Source: Why new IRS rules will be an absolute disaster for casual eBay users
EBay and others will have to file Form 1099s with the IRS if you sell an annual cumulative total of more than $600.
If you sell stuff from your collection of old stuff on EBay (or Amazon or other places) and make more than $600 in revenue, you will have to either pay income tax on your sales revenue or be able to document what you paid for the item, originally, to show profit or loss.
For example, if you bought a camera and lenses for $900, 5 years ago, and sold it used on Ebay for $650, you have to pay regular income tax on the total of $650.
Unless you can prove your original purchase price with a receipt, in which case, you can then demonstrate you sold at a loss.
Many people sell old stuff they no longer use and no longer have original receipts even though they are selling at a loss. If you cannot prove your original cost, the IRS will tax your revenue ($650 in this example). To show a loss, you need to show the original price (cost basis) for each item you sold, on an IRS Schedule D. Which means you need a receipt from when you originally bought the item.
I do not think I have ever sold any used item at a profit; all sold for less, often much less, than what I originally paid for the item. The change, now, is the IRS will require that we prove that we sold each item at a loss. Imagine if the IRS taxed all of your earnings from a pre-move garage sale, where you are selling off all garden tools, furniture and clothing items, and may be some old kitchen stuff. Of course you are selling at a loss. But under this thinking, the IRS would want you to track each sale and the original purchase price too. Tons of paperwork – let’s hope they do not do this too …
