Quote:
Originally Posted by KCRfan1
I received my tax form from eBay last week.
What the form does not indicate is the amount I PAID for the cards I sold.
The dollars on the tax form assume this is pure profit, when I could have actually LOST money. In any case, it is not pure profit because I had to purchase the cards.
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The sales amount reported on the 1099-K form is not assumed to be all profit, it is just the reportable gross taxable sales you had for the year. It is up to the recipient to report this gross taxable sales amount in the proper place on their tax return, and then also to list and report the allowable expense deductions on their return and then subtract those from the sales to arrive at their net taxable income/profit/gain (or loss). You want to be sure to report your gross taxable sales in the appropriate place(s) on your tax return so the IRS can easily match any 1099-K income reported to them on your behalf to the gross sales amount reported on your tax return.
Please note, the reported gross sales on your tax return doesn't have to tie exactly to the amount of gross sales you got reported to you on 1099-K forms you received for that same year, but you want that gross taxable sales amount reported on your return to at least be the same, if not more, than what was reported on the 1099-K form(s) you got. If the gross taxable sales amount reported on your return is less than what was reported on the 1099-K form(s) you got, and copies of which were sent the IRS, when the IRS tries to match the 1099-K form(s) sales to your return, they'll come up short and you will get a correspondence from the IRS questioning what they think may be un-reported income, along with an estimate of what they think you may owe them on that unreported income. If you fail to report anything at all about your 1099-K reported income on your tax return, the IRS figures you have no expenses to offset against those sales because you didn't report any. They don't just assume the sales are 100% profit.