Hello Everyone and Ebay Community,
A casual seller here that is clearing out some of the closet with personal owned items. Decided to go ahead with listing more than was planning to do. Because of the $600 threshold , hesitated to sell anything last year because I didn't understand it well then, and realized not so well now and hope I can get some assistance in understanding this.
There are a few things I need clarification on if the community members can address each one:
1) Do I understand correctly that the "cost basis" of something you purchased at that price becomes the actual "cost basis"? If I bought something for $100 total , does that $100 include the price of the item, any shipping costs, and fees? (excluding personal sales tax) or only the base cost of the item?
Example:
Item ($100.00) + Shipping($25) = $125 cost basis or only the Item ($100.00) is the cost basis?
2) For some items, I have records of where and when it was purchased, but others, cannot recall at all or no receipts. I was reading that if you sell the item for less than you paid for (which is basically just about everything, though I understand some bidders could pay you more than what you ask occasionally), then you do not pay a capital gains tax on that item sold. Is that correct?
3) If the original cost basis of what was paid for an item is unknown, then I had read that Fair Market Value (FMV) or comparable value can be used to establish a cost basis? Is this FMV an estimate of using an average of when the item was bought then (say a few years ago) or using an average of what is currently being sold for now (if there are any sales of that item to compare against)?
4) As a worst case scenario, let's say that I cannot demonstrate or prove anything of what I paid for the item and am not certain on an average FMV, should I just be prepared for worst case to pay capital gains on every item sold at this point? For whatever the item is sold as, I should take 28% from the item sold amount out of my net profit and put it back for potential taxes?
5) Come tax time, typically I have just used a national commercialized US tax service for personal taxes. When a 1099 k form is provided, in looking at a sample form, I see that it records sales by month.
How do I notify the tax accountant of what sold for less that should not be taxed and for what items capital gains tax should be paid if it sold more than the cost basis?
I know this is a lot of questions at once. I thought it was best to get some answers before taking a rash reaction of just taking down listings and not do any selling. Thanks for your time and help to provide additional information and resources to better understand this.
Thank you!
