Items Sold On Ebay

[Christian]

A client sold a large number of toys received over time on Ebay to the tune of over $11,000 worth ! They cost her nothing having been received as gifts. Having been received as a non cash gift they have now been sold for a considerable sum over costs. Do they retain their status as a gift and no tax is due or are they shown as individual sales on Form 8949 with profits falling to Schedule D. In 42 years of helping folks with their taxes I never dreamed of having to report the sale of toys on Ebay !!!

[jasdlm]

I would say even if they were gifts, she takes the giftor's basis (is that a word?) in the gift, so basically, if she sold them for more than what the 'basis' was, gain, and if not, personal loss not deductible.

My 2 cents, and I'm ready to stand corrected.

[Lion EA]

Agree with jasdlm.

Also, your client received the toys as gifts, so she didn't owe any tax upon receipt as gifts. But that's as far as their status as gifts goes. She didn't give them away. She sold them. It sounds like she sold most of them at a profit.

Investments? Form 8949/Schedule D.

Business selling toys for a profit motive? Schedule C.

Facts & circumstances. 

[jklcpa]

If truly gifts, the rules for basis of gifted property should be used:

• sold at a gain, the basis in the hands of the donee would be donor's basis
• sold at a loss, donee's basis is the lesser of FMV at the date of gift or donor's basis

I am willing to bet that this basis information does not exist.  Was this activity a multitude of generic mass-produced toys accumulated since childhood that were sold off, or more valuable pieces considered collectibles that either held their values or possibly increased (true antique pieces, or something like the original handmade cloth Cabbage Patch dolls, etc)?

I'd say that the schedule or form where to report these depends on the client's intention. Did the client view these toys as an investment, or is client talking about this as a business where more toys may be obtained as inventory with the intention of flipping for profit?

[Yardley CPA]

Did she receive some type of 1099 from eBay reporting the sale of the toys?

[mcb39]

I think the facts and circumstances are superfluous unless she got a 1099 or is in the business of reselling.

[Lion EA]

...or, if she sold personal property at a profit. We report ALL worldwide income from ALL sources unless specifically exempted by law.

[Catherine]

eBay is sending out gazillions of 1099s - as long as the total went above $600, you got one. Heck, my husband got one for selling a couple of used tools that he upgraded. No gain; he sold them for no more than cost + shipping fee. Often less than his cost, as they were older (but not antique/collectible/worth a premium). He is decidedly un-amused that he now has to dig out all the details for me.

[Lee B]

The IRS also has a 1 Hour video that covers the same stuff:

https://www.irs.gov/businesses/what-to-do-with-form-1099-k

 

[Christian]

The individual sold the toys to raise money for college and I would say did a bangup job. She has no clue what they cost so I would submit the basis is zero. Even so this is now merely a technical discussion as I have just about completed entering them on Form 8949 and Schedule D. Her income is well below the level at which the capital gain will be taxed. She is not in any form of business as these were simply items accumulated over a period of years and as noted the money went toward her first year tuition. I am really glad of this outcome as she is trying to advance her station in life. And Ebay did send her the 1099 with every item listed with selling price. 

[DANRVAN]

21 hours ago, Christian said:

large number of toys received over time on Ebay to the tune of over $11,000 worth

The toys most likely did not increase in value "over time".

Therefore basis of gifts would be equal or greater than sell price.

Taxpayer is entitled to making a reasonable estimate.  Unless the toys were collector items, I would accept a reasonable estimate of basis = sell price and call it good.