Question

Reporting sales of goods that was sold at a loss

Forum|Forum|3 years ago
August 31, 2022
1 reply
0 views

Hello!

What if we sold goods, in this case shoes at various sales prices, but some of them were sold at a loss (less than what it was purchased for). Do we still get taxed on these losses because the IRS taxes the whole total of sales?

How do we avoid getting taxed twice if we already paid a sales tax for the original price of the goods?

K

kdevere

It really depends on what you are selling. If you are selling used household articles (if the shoes are "gently used" for example) you've used in the past, you may qualify for "occasional garage or yard sale" treatment. According to the IRS, if your online auction sales are the Internet equivalent of an occasional garage or yard sale, you generally do not have to report income from those sales.

Assuming that you originally bought the used items for more money than you are selling them for, you don't have to report the income received from the eBay sale. For example, if you sell a bicycle that you paid $500 for two years ago for $350 on eBay, you usually don't have to notify the IRS—and you can't claim a loss on it.

If you are buying and selling shoes, that would be a gig or small business activity, then you would report the aggregate of the sales, so the total amount of sales as income then you would report your cost of goods, which would include what you paid for the product as expenses to arrive at a net taxable income or net profit.

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"

G

GreenFallsHollow

@kdevere , can you please clarify your statement: "... if you sell a bicycle that you paid $500 for two years ago for $350 on eBay, you usually don't have to notify the IRS"? Assuming the payment was via Venmo, PayPal, etc., and you had other similar payments of the course of 2022 totaling >$600, wouldn't the IRS in essence be notified of that $350 bike sale and now be looking at it as income?

K

kdevere

1099-K's will be issued for amounts over $600. The amount has just changed and at this time, it is really unknown how that will be handled. The best approach, if it isn't reportable income, in the event of used household goods, for example, would be to keep that document with your tax records for that year, with notes as to the transaction in the even you would be asked about it.

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"