Pay Pal 1099K

[Choppaman]

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 endorse this post.

How close is that to Springfield VA? my sister in law lives there and we there a few times a year. Person to person transactions would be awesome. Bring the bourbon! LOL.

I am changing all my current and future posts to include pp fees and taxes but offer an attractive discount for F/F. I hope people will work through this as a team. Allow our hobby to remain a hobby in lieu of a business. The paper trail will be a pain for sure.

I have also started my own spreadsheet of my current GS sales. I have a lot to locate yet like original receipt, shipping cost but will attempt to show that we all take a loss when we sell one of our beloved blades. See how this whole things goes.

Have an awesome Sunday everyone.
OH, once I connect with my accountant, I'll let you know if there is anything worth mentioning.

 

[w.t. anderson]

How close is that to Springfield VA? my sister in law lives there and we there a few times a year. Person to person transactions would be awesome. Bring the bourbon! LOL.

I am changing all my current and future posts to include pp fees and taxes but offer an attractive discount for F/F. I hope people will work through this as a team. Allow our hobby to remain a hobby in lieu of a business. The paper trail will be a pain for sure.

I have also started my own spreadsheet of my current GS sales. I have a lot to locate yet like original receipt, shipping cost but will attempt to show that we all take a loss when we sell one of our beloved blades. See how this whole things goes.

Have an awesome Sunday everyone.
OH, once I connect with my accountant, I'll let you know if there is anything worth mentioning.

Thanks, Choppaman! I'm right next door, about two or three miles at most from Springfield VA. I will most certainly have the bourbon, sour mash, scotch, and rye ready to flow! (Next time you're in Springfield, visit the nearby George Washington's Grist Mill and Distillery next to Mount Vernon - not only was he the Father of Our Country and its First President, but also its top whiskey distiller of his time!)

Any other residents or frequent visitors to NoVA out there that want to join in?

 

[w.t. anderson]

Please pass this on to everyone concerned about the new IRS policy and the 1099k!

If you search your own forum name on the Bladeforums knife exchange, you can quickly determine the "basis" or cost of every knife you eventually sell. Only the sale amount in excess of your "basis" is liable to be taxed as "income"; a knifes sold for the same or less than your basis is like a yard sale item that sells for less than you originally bought it for - not taxable/no tax liability to the IRS.

In doing your search, I'd also write down the date you purchased the knife, the date, as much of the seller's name/location as is avaiable, and the words used to identify/describe the knife for your recordbook or spreadsheet.

This information should go a long way in proving the taxable amount of your "hobby" income is not nearly as large as the IRS may suspect it it. The bad news is that, as a hobby versus a business, you probably cannot add any incidental costs such as shipping and insurance and packing materials to your "basis" according to the IRS policy put in place back in 2018.

I hope this relieves the stress some of us experienced at the news of the new 2022 IRS requirement for paypal and others to report on 1099k. Any lawyers or tax accountants out there please feel free to confirm or contradict my posted information - I'm just a recovering Phi Alpha Delta law fraternity dropout who may be mistaken.

Best Wishes to All - Be safe, be well!
John AKA w.t. anderson

 

[Choppaman]

w.t. anderson thanks for that info. I’m feeling the more we get into this we probably are not going to have much an issue if we document well. I think a push for F/F will help. Maybe?? Not sure it is as traceable as GS. Very helpful. I’m still waiting to hear from my accountant. We’ve been playing phone tag. May end up emailing him. I will update what he says hopefully soon. Keep posting any new findings you have. Thanks to everyone.

Eric

 

[jlauffer]

Don't mean to intrude, but there's an ongoing thread in GBU about this for those interested. MA put the $600 threshold in place starting in 2017, so I've had to deal with it a few times.

Bad - Paypal 1099

So I just got a 1099 from Paypal for selling through Goods and Services. I was under the impression that would only happen to those who sell large amounts, like over $20K. I only sold about $800 worth of items. I'm kinda pissed, especially since it was mostly stuff I had bought previously...

www.bladeforums.com

 

[Choppaman]

Don't mean to intrude, but there's an ongoing thread in GBU about this for those interested. MA put the $600 threshold in place starting in 2017, so I've had to deal with it a few times.

Bad - Paypal 1099

So I just got a 1099 from Paypal for selling through Goods and Services. I was under the impression that would only happen to those who sell large amounts, like over $20K. I only sold about $800 worth of items. I'm kinda pissed, especially since it was mostly stuff I had bought previously...

www.bladeforums.com

Yes thanks. We know. We are going back and forth. Thanks

So MA already has it. Ok.we’re you able to show a loss and avoid taxes?

 

[dericdesmond]

Another pita option is to send your stuff to AZCK and pay them 25% to deal with all that. 25% is hearty but possibly offset it by setting your price slightly higher since they have a pretty long reach. Cheers E
E

 

[Choppaman]

Another pita option is to send your stuff to AZCK and pay them 25% to deal with all that. 25% is hearty but possibly offset it by setting your price slightly higher since they have a pretty long reach. Cheers E
E

Hey E. Hope you’ve been well brother. Yes. Thought about that too And you’re right. That’s a healthy loss but I guess we could free up some time. Or you could buy them all. I’ll even hand deliver to you. LOL. Stay warm. Cold out there.

 

[jlauffer]

Yes thanks. We know. We are going back and forth. Thanks

So MA already has it. Ok.we’re you able to show a loss and avoid taxes?

My first 1099 was for about $3k. I use the H&R Block home software, and when I told it that I had a 1099K, it had me do Schedule C. I scoured ebay and PP to get as much info as I could on the transactions (original costs, shipping costs, fees, etc), but many of the sales were older items that I didn't still have receipts for. I was able to get the taxable "profit" down to about $600.

Stopped selling for a few years due to all this, but started keeping records, then had to do it again for 2020. That time the 1099 was around $4k, and got the taxable amount down to about $200 (again there were some items I didn't have original cost for).

Right or wrong, have done Schedule C both times, and no issues so far. Need to do this again for 2021, and am going to look into trying Schedule D instead, if I can get the software to cooperate.

 

[Choppaman]

My first 1099 was for about $3k. I use the H&R Block home software, and when I told it that I had a 1099K, it had me do Schedule C. I scoured ebay and PP to get as much info as I could on the transactions (original costs, shipping costs, fees, etc), but many of the sales were older items that I didn't still have receipts for. I was able to get the taxable "profit" down to about $600.

Stopped selling for a few years due to all this, but started keeping records, then had to do it again for 2020. That time the 1099 was around $4k, and got the taxable amount down to about $200 (again there were some items I didn't have original cost for).

Right or wrong, have done Schedule C both times, and no issues so far. Need to do this again for 2021, and am going to look into trying Schedule D instead, if I can get the software to cooperate.

Wow!!! All goods and services or did they flag F/F sales too? It’s just for goods and services I thought.

 

[jlauffer]

Wow!!! All goods and services or did they flag F/F sales too? It’s just for goods and services I thought.

That's my understanding, but hard to tell since the 1099 only shows a lump sum. In my case, everything for 2017 was done through ebay. For 2020 and 2021 I also had sales here, and all but a couple were G&S. What's weird though is that the 1099 amounts for 2020 and 2021 don't match my records, whether I include F&F or not. In both cases the 1099s are lower, by about $200 for 2020 and about $500 for 2021.

 

[Choppaman]

That's my understanding, but hard to tell since the 1099 only shows a lump sum. In my case, everything for 2017 was done through ebay. For 2020 and 2021 I also had sales here, and all but a couple were G&S. What's weird though is that the 1099 amounts for 2020 and 2021 don't match my records, whether I include F&F or not. In both cases the 1099s are lower, by about $200 for 2020 and about $500 for 2021.

Thank you for sharing.

 

[w.t. anderson]

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.

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.

If you do a search for your own name in the blade exchange section of the Forums, it should provide you the posts with the date, amount paid, and to whom for every knife you purchased, use or copy the information to create a database of the "basis" or cost you have for each knife to be subsequently subtracted from knife you sold recently or will sell the future. You can also check credit card statements, Bebay transaction history, and paypal (although pp only goes back to 2020 I found).

 

[w.t. anderson]

Time to start meeting in warehouses and cellars face-to-face for cash transactions. With good booze, of course. Vive la resistance!

 

[RobbieB]

On the bright side, Choppaman congrats on your successful efforts to whittle down your collection.

Consider the collective time & effort spent to comply with or circumvent this. Now imagine that being redirected toward abolishing the IRS altogether! Fat chance of that ever going away though. Hopefully, we can get Republicans back in control and they will rescind the lower limits for this reporting.

 

[WValtakis]

If you do a search for your own name in the blade exchange section of the Forums, it should provide you the posts with the date, amount paid, and to whom for every knife you purchased

If people actually left all that information up...chances are that the price is gone and possibly the whole post wiped Dang, who woulda thunk leaving the sales price up could have been useful?

 

[w.t. anderson]

It at least it gives you a description and known date which you can then crosscheck against your personal checking and credit card records. It's a data hunt that can lead to treasure, or at least prevent the loss of treasure to the IRS pirates. Arrrgh!

 

[Choppaman]

I know this is not new news (for those seeing this for the first time) but rather my follow up after talking to my personal tax accountant. He, like most accountants this time of year, is so far behind the 8 ball that it took a little time to connect and have a decent conversation about this.

He does not recommend dancing around this subject (tax guys LOL). I explained that this is only a hobby - buying/selling etc. He advised me that calling it a hobby does fall under hobby income and therefore is taxable. He also believes it is only a matter of time that FF will be tracked somehow and will somehow be recorded (not sure when but most good things come to an end as he put it). His advise was to call it a business and keep track of knife purchase prices and sale prices including the fees to ship and cost of shipping materials. When the 1099 arrives he said he will simply review my notes to see how much I've sold in knives including shipping and supplies and what I paid for them. As we all know, selling usually generates a loss even if you break even on the knife due to shipping costs. After explaining to him the same, he said that we most likely would be showing a loss and write it off. Let the government deal with the loss, not me. So now I have mixed feelings about all this. Record keeping sounds like a real pain in the ass for something that is supposed to be fun and adventurous. ????

Any other thoughts on this matter? Anyone hear something similar from their tax accountant or possibly another way to go at it since we started discussing this topic

One other item. I am seeing a lot of forum discussions and a lot of negative comments on the sudden push to sell friends and family. It appears it is really turning a lot of people off. In my sales I still offer both options. GS with fees and taxes included and FF with a discount (usually less than what I paid - there is that loss factor again). My opinion as of right now is you have both options. Take the one you feel most comfortable with. Any thoughts on this matter?

 

[varga49]

I know this is not new news (for those seeing this for the first time) but rather my follow up after talking to my personal tax accountant. He, like most accountants this time of year, is so far behind the 8 ball that it took a little time to connect and have a decent conversation about this.

He does not recommend dancing around this subject (tax guys LOL). I explained that this is only a hobby - buying/selling etc. He advised me that calling it a hobby does fall under hobby income and therefore is taxable. He also believes it is only a matter of time that FF will be tracked somehow and will somehow be recorded (not sure when but most good things come to an end as he put it). His advise was to call it a business and keep track of knife purchase prices and sale prices including the fees to ship and cost of shipping materials. When the 1099 arrives he said he will simply review my notes to see how much I've sold in knives including shipping and supplies and what I paid for them. As we all know, selling usually generates a loss even if you break even on the knife due to shipping costs. After explaining to him the same, he said that we most likely would be showing a loss and write it off. Let the government deal with the loss, not me. So now I have mixed feelings about all this. Record keeping sounds like a real pain in the ass for something that is supposed to be fun and adventurous. ????

Any other thoughts on this matter? Anyone hear something similar from their tax accountant or possibly another way to go at it since we started discussing this topic

One other item. I am seeing a lot of forum discussions and a lot of negative comments on the sudden push to sell friends and family. It appears it is really turning a lot of people off. In my sales I still offer both options. GS with fees and taxes included and FF with a discount (usually less than what I paid - there is that loss factor again). My opinion as of right now is you have both options. Take the one you feel most comfortable with. Any thoughts on this matter?

It was only a matter of time. I'll refrain from any sentiments regarding govt. Though I've been lucky enough to legally fly under the radar of income taxes, I can see where your tax accountant is coming from. I've seen a few sellers here that refuse PayPal entirely and prefer check or money order. That's how it used to be "Cash, Check, or Money Order". Like so many other things we've gotten accustomed to, things can and will change. I actually sold a knife for 10 1oz American Silver Eagles. Even though I did this to teach a young man a bit about the value of trade, I still like that idea..

 

[Choppaman]

It was only a matter of time. I'll refrain from any sentiments regarding govt. Though I've been lucky enough to legally fly under the radar of income taxes, I can see where your tax accountant is coming from. I've seen a few sellers here that refuse PayPal entirely and prefer check or money order. That's how it used to be "Cash, Check, or Money Order". Like so many other things we've gotten accustomed to, things can and will change. I actually sold a knife for 10 1oz American Silver Eagles. Even though I did this to teach a young man a bit about the value of trade, I still like that idea..

I know D. Gets under my skin BIG TIME!