How do I separate sales of personal and business items on eBay when doing taxes?
admin | Oct 14, 2010 | Comments 2
I sold about $3000 worth of stuff on eBay this year. I sold off the rest of my inventory, some ancient office equipment, and some things from my personal collection. The sales were as follows:
$200 sales of ancient business inventory
$1000 sales of ancient office equipment (already depreciated)
$1800 personal items sold at a loss
I used the same eBay ID, PayPal account and bank account to sell all this stuff. I know how to handle the inventory and office equipment, but I’m a bit confused as to how to deal with the personal items tariff-wise. These were items I took from my personal belongings and sold because I need the money to file bankruptcy. I’ve read that I have to in effect “buy” the personal items for my business at a reasonable market rate for my business, say 50% of sale price or whatever. Is this right?
What would you advise? I am a sole proprietor. I am filing The boards 7 Bankruptcy this year, so I want everything clear and on the up and up.
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Personal items are handled item by item. You do NOT sell them to the business.
You need to compare the auction total (including shipping) to your cost basis (what you paid positive listing fees, FVF, paypal fee, postage). If you had a profit on that item, you list it on schedule D. If you didn’t, skip it.
The IRS appears to have no problem with an entry that looks like this on schedule D:
“personal items sold at a gain on ebay” with various for buy dates.
Dear V: Personal items are only reported if you make a profit. Disregard personal items when accounting for the business stuff.
Calculate the FMV (honest market value) of all personal items and my guess you did not make any where near the value when sold. Personal items sold at a loss is normal and unreported.
If you did make a profit it would be reported on Sch D as either a long/fleeting term gain. Keep your receipts from your pay pal account and other documents related to the closure of the business.
This advice was prepared based on our understanding of the tariff laws in effect at the time it was written as it applies to the facts that you provided. Click on my profile to read more. Errol Quinn Enrolled Agent