Pay Pal 1099K

In the post that Craig the Brewer posted, some folks have pointed out Schedule C or D can be completed with your taxes to show cost basis. This should remove the burden of paying taxes on items sold at a loss. I agree it’s complete BS and an additional pain to keep records of purchases and sales.
I have already avoided selling a few knives and definitely l skipped more purchases b/c seller wouldn’t accept G&S. The terrible mail service alone warrants G&S protection for me.
 
Bmurray said:
I think cash app is the way to go now.
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I will have to look into that. Do you know if they gave the Goods and service option there like PP and Venmo? Probably a matter of time before they all get tagged. Crazy!
 
Cash app is the same as Zelle or sending F&F in PayPal. There isn’t any buyer protection.
 
If you do a deep dive on the IRS guidelines and within PayPal itself you'll see that the IRS is requiring the third party payment vendors to closely monitor F&F transactions to flag users that appear to be trying to skirt the regs. I would imagine that this additional administrative burden will be very difficult to do manually, and will likely be done in some automated way. I would think that if any description of an item that is placed in the notes of a F&F transaction will make it easy for a computer to pick up. A cash (personal check) or cash equivalent (money order) is probably the only way to avoid this form of double taxation. One more example of big government slipping legislation into laws that were labeled The American Rescue Act.......sheesh ! I've written to both my local congressman & senator both of which are republican in the hope that if the republican party can regain congress that this type of legislation can be modified.

The IRS offers justification for the changes based on the believe that our economy has shifted into more of a gig economy. I can see where this could apply to the craftsmen that build the products and offer them on sites like Etsy, Ebay, BF etc but for folks like us that are engaged in a hobby it doesn't make sense. I could see if you booked a profit on a sale of an asset that a tax be levied on the profit but along those lines you would expect to be able to net out losses much like you can with stock transactions. After we get through this tax season I plan to have a conversation with my tax accountant to better understand more of the specific reporting requirements.

IMO we are being caught in the undertow of a set of IRS guidelines that were written for gig workers.......not hobbyists and that sucks !
 
prom52 said:
If you do a deep dive on the IRS guidelines and within PayPal itself you'll see that the IRS is requiring the third party payment vendors to closely monitor F&F transactions to flag users that appear to be trying to skirt the regs. I would imagine that this additional administrative burden will be very difficult to do manually, and will likely be done in some automated way. I would think that if any description of an item that is placed in the notes of a F&F transaction will make it easy for a computer to pick up. A cash (personal check) or cash equivalent (money order) is probably the only way to avoid this form of double taxation. One more example of big government slipping legislation into laws that were labeled The American Rescue Act.......sheesh ! I've written to both my local congressman & senator both of which are republican in the hope that if the republican party can regain congress that this type of legislation can be modified.

The IRS offers justification for the changes based on the believe that our economy has shifted into more of a gig economy. I can see where this could apply to the craftsmen that build the products and offer them on sites like Etsy, Ebay, BF etc but for folks like us that are engaged in a hobby it doesn't make sense. I could see if you booked a profit on a sale of an asset that a tax be levied on the profit but along those lines you would expect to be able to net out losses much like you can with stock transactions. After we get through this tax season I plan to have a conversation with my tax accountant to better understand more of the specific reporting requirements.

IMO we are being caught in the undertow of a set of IRS guidelines that were written for gig workers.......not hobbyists and that sucks !
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Well said brother. I’ve got a call into my tax guy as well. Hope there is a way that doesn’t involve 10 MB of back up and note taking to get around this. I’ve sold 500 + knives from my collection since 11-2020. The thought of a 1099 on this has my anxiety in overload.
 
Choppa.......the guidelines for 2021 were quite different than the new regs that kick in as of Jan 1st 2022. I believe past years were based on 600 + transactions or a total of $20K in sales. Starting in 2022 the number of transactions goes away and it's simply based on total transactions of $600. That's why most of us never received a 1099-K from PayPal in the past. 2022 is a whole new ball game.

Unintended consequences that may take hold once this sinks in for the average person. Fewer knives sold and even more impactful, fewer knives purchased from the makers since people may wish to avoid getting caught up in this net and only purchase what they believe will be a long term keeper.

Another example of Big Government looking out for the little guy. Once the harbor thaws out we may need to organize a modern version of the Boston Tea Party. Just think, once dudes start dumping their knives into the harbor we can swing by in a small skiff with a strong magnet on a pole and snag a few prizes. Please forgive the dark humor.

BTW, the IRS guidelines call for documented receipts for purchases & sales, costs for supplies (packing tape), shipping costs, advertising (possibly a BF membership fee) etc. They even go so far as to suggest that you should consider using a professional tax accountant to handle the reporting.
 
prom52 prom52 I'm going to start looking for scuba gear. Maybe I can find someone who will accept a F/F payment for one. LOL. Appreciate you explaining the 2021 rules. I may fall outside of that barely. I agree with all you said. I'm already thinking about pulling some listings so I can think this through. The amount of time and energy on top of the time and energy that already goes into selling knives sounds excruciating. Good grief!

On standby for mission "Scoop em up"
 
And as if this wasn't bad news enough for me, I just found my SUV ransacked and a Busse black crinkle/micarta Badger Ergo, a .22 thick Busse satin/orange G10, and two Victorinox 111mm folders stolen. First this bad IRS news, then knife thefts . . .
 
w.t. anderson said:
And as if this wasn't bad news enough for me, I just found my SUV ransacked and a Busse black crinkle/micarta Badger Ergo, a .22 thick Busse satin/orange G10, and two Victorinox 111mm folders stolen. First this bad IRS news, then knife thefts . . .
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WTH?? Can't stand a Thief! Sorry to hear this brother. Do you have pics? can keep an eye out for them.
 
And as if this wasn't bad news enough for me, I just found my SUV ransacked and a Busse black crinkle/micarta Badger Ergo, a .22 thick Busse satin/orange G10, and two Victorinox 111mm folders stolen. First this bad IRS news, then knife thefts . . .
Choppaman said:
WTH?? Can't stand a Thief! Sorry to hear this brother. Do you have pics? can keep an eye out for them.
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Thanks! but no, just standard stock photos. I'm posting the theft over on the Busse subforum.
 
I agree this is messed up… I’m also active on several music and hunting forums and this is hitting all those forums too… the whole thing is such a pain. I have several knives I need to list, but keep dragging my feet cuz I don’t want to deal with paperwork or mailed checks etc… I guess I’m gonna start asking for a “gift” of X dollars and then you get a “thank you knife” with your card… whole thing is dumb.

Forum feedback is gonna be really important… but in reality, PayPal has been screwing people anyway by not backing knives/hunting/shooting gear anyway… not a lot of reason to not use f/f anymore IMO.
 
Choppaman said:
1-1-2022 Pay Pal/Venmo, etc. are now going to start sending 1099K’s to individuals receiving a gross $600 in sales through Goods and Services. Friends and Family does not fall under this reporting that Pay Pal is now required to report to the IRS. Well this sucks. LOL. Many of us know each other and probably have no issue paying F/F but thats not really the case for most transactions on the forums. Matter of fact, the rules strongly discourages F/F payment due to the lack of protection. So! What to do???? I wonder if adding payment by USPS money order would work. Would take a little longer for transactions to occur. A lot of trust would be required. One thing is for sure, in my attempt to thin out my collection, I know I’m going to get nailed with a 1099K. I certainly would like to avoid that.

What are your thoughts Fiddleback Family?
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I tried to cash a $10 postal money order at my local post office. It took 3 clerks 20 minutes to accomplish the task, not to mention the time it took to get to the head of the line.
 
I really hate this whole mess.

I'm just a dude that likes knives and wants to try different things. The thrill of the chase is what gets me going, generally not the kill. I've been losing interest in this hobby for a while now. This new situation has all but killed any fun and interest that I once had.

***Add to that the frustration of using this site and the S>>>>>>>>>>>>>L>>>>>>>>>>>>>>>>>O>>>>>>>>>>>>>>>>>>>>>W loading and errors, Meh...I'm all but done.

Bummer...........
 
Choppaman said:
Probably get assessed a fee for being a business. LOL. UGH!!!
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In Michigan, it's $50 to setup an LLC. And $20 annually to maintain it. Even for the 1099, if you don't make an income then nothing is taxed either. If you sell it for more than you bought it, that's when the taxes come in.

It makes the burden for personal accounting annoying but it's often a good practice to know how much you have in assets. Comes in handy for things like insuring those assets, often under homeowner's insurance.
 
Mr. Tettnanger said:
I really hate this whole mess.

I'm just a dude that likes knives and wants to try different things. The thrill of the chase is what gets me going, generally not the kill. I've been losing interest in this hobby for a while now. This new situation has all but killed any fun and interest that I once had.

***Add to that the frustration of using this site and the S>>>>>>>>>>>>>L>>>>>>>>>>>>>>>>>O>>>>>>>>>>>>>>>>>>>>>W loading and errors, Meh...I'm all but done.

Bummer...........
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I hear ya! What we do here is for the love of knives. This isn't our occupation making/selling knives. It certainly makes you think more than twice about your investment - whether you need it, use it. etc. Sucks.
bikerector said:
In Michigan, it's $50 to setup an LLC. And $20 annually to maintain it. Even for the 1099, if you don't make an income then nothing is taxed either. If you sell it for more than you bought it, that's when the taxes come in.

It makes the burden for personal accounting annoying but it's often a good practice to know how much you have in assets. Comes in handy for things like insuring those assets, often under homeowner's insurance.
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I was restless last night so I started to document my sales from 1-1-22. about 39 total. about a 50/50 on GS and FF. Still going to take some serious time finding emailed receipts and documenting each and every one. I totally agree on the gain part for tax purposes. By all rights, gains are taxable. But who is making any money on reselling? Not I. The proof is going to be a bear I fear. We'll see how this pans out. Thanks for your input brother.
 
Looks like face to face transactions with cash are the way to go. It's going to limit the market for some things, but it solves some other problems as well (like reducing some types of fraud, shipping hassles, etc.).
 
I just spent twelve hours yesterday researching and recording my knife purchases on Bladeforums (back to 2007), eBay and Paypal (only last three years available) in order to create a documented "basis" of what each knife I have cost me so that, from now on out, when I sell one (also keeping costs of packaging and shipping), I can show that the taxable income from each sale was minimum or even a loss, eliminating any tax liability from a 1099k with the IRS.

Actually, rather than a pain, it became an enjoyable walk down memory lane to review and remember not only the knives, but the people from whom I've purchased them.

That being said, I see a future in our organizing face-to-face sales events between local sellers and those looking to buy - I used to meet knife.hunter in Fairfax County VA for just such one-to-one Busse transactions 15 or 20 years ago. Perhaps we should start banding together locally/regionally to create an underground network of hobbyists. Or just go to a knife show if you're lucky enough to have one nearby.

I'd like to see a list of Bladeforum member names and locations (NOT actual names and addresses) those in Northern Virginia/DC/Maryland willing to meet or be contacted for such sales event. Anyone?

I'm w.t. anderson in Fairfax County, VA, and I have Fiddlebacks, GECs, MLs, and a Busse or two I'd like to sell.
 
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