Selling of goods considered income?

[bmjohnson35]

I sold my Miata about a month ago and I also sold various parts from the car separately.  Now PayPal is asking for may SS# since one of the items sold for more than $200. They say they have to report my "income" via form 1099k to the IRS.  I understand this reporting requirement is stricter than before and was introduced with the American Rescue Plan of 2021. I was not aware that selling used items was considered income unless it resulted in a profit.  Does this include selling used cars?  For example, if I buy a new car today for $30k and sell it for $20k 5 yrs later, I wouldn't consider this as income.  Am I confused? If not, was this always true?

[MustacheAndaHalf]

When you sell something for $200, PayPal doesn't know if you bought it for $150 or $250 ... they don't know if you have a gain or loss.  I think they're pushing that responsibility onto you, without deciding if you have a gain or not.

Years ago I sold things on eBay.  Some items I sold for less than I paid to cash them out.  Others were collectible items I sold for a profit.  To keep track I made a spreadsheet similar to how stock sales are tracked: purchase date and amount, sell date and amount, profit/loss.  I forget where I reported that hobby income in my tax forms, though.

[GilesMM]

All proceeds from the sale of personal (non-business) property should be on Schedule D and a long or short term gain or loss reflected.  If you sold the item for more than you paid, then you have a taxable gain, otherwise not. But the IRS will probably be looking to match up 1099Ks to what is on your tax return so you will need to report all that.

[bmjohnson35]

Most of the parts were off the car. I can't identify an original cost for them.  Would I use the original purchase price of the car and then lump the selling of the car and its associated parts together?   

[GilesMM]

Most of the parts were off the car. I can't identify an original cost for them.  Would I use the original purchase price of the car and then lump the selling of the car and its associated parts together?   

Yes, if all in same tax year.  Document it.

[bmjohnson35]

Thanks. I think I have the original sticker off the car, so documenting this should be easy. 

[stoaX]

All proceeds from the sale of personal (non-business) property should be on Schedule D and a long or short term gain or loss reflected.  If you sold the item for more than you paid, then you have a taxable gain, otherwise not. But the IRS will probably be looking to match up 1099Ks to what is on your tax return so you will need to report all that.

So when I eventually sell my car at much less than I originally paid for it then I will have a capital loss I can write off on my US federal tax return?

[nick663]

Paypal, ebay, etc. are now required to issue a 1099-K if they process payments in excess of $600.  Before 2022 it was 20k in payments and 200 transactions before they were required to issue a 1099.

[NotJen]

All proceeds from the sale of personal (non-business) property should be on Schedule D and a long or short term gain or loss reflected.  If you sold the item for more than you paid, then you have a taxable gain, otherwise not. But the IRS will probably be looking to match up 1099Ks to what is on your tax return so you will need to report all that.

So when I eventually sell my car at much less than I originally paid for it then I will have a capital loss I can write off on my US federal tax return?

If you sell it at market value, there wouldn't be any loss.

[GilesMM]

All proceeds from the sale of personal (non-business) property should be on Schedule D and a long or short term gain or loss reflected.  If you sold the item for more than you paid, then you have a taxable gain, otherwise not. But the IRS will probably be looking to match up 1099Ks to what is on your tax return so you will need to report all that.

So when I eventually sell my car at much less than I originally paid for it then I will have a capital loss I can write off on my US federal tax return?

Losses are not allowed.  But if if the vehicle is used for business, then it the capital can be depreciated annually, like a rental property.

[stoaX]

All proceeds from the sale of personal (non-business) property should be on Schedule D and a long or short term gain or loss reflected.  If you sold the item for more than you paid, then you have a taxable gain, otherwise not. But the IRS will probably be looking to match up 1099Ks to what is on your tax return so you will need to report all that.

So when I eventually sell my car at much less than I originally paid for it then I will have a capital loss I can write off on my US federal tax return?

Losses are not allowed.  But if if the vehicle is used for business, then it the capital can be depreciated annually, like a rental property.

Thanks, that makes sense.  Glad to know I wasn't missing out on a write off all these years...