedule 1, Additional Income and Adjustments to Income, as follows:
Report your proceeds (the Form 1099-K amount) on Part I – Line 8z – Other Income, using the description "Form 1099-K Personal Item Sold at a Loss."
Report your costs, up to but not more than the proceeds amount (the Form 1099-K amount), on Part II – Line 24z – Other Adjustments, using the description "Form 1099-K Personal Item Sold at a Loss."
https://www.irs.gov/pub/taxpros/fs-2022-41.pdf

[wildriverrun_1]

BLESS YOU!

[mam98031]

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@wildriverrun_1 wrote:

Hi,

I was a power seller back in the day when LOTR collectibles were a thing.  Now I am aging and want to start downsizing for real and I am worried as for many things I have no receipt.  These are truly personal items that I have enjoyed (including jewelry, collectible books, dolls) and any receipts are long gone.  I am pretty sure I need to get a real business license and track my sales (as I will likely make enough for the income will get reported).  Couple of things:  Do I have it correct that I can make 5K without it getting reported?  And, what to do about things that I want to sell that I have no receipt?  I figure I have 10-15 good years to get my stuff down to a reasonable level, so my family doesn't have to deal with it, but I don't want it to show as all profit.  Many of my items will sell for much less then I recall paying, but how do I prove that?  Ideas and help?  

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NO, you do not have that correct.  You are referring to a FORM the 1099K.  It is a FORM and nothing but a FORM.  It does not now nor has it ever set the threshold for when you need to report your income.  

We have ALWAYS been responsible to report ALL our income.  With or without a 1099K, you need to report ALL your income to the IRS every year.

As far as getting a Business License.  In most states it is pretty easy to do.  I know for my state It cost me $50 some 25 years ago and that was it.  Just go to your states Dept. of Revenue site, it is likely far easier than you are imagining to sign up for a Business license.  

AS to the 1099K form, we don't know yet what the minimum threshold on that form will be yet.  IRS isn't likely to tell us until very late in the year.  They said they are trying for $5,000, but that has not yet been approved.

Here are some links that will help you to better understand the 1099K and give you some ideas on how to track your income and what to do when you don't have receipts.

https://community.ebay.com/t5/Announcements/eBay-and-TaxAct-partner-to-help-you-navigate-new-Form-10...

https://www.irs.gov/faqs/small-business-self-employed-other-business/income-expenses/income-expenses

https://www.irs.gov/businesses/gig-economy-tax-center

https://pages.ebay.com/seller-center/service-and-payments/2022-changes-to-ebay-and-your-1099-k.html

https://www.irs.gov/pub/taxpros/fs-2022-41.pdf